This is how long Ford Motor Co. (NYSE:F) has been making its cars in Australia: Henry Ford himself oversaw the foundation of his company’s local subsidiary in Geelong, Victoria, in 1925, to make the Model T for the local market.
Now, 87 years later, the company announced it will close up shop Down Under, citing prohibitively expensive costs. The move, announced by Ford Australia President and CEO Bob Graziano, will end 1,160 jobs by October 2016 at the company’s two plants in Geelong and Melbourne. It will retain the 1,500 Ford employees involved in product development.
Australia's auto sector faltered as its currency strengthened against the yen in recent years, spurring increased demand for imports. The news has garnered significant attention in the Australian press and will be likely be used against Prime Minister Julia Gillard and her Labour Party in the run-up to the country’s Sept. 14 elections. In the wake of Graziano’s announcement on Thursday, the government quickly responded by pledging $49.5 million in government assistance to affected communities and peripheral Ford Australia suppliers.
“I don't agree ... that making cars isn't a viable industry for Australia,” Gillard was quoted as saying by The Australian.
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The auto industry has reportedly received $11.6 billion in government assistance since 1992. Ford Australia received $34 million just last year, a drop in the bucket of the $600 million the subsidiary has lost since 2008.
“Our costs are double that of Europe and nearly four times Ford in Asia,” Graziano told the local press.
While new car sales are up in the country by about 10 percent, Ford sales have declined. Its Ford Falcon is far less popular that it once was. In the early 1990s, Ford Australia sold about 80,000 units annually of the two- and four-door sedan; last year it sold 14,026 units.
"There is not much future for me working, this is it," a robotic arm operator who has worked at the Geelong factory for 35 years told the Sydney Morning Herald.