By on May 24, 2013

2005-2006_Ford_BF_Falcon_Ute_XR6_Turbo

Something was happening, and must have been very big or wrong for our office to became that noisy during the lunch break. In fact, the bad news were just a couple of clicks away.

Today is a sad day for the Australian automotive industry. Heck, I would venture to say it is a sad day for the country. I don’t know how sad or upset the street is, but happy is not the world I’d use to describe the mood I saw around the rest of the afternoon.

Ford’s announcement that it will close its manufacturing operations in 2016 may look like a surprise, but my gut tells me that this has been brewing for a long long time. For me it is kind of an expected outcome, because since we arrived here, I have yet to hear any of their leaders committing on the record to their production activities after 2016.

I can only speculate about what happened in Broadmedows (or Dearborn), however I have seen enough to try to draft an explanation.

The reduction of the tariffs and elimination of import restrictions since the end of the 90′s, created a situation of increased competition in both models and pricing for the local manufacturers. This situation has reduced the market share of locally made vehicles to around 15-20% (from >50%) of the total market. At those volumes, it is very very hard to sustain a manufacturing operation, specially if there are no export programs.

The increased vehicle choice, raising fuel prices and popularization of the SUV/CUV has had a strong effect in switching consumer tastes. A big sedan, comfortable as it is, loses points when compared with the increased practicality offered by a SUV. Higher fuel prices make big cars less attractive, specially in the cities where their higher weight penalizes the increasingly important lt/100 figures. Enter the small cars, and small is a relative term here, since most of them are of the C-segment variety. Adding 1+1, it is easy to see on the streets what VFACT’s numbers have been reflecting for some time: a market increasingly moving toward SUVs and C-segment cars. I saw this change happening before my eyes in my home country during the 90′s.

The cost of making business has had its fair amount of influence here. The high Australian dollar and the increasing energy, taxes and salaries costs are causing a loss of competitiveness for locally manufactured goods. That is hurting not only the auto industry, but the whole sector.

Ford also has itself to blame for some of its woes. A first easy shot is the AU Falcon, a self-inflicted blow from which they never recovered. The lack of an export program like the ones in place at Toyota or Holden means Australia is Ford’s main market for its locally made cars. With a dwindling big car market share that only means trouble. To Ford’s credit, they developed the terrific Falcon-based Territory CUV, a car that has been a top seller in its segment almost since its launch… constrained to local sales by the lack of an export program. The lack of investment, marketing and advertising for the car must have had its fair amount of influence too. It creates the impression that has been left to its own devices. The FG Falcon is a very good car, something I hear even from people with far more knowledge of the industry than me.

And then we have the perception of the product in the public. If the forums and comment sections of newspapers are any indication, there seems to be an image stigma associated with large domestic cars. The word bogan is usually thrown around when mentioning its owners. Past quality woes are also name on some of them. On top of that, the Falcon in particular suffers because it is the de facto choice of the taxi trade down here (and is easy to see why, it is good on LPG and is a tough car). Finally, large cars are considered gas guzzlers, despite the big advances in fuel consumption achieved in the last 10 years.

What comes next is uncertain.

An Aussie icon will be gone forever and Ford will almost surely face a severe backlash, hurting even more its position in the market (they were in 3rd position in 2011 and were sitting in 5th last time I checked). They are bringing some more product and eventually they will recover. I hope they maintain their promise of keeping their development activities here.

But the big elephant in the room is what will happen with the suppliers after 2016, which will lose an important customer and volume, and as Mr. Nasser said in a previous interview a couple of weeks ago, when lacking the necessary scale, a domino fall in the sector can take the whole industry down.

Indeed, a sad day for the industry.

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110 Comments on “The Day The Blue Team Dropped The Ball...”


  • avatar

    People who work in Australia have to realize that Ford is a USA owned Company, they will do what they want in any Country they operate in, so if people are not buying there Products, well the answer is to move out!

  • avatar
    racebeer

    Soooo … I guess this means one less make in the V8 Supercar series. Now just Holden, Merc, and Nissan. Too bad ……

  • avatar
    Junebug

    Hey Racebeer, is that a 1964 Dodge Polara?

