Ford to close Australian manufacturing plants

Ford announced it will close its Australian manufacturing facilities in October 2016 due to decreasing sales and the growth of the local currency, according to Nasdaq. An engine plant and a vehicle assembly facility will shut down, although the company will retain its parts, service and support operations in Australia. 

The Australian dollar has traded higher than U.S. currency for most of the past two years, meaning vehicles manufactured in the country cost more than imported automobiles. Since the lower sales were preventing Ford from keeping up with indirect manufacturing costs, the company was forced to cut production and make fewer vehicles in Australia, the source said. 

The news comes at a bad time for Australia because the mining boom appears to have cooled off, and Ford's departure will have a significant impact on the country's manufacturing industry, CNN reported. There are growing concerns that Australia's economy is too reliant on the mining industry, which is its primary export. Mining profits are down due to lower commodity prices. The country's manufacturing sector has been in decline for several decades with manufacturing contributing to only 7.2 percent of GDP and a smaller share of employment as workers have moved to other industries.

The government attempted to fund the auto industry to keep foreign manufacturers in the country, and subsidized GM's Australian operations so the company would agree to keep producing vehicles there for another decade. However, Ford reported it could not remain competitive in the small market with inflexible cost structures. The Australian dollar appreciated too much for Ford to remain profitable in the country. Annual automobile sales in Australia are close to 1.1 million units, and its automotive manufacturing industry employs 55,000 workers and supports 200,000 positions in other industries, Nasdaq stated. 

Share To:

Strategic Sourceror

Post A Comment:

0 comments so far,add yours