Ford invests $103 million in Australian operations, governments kick in $32 million

The future of the local car manufacturing industry has been boosted by a $103 million investment by Ford to complement $32 million in Government grants.

The money will be invested in clean technology and safety upgrades and will ensure the survival of its Melbourne assembly plant through to 2016.

Ai Group has welcomed the investment, saying it “represents a renewed commitment by Ford, supported by the Commonwealth and Victorian governments, to continue production in Australia” and helps fill the void created by the sudden withdrawal of the Green Car Innovation Fund last January.

“It is an approach that will be warmly welcomed by the many local small and medium-sized businesses in the automotive supply chain,” Ai Group chief Heather Ridout said. 

“The automotive industry plays a very important role in product and process innovation, workforce and management training in the Australian manufacturing sector. These contributions have broad regional and national benefits both in the Australian manufacturing industry and across the broader economy.”

Although the car industry reached its target of selling one million new cars last year, the sale of locally produced cars fell by 3% to 141,949.

Particularly alarming was the 36.5% fall in Falcon sales to 18,741, with Ford selling 20% fewer locally made cars through 2011. The Holden Commodore was also knocked off its perch as the country’s highest selling car by the Mazda3.

It’s a trend that has the Federation of Automotive Products Manufacturers worried, with chief executive Richard Reilly describing the times as “difficult” due to the popularity of imported and small cars.

State and federal politicians are currently in America where they will also try to get commitments on Holden’s future from its parent company, General Motors.

Speaking from Detroit, South Australian premier Jay Weatherill says the future of General Motors in Australia depends on Government support.

Weatherill has told the Australian Financial Review that talks are progressing on the prospect of further Government support in return for a possible increase in the volume of parts sourced from Australia.

“They do want to continue making cars in Australia if they can find a viable business case for doing so, which they are saying is dependent on a co-investment from the state and Commonwealth.”

GM chief Mike Devereux added the groups were “making good progress on a new co-investment plan,” the publication says.

Damon Honnery, associate professor, department of mechanical engineering at Monash University, says the two most important factors for the local industry are the success of new developments such as the Holden Cruze (a small to medium passenger car) and continued government support.

“The only question is whether the Government wants to keep funding production of cars only they and fleet operators seem interested in buying,” he writes on The Conversation.