  • avatar
    olddavid

    In the 1980′s, I felt that an MBA would be a necessary addition to my bona fides for my career to continue. I took an International Business relations class from an attorney named Clem Ady. He posited that business was on a rush to the bottom to cut costs for manufacturing and that China and the Asians would be the beneficiaries. I know when I comment that I come across as a cranky old man, an uncomfortably close characterization. However, in all my experience, I have yet to have anyone explain why a closed market, well-regulated and tariffed, cannot be maintained in these small countries, particularly when they are resource independent. Why can’t my parents home country – Canada – or the Australians, essentially close their markets like we did with the little pickups in the late 70′s and 80′s, thereby keeping their manufacturing bases intact while having an industry that provides high wage jobs for their own citizens? My imagination is very limited, as I used to be of the opinion GM would never go BK, either – something I was constantly reminded of by the originator of this blog. I’m also unable to come up with a reason for growth in perpetuity, but that is another matter. Can any of you who have been deep into the ambiguities of academia explain why this model is unworkable? It would seem to me that being self-sufficient has to be good for the most people, while detrimental to only corporate interests. I’m really curious, as it certainly seems to me the only good to come from this is for shareholders and the upper floors of headquarters. But, I’ve never shopped at WalMart, either, so maybe I just lack something obvious to everyone born after 1980. Am I the only one who pays more for quality that is mostly American made? Or am I delusional? I do know the marginal increases in my portfolio have been offset by a declining standard of living for my children.

    • 0 avatar
      raph

      Free trade “everybody” wins!!!!!!

    • 0 avatar
      JD23

      Your proposal is workable, but would benefit a small group to the detriment of many. Consumers would have less choice and be forced to purchase vehicles that were more expensive and likely of a lower quality. Domestic producers would benefit, however, due to reduced competition, effectively transferring wealth from the overall populace to those employed in the domestic auto industry. Imagine if American consumers had been deprived of the opportunity to purchase foreign autos during the 80s, 90s, 00s, and limited to the vehicles excreted by the Big Three during that period.

    • 0 avatar
      CJinSD

      Why do we need growth in perpetuity? Because people want more every day. Any stupid argument for a benefit becomes an argument over rights. How can you not want everyone to have elaborate health care including experimental medicines and treatments? What sort of monster isn’t in favor of that for everyone? Why do you want to push old folks off cliffs instead of providing them with a comfortable lifestyle for more years than they worked? Why shouldn’t every kid go to college and receive As? Why shouldn’t every building be wheelchair accessible? How can you be against that? We’re living Idiocracy. Everyone has been promised far more than they’ve earned. Are you delusional? Maybe not delusional enough. Just pretend you still live in 1968. Your paycheck is huge in 1968 eyes. Why won’t it buy more? Tell yourself that it is because of the closed economy, keeping productivity low and prices high. The end result would be the same.

      • 0 avatar
        olddavid

        CJ- Do you really believe that the only solutions lie in the extremes of both arguments? I’m retired, and even if I live to be 80, I will not be a net taker vis a vis social security. Yet I’m not angry or bitter, just curious as to how the prevalent attitude that happiness and security is a zero-sum game came to be mainstream? I am the only one of my ilk in my demographic, yet even with the wide divergence of opinion between myself and my peers, we have – by far – more convergent concerns than the popular view of left/right, liberal/conservative, or Republican/Democrat ideology being irreconcilable. The only thing I do know is our current system is selfish, unworkable, and has encouraged the belief that being “right” is more important making progress. Both sides are guilty of this hubris. Where have the reasonable humans gone?

        • 0 avatar
          CJinSD

          Isn’t your argument in favor of closing the market and then equitably distributing goods the product of zero sum game thinking? You asked why we need perpetual growth, implying that you’re against it. Again, that’s getting close to the definition of zero sum game thought. Zero sum game means that there is only so much reward to go around. If any of it goes to China, then it is at the cost of US workers or capitalists. It is people that aren’t trapped in the zero sum game box that look at comparative advantages, efficiencies, and innovations. What do you mean when you say zero sum game?

    • 0 avatar
      danio3834

      “I have yet to have anyone explain why a closed market, well-regulated and tariffed, cannot be maintained in these small countries, particularly when they are resource independent.”

      A good example would be Brazil. Ask Marcelo what kinds of vehicles they get to choose from and at what prices.

      It’s a global economy now. If you want the spoils, you have to play.

      • 0 avatar
        OldandSlow

        Add to that one – Argentina.

      • 0 avatar

        the cars on offer in Brazil are quite adequate and adapted to our circumstances. Of later, increased competition has increased finishing and quality while slightly lowering prices. The gov is forcing active safety in cars. I have no problem with the dominating small engines. Fact is whenever I drive an imported car i’m underwhelmed. Are they better? Yep, in certain aspects but we are not that far behind. As compensation we get more people employed and thus more money circulating here.

        The situation is not that bad now.

        • 0 avatar
          danio3834

          I seem to recall you describing how much more vehicles cost and how much less affordable comparable vehicles are in Brazil vs. the same vehicles in the rest of the world. Also, that many of the vehicles sold there are legacy vehicles, like the Focus that is sold in Brazil that is still a generation behind.

    • 0 avatar
      bumpy ii

      “I have yet to have anyone explain why a closed market, well-regulated and tariffed, cannot be maintained in these small countries, particularly when they are resource independent.”

      That does work, for a while. Problem is that the rest of the world can and will use its combined resources to outpace you, and eventually you end up looking like North Korea by comparison. Then one day some gunboats show up in your harbor, commanded by those who have decided they can use your resources better than you can.

    • 0 avatar

      it does work but it takes finesse and dedication. The US in the 19th and Japan and South Korea in the 20th are pretty good examples as is China in this one.

    • 0 avatar
      Nick

      ‘He posited that business was on a rush to the bottom to cut costs for manufacturing and that China and the Asians would be the beneficiaries.’

      Posit? Posit my butt. It’s a painfully evident truth.

    • 0 avatar
      ect

      In 1913 (100 years ago) Canada and Argentina were at similar levels of development and GDP per capita. It was commonly understood that Argentina had better prospects for growth.

      As matters developed, Argentina closed its market in favour of “import substitution” policies. Canada’s economy was more open. And the rest, as they say, is history.

      Canada’s economy is wide open, and the country has benefited greatly. Particular sectors may suffer, but the overall economy is improved. And people’s lives with it.

      The Canadian auto industry, in particular, has been integrated with that of the US for almost 50 years, since the passage of the Canada-US Auto Pact. Canada and Canadians have benefited immensely from this.

      The reality of free trade is that everyone wins. In any free trade agreement, the biggest (relative) winners are the smaller economies, which benefit from access to larger markets and longer production runs for the products they produce.

      Closed markets are a recipe for stagnation. Latin America has proved this over and over again. As did Australia and New Zealand, until they liberalized in the 1980′s.

      • 0 avatar
        RobertRyan

        @Ect,
        That is the “nice theory’ of International trade, not the reality. IF free trade was so great EVERYONE would be doing it,as obviously it is to their advantage to do so. The move away from “free trade” suggests strongly that there are ‘losers and winners” in current arrangements. Unless the factors that distort trading arrangements are addressed more and more countries will feel they are being “ripped off”

      • 0 avatar
        Roland

        You’re being a bit unfair to the South American countries which turned to import substitution during the era of the World Wars. The policy may have failed, but there was a logic behind it.

        e.g. Argentina depended on imported manufactured goods. In peacetime, that was great. But during the wars it became nearly impossible for Argentina to import manufactured goods. All the industrial countries were focused on war production, not trade, so it didn’t matter that Argentina had made windfall wartime profits on its own exports. There was little available on the market for them to import. The result was significant disruption to Argentina’s economic development.

        So it’s not surprising that after two world wars, and facing the possibility of a third, that Argentina’s gov’t would embark upon an import-substitution industrialization programme, notwithstanding the inherent theoretical inefficiency of such.

        As I said, it wasn’t successful. But it wasn’t stupid, either.

        The other thing that really hurt Argentina’s economy was the consolidation of the European Common Market, and the Common Agricultural Policy in Europe. The subsidization of food self-sufficiency in Europe not only took away much of Argentina’s export market, but also led to global subsidy wars in the agricultural sector, a competition that hurt Argentina more than the USA or Canada.

        There were follies in 20th century Argentina, but they also took a hammering from almost every major world trend during that time.

      • 0 avatar

        That is such a simplistic view. There are many, many contributing factors to Argentina’

      • 0 avatar

        That is such a simplistic view. There are many, many contributing factors to Argentina’s decline. Import substitution may have been a factor but it’s not even among the most important. What Argentina lacks is credible government. Argentinians hold more assets in international banks than in local ones. They have the cash to do things, they just lack the confidence.

      • 0 avatar
        Nick

        Free trade doesn’t work when the trade partner is operating under a completely different set of rules in terms of the environment and labor allowing them to keep costs ridiculously low.

        It also assumes that your trader partner is honest, which the Chinese are not.

        And although it states that there are winners and losers more often than not it doesn’t say that the losers, unless they are lucky, stay losers despite the best efforts of their governments.

        • 0 avatar
          RobertRyan

          @Nick,
          How very true as well. Finding a ” level Playing field” is like finding a needle in a haystack.

        • 0 avatar
          MadHungarian

          At the risk of sounding all Karl Marx here, one of the reasons you will have winners and losers is that mobility of capital is much greater than mobility of labor. That is what makes it possible to maintain the huge wage differentials between the US and, say, Mexico and Bangladesh.

        • 0 avatar
          danio3834

          Maybe we’re spoiled now, but to say we haven’t benefitted from trade with China is fairly obtuse. Disposable items made from textiles and plastics have never been cheaper to Mr. and Mrs. America thanks to the importation of Chinese goods. We’ve never lived so opulently because of trade with countries like China.

  • avatar
    raph

    Add to this a very small population, the states of California (38 million) and Texas (26 million) each have a higher populations than all of Australia (23 million) and even Florida and New York get close at 19 million people.

    Its to bad Ford AU didn’t have a healthy export program.

    • 0 avatar
      doctor olds

      It is tough to make the business case (profitability!)for an export program when you are a very high cost producer, which results from Australia’s tiny scale, high wages, and is amplified by the strong currency today.

      Tariffs boil down to the residents of the country subsidizing local manufacturing. A good deal if you are involved in manufacturing, not so much so if you are a consumer paying the higher prices.

      • 0 avatar
        olddavid

        Why is having more of your neighbors with more money a bad thing? I don’t recall any lack of 25% tariff pickups being sold at the local Datsun or Toyota stores in 1980. Besides, to me, better to subsidize local business than the monoliths that have emerged in this free trade explosion. Which are being supported by stability bought by our absurd military budget with only Americans footing the bill.

        • 0 avatar
          danio3834

          “Why is having more of your neighbors with more money a bad thing?”.

          This in and of itself is a good thing. But when it comes in the form of market protection instead of competition or innovation, how much of that money are you readily willing to hand them as the subsidizer?

          • 0 avatar
            olddavid

            I did ask for a reason. This blog always amazes me with its diversity of opinion that mostly stays away from angry denunciation. I thank you all. My perspective is skewed by my age and experience, and my children have learned that dialogue is not always productive. I guess my memories of the budding Social Credit movement of my childhood were more instructive than formative. Or vice versa.

        • 0 avatar
          Scoutdude

          For the most part there was no tariff paid on those Japanese pickups from the 80′s. They were imported as incomplete vehicles w/o a bed. The beds were made and installed here making their final assembly point the US and thus exempt from the tariff. The Transit connect is imported with a back seat so that it is a car and then that back seat is thrown away. The Sprinter gets it’s engine and transmission removed, put in the back to be reinstalled in the US so its final assembly point is the US.

        • 0 avatar
          doctor olds

          @olddavid- Tariffs are just wealth redistribution from consumers to the favored local business. Some have more money(local business and employees), but the larger population subsidizes them by paying a higher price on all imports.

          It appears the biggest beef with the US “bailouts” is founded on the fact that UAW employees have long been know to be very highly compensated, including benefits, compared to most other workers with similar skill sets. Some see it as wealth transferred from “poor to rich”, in a sense.

          • 0 avatar
            RobertRyan

            @doctor olds
            Nice try, but it all works if you have a “level playing field”. Otherwise you are taking a knife to a gunfight, especially if your competition is heavily subsidized.

      • 0 avatar
        RobertRyan

        @doctor olds,
        No got it wrong again. Ford Australia HAD a export program going in the middle East but Mullaly’s interference and the rising dollar killed that. GM Holden exports in limited numbers to the Chevrolet SS to the US despite the High Dollar.

        • 0 avatar
          doctor olds

          Mr Ryan- I understand you love to confront me, but I said “it is tough to make the business case” with the current conditions. Ford management apparently agrees with me having made the business decision to discontinue manufacturing operations in Au altogether because they can’t make any money at it.

          Mulally’s job is not to make cars, but to make money! You write as if he doesn’t have a right to decide how to run Ford, including the piece that is Ford Australia. It is a small part of the larger company, just as Holden is relative to global GM.

          • 0 avatar
            RobertRyan

            @doctor olds
            “Mulally’s job is not to make cars, but to make money! ‘
            Seeing Ford is losing money hand over fist in Europe and due to Mullay’s indecisiveness is making sure people in Australia abandon Ford Products and go elsewhere for their purchase. it is about time he was shown the door.

            Yes I do like confronting you “doctor olds” as your mindset is the type of thinking that set GM on the destriuctive pathway to bankruptcy. I Unfortunately can see this being repeated. Alfred P Sloan would be turning in his grave.

          • 0 avatar
            doctor olds

            @RobertRyan- The “mindset” you imagine me to have is simply a business perspective, not unique to me, GM, or the auto sector, but necessary to succeed in any business.

            Emotion has no place in business decisions which must be based on cold hard facts and reality to have a chance to succeed. Your emotions around Mullaly deciding to throw in the towel in Australia are understandable, but his job is to manage a real multi-billion dollar enterprise. You have the luxury (as do I in retirement!) of sitting on the sidelines and chattering.

      • 0 avatar
        RobertRyan

        @doctor olds,
        Ever heard of Sweden?. a little country of 8 million people who have a very tiny scale, VERY High Wages and a reasonably high currency. Somehow this tiny country owns at least 35% of the US MDT/HDT Trucking production for starters not counting other industrial enterprises they have a significant holdings in the US . Yes they have high tariffs as well.

        • 0 avatar
          doctor olds

          @RRyan- You write, “for starters” as if there is more? There are no other vehicle manufacturers left in Sweden. AB Volvo (heavy equipment) had gross sales revenue of $4.7B in 2011, roughly 3% of Ford’s revenue, to bring some proportion.

          As for economic data: Michigan, not exactly a boom state, has 3% more population and 10% larger economy than Sweden on a PPP basis. The Swedes mean income is about 2/3 the US average and less than half that of Michigan.

          • 0 avatar
            RobertRyan

            @doctor olds
            ” There are no other vehicle manufacturers left in Sweden. ”
            You sure? YES THERE IS.

            “had gross sales revenue of $4.7B in 2011, ”
            You sure?

            It had a a fall of GROSS EARNINGS Not REVENUE of 92% in 2013, it did no make the US$2.2Billion for the first QUARTER of its projected 2013 target.
            Overall in 2012(not a good year) it earned $4Billion, Ford’s profit was $7 Billion

            What has Michigan got to do with it? I was referring to the fact that Volvo manufactures and sells roughly 35-40% of the US’s MDT/HDT Trucks and Volvo is not the only Swedish Corporation to have a substantial presence in the US, not just one state. I think 8 million people make up a very small state in the US.

          • 0 avatar
            doctor olds

            @RRyan- I stand corrected on AB Volvo’s sales- You are right, I was off by a factor of 10! must have fat fingered the conversion from Krona to $US.

            I would like to know what vehicle manufacturers are in Sweden besides a portion of AB Volvo. Saab is dead, and Volvo is Chinese.

            In the context of their success exporting, the point of your comment, I note that only 2 of the 16 Volvo truck manufacturing facilities are in Sweden. The vehicles they sell in NA appear to be manufactured in NA. It appears they build where they sell, though I am waiting to be enlightened if that is not accurate, being no expert on Volvo or the Heavy Truck industry. If it is accurate, the AB Volvo example does not give much support to your contention.

          • 0 avatar
            RobertRyan

            “I would like to know what vehicle manufacturers are in Sweden besides a portion of AB Volvo. Saab is dead, and Volvo is Chinese.”
            @doctor olds you have been in the Automotive sector. I will give you some homework to do, one is a fairly substantial operation the other is not. I asked a 12yr old son of an acquaintance who actually came up with correct answers for both. The larger Global entity could have a substantial presence in the US in the future.

          • 0 avatar
            doctor olds

            Ryan-No response to the comment that AB Volvo builds where they sell? I did my homework by reviewing AB Volvo’s 2012 operating report to provide you the data that 14 of the 16 Volvo truck manufacturing facilities are NOT in Sweden. I know that Volvo Cars is a separate company once owned by Ford and now Chinese owned. Just tell me how many trucks are built in Sweden and exported to anywhere outside the Sweden and the EU, which certainly has no tariff barriers with Sweden a member state.

    • 0 avatar
      JMII

      I think those population numbers put this market in perspective. Small market, high prices and few of the local vehicles being sold elsewhere (to share costs) doomed Ford AU.

  • avatar
    CJinSD

    The AU Falcon is styled in the same fashion as the Oval Taurus, the car that took Ford from being a regular competitor for best selling car in the US to a purveyor of reskinned Mazdas and Volvos.

    • 0 avatar
      RobertRyan

      @CJinSD
      Glad you could see that, unfortunately the Dearborn executives who forced Ford Australia to build the AU Falcon did not. Local protests saying it would not sell ,did not deter them. The AU Falcon did a lot of damage to Ford Australia.

      • 0 avatar
        CJinSD

        Somebody must have known that the look wouldn’t sell in the US either, but they threw away one of those moments when they had a chance to compete with Toyota on equal footing anyway.

        Ford is selling lots of vehicles in the US now, but their quality is at the very bottom of the market. I could easily see them repeating Chrysler’s mistake of 1957, when they gained massive market share through advanced styling only to never recover from the backlash of burned customers.

  • avatar
    OldandSlow

    Athos – It is good that you mentioned the local suppliers – which have probably been shrinking already.

    It’s tough to see an icon like the Falcon fall to the wayside – but the truth is the market share of large, rear wheel sedans in the sub-luxury class isn’t what it used to be. Bogans aside, the C-class sedans and CUVs are what mainstream consumers can budget for.

    In a one-Ford world, the platform and drive train of the Falcon are not shared by other Fords in the global market. As the 20-teens progress, I see a definite shift to fewer global platforms that can be multipurposed to as many as three different vehicles. Also, there is a regulatory environment which favors small engined vehicles.

    The result – Ford has bet the farm on smaller displacement, turbo boosted FWD cars. The chances are very slim that Ford will develop a rear wheel drive platform for a 4-door sedan to replace their North American built Tauris, which is FWD, by 2016.

    Finally, I had a gander at the Toyota web site for the manufacturer’s prices on specifically the Hilux. The price for this mid-sized Ute is about a 20 to 30 % higher than what Toyota charges for a similar Tacoma built in San Antonio, Texas.

    Any exports from Australia would have to be geared to the above $40K USD and that is a limited market populated by the likes of Audi and BMW, not so much by Ford.

    • 0 avatar
      Athos Nobile

      Suppliers are already suffering. A lot.

      “It’s tough to see an icon like the Falcon fall to the wayside – but the truth is the market share of large, rear wheel sedans in the sub-luxury class isn’t what it used to be. Bogans aside, the C-class sedans and CUVs are what mainstream consumers can budget for.”

      You have various points there. Actually, if you check the basic entry price of a C/3/A4 or a middle of the pack big CUV, and compare with a fully loaded Calais or G6E… in the current market, badge appeal or practicality will weight a lot in the balance. And the Germans are considerably smaller inside than the local offerings and would also get easily smoked at any stoplight.

  • avatar
    krhodes1

    I fail to understand the wailing and gnashing of teeth over this. There is a simple solution – buy enough of the damned cars so that Ford can make money building them. Very simple. But Australians have decided they would rather have Toyotas, so Ford is shutting the plant. <20K sales a year is not enough, and Ford is not a charity, it is a business. As has been mentioned, they killed the Ranger at 50K sales a year, and that was probably a FAR more profitable vehicle than these, as it shared engines and whatnot with other vehicles in the line.

    • 0 avatar
      bball40dtw

      I mostly agree with you. I think a lot of the teeth gnashing has to do with people hoping Ford would expand the usage of those platforms to the US. It was never going to happen, but people covet the forbidden fruit.

      If there is ever going to be a Ford or Lincoln RWD sedan, the Mustang platform is the first place to look. Its the future world car and has much better platform volumes than the Falcon. The next in line would be the closely related DEW platform that underpins the Jag XF.

      • 0 avatar
        Scoutdude

        Way back before Mullaly took the reins of Ford the plan was to redo the Falcon platform and use it as the basis for the Mustang and a Panther replacement and we would have at least the Panther replacements right now. Instead the Falcon was doomed to be soldiered on as long as they could w/o any significant investment in it.

        • 0 avatar
          bball40dtw

          That’s back when they could have used a RWD platform for everything from a Crown Vic, Town Car, Mustang, LS, Jag, Falcon, etc.

          Instead they went the cheaper route and revised the DEW platform for the Mustang. Its kind of sad because I would like a Lincoln similar to the XF.

          I’m hopeful Ford will try to amortize the new Mustang platform across other models. I don’t know if they can make it profitable on just Mustang volume alone.

          • 0 avatar
            Scoutdude

            This was after the Mustang got DEW’ed. The US versions of the Large Sedans were supposed to be hitting, or in, the dealerships around now and the 2014 Falcon would have been “new” rather than just “refreshed”. The Mustang would have likely hit the showrooms as a 2015 model.

          • 0 avatar
            bball40dtw

            Well then Scottdude, everything just got ruined. I like your alternative Ford product line better than the current. So this prior to Mullaly selling all the PAG brands besides Lincoln and after the 2005 Mustang?

          • 0 avatar
            Scoutdude

            It was after the 2005 Mustang since Mullaly took over in late 2006. I’m not sure where the PAG divestiture lies in the bring back the Taurus name, axe the Falcon timeline. Likely it was after the pieces of PAG were put up for sale but I don’t know for sure. I read all about it in C&D or R&T. It was a pretty lengthy article about the future plans that had been started before the ax fell for a new Falcon platform but not finished until after the plans were canceled. The article basically said look at this great plan with a preface that it wasn’t going to happen after all.

        • 0 avatar
          RobertRyan

          @Scoutdude
          I wish they get someone with a more Global focus to replace him. The Pickup sales are what is keeping Ford going at thee moment. It needs to be a lot more diversified.

          • 0 avatar
            DenverMike

            @RobertRyan – There’s really not too much Ford is good at other than trucks, SUV and Mustangs. At least globally, not the US. I don’t think that’s a bad thing. When it comes to anything else (around the world), TOO many global OEMs are already there making and equal or better car AND building it for much less.

            If Ford focuses on trying to sell the 3 vehicles they’re exceptional at, on the world market, it seems like the best global strategy, if there has to be one. Even if they’ll never be more than niche products around the world, it has to be better than where Ford has been.

          • 0 avatar
            Scoutdude

            They are definitely relying heavily on trucks but they aren’t doing that bad in other segments.

            The Econoline, Escape, Explorer, and Fiesta are either #1 in their segments or on track to be for the 2013 CY.

            The Econoline has over 50% market share but we’ll have to wait and see if the Transit can hold on to that.

            Fusion, and Focus are on track to be #3 in their segments with ATPs higher than the #1 & #2 in those segments.

            Edge, C-max and Transit Connect aren’t doing too bad.

            The only real dogs are the Taurus, Flex and Expedition.

            They are also the #1 brand. So all in all they aren’t doing that bad in the US.

    • 0 avatar
      OldandSlow

      The Ranger at one time shared engines and transmissions with the Explorer and the Aerostar van. Towards the end it, the Ranger was all by its lonesome. Yeah, the 2.3 four was a variant of the MZR four banger in the older Focus – but other other than that it out on its own limb, much like the AU Falcon.

      • 0 avatar
        Scoutdude

        Yet they spent a bunch of money to develop an all new Ranger, though they chose to not offer it in the US, to protect the F150′s #1 spot. Of course it is shared with Mazda so it isn’t all alone.

        • 0 avatar
          DenverMike

          I think there’s a lot more to it than having the F-150 hog the #1 spot. Ford would sell a lot of Rangers in the US, but how many would sell, well equipped? It’s a given that Rangers cost as much to build as F-150s, but in many world locations, like Australia, mid-size trucks command a high premium over say, Camrys that top out at 42,000 AUD. Hard loaded and luxury global mid-size trucks do rival the King Ranch and Longhorn editions. The global Ranger starts at 25,000 AUD and goes to 60,000 AUD for the Wildtrak.

          • 0 avatar
            outback_ute

            The single cab 2.5 gas Ranger is still $AUD 19,740, which is about the same price as a base model Focus/Corolla/etc

    • 0 avatar
      RobertRyan

      Agreed. Instead they are abandoning sedans for SUV’s and Pickups. Makes it hard for any manufacturer to sell to a fickle public. The fact that there are TOO many manufacturers and models in the market adds to the problems.

  • avatar
    carguy

    The demise of the Falcon was inevitable. While looking good, it is based on a 25 year old platform that is increasingly becoming uncompetitive. At the same time Ford AU did not the R&D funds to modernize the car as their domestic market is small and the car wasn’t exported. Add to that a heavily unionized workforce and a strong currency and death of the Falcon was never in question.

    • 0 avatar
      RobertRyan

      No not all changing vehicle tastes the move to SUV’s, Pickups and to a lesser extent smaller cars has killed e Falcon. Not that long ago it was selling in reasonable numbers, but Mullaly’s hinting two years ago that local production would come to an end in 2016 was the last straw and the car started to plummet like a stone when the public knew it was eventually not going to be supported or updated.

  • avatar
    DIYer

    Australians can look forward to driving Fords built in China. They say that in China, the women work like men, and the men work like machines.

    • 0 avatar
      RobertRyan

      China could be a nightmare for both GM and Ford. Economic reports for the last 12months suggest economic production is going backwards, as a result of the quantitative easing by Japan and the US and the Chinese property bubble. Factor in a Government that has been doing a lot of sabre rattling as well and China is not looking that good.

  • avatar
    david42

    The OZ car industry was double-damned: currency exchange rates (which may fall soon, given the expected decline of the mining industry), and the quirks of local consumers.

    Currency rates are easy to understand, but the second one bears more consideration. Even in the United States, land of the free, and home of cheap gas, no one wants big, sub-premium rwd sedans anymore. Just a handful of enthusiasts (and a disproportionate number of TTAC commenters).

    The local branches of Ford and GM developed themselves into a dead-end: their expertise isn’t valued by the rest of the world. Chrysler is the last purveyor of big rwd family sedans, and much of that development work was amortized by Mercedes products, and continues to be paid for by platform-sharing with premium-priced Grand Cherokees and Durangos. If someone told Chrysler to “build a rwd family sedan from scratch,” I think they would’ve said no-thanks and merely updated the fwd LH cars.

  • avatar
    RobertRyan

    @Athos Nobile said in the article:
    “An Aussie icon will be gone forever and Ford will almost surely face a severe backlash, hurting even more its position in the market (they were in 3rd position in 2011 and were sitting in 5th last time I checked). They are bringing some more product and eventually THEY WILL RECOVER”
    What Ford did and the surprisingly less than gracious announcements by Graziano has very much doomed the Company after 2016. His announcement would be the equivalent of Ford saying they were shutting all F150 production i NA and moving it to Thailand. That would go down well, so did Graziano’s announcement.

  • avatar
    skor

    Do you see me, Toecutter?
    Do you see me, man?
    Born with a steering wheel in his hand…
    … and lead in his foot.
    He is the Nightrider…
    … cruising at the speed of fright!
    I am the Nightrider,
    and we ain’t never coming back!

  • avatar
    RobertRyan

    @ScoutDude
    “They are definitely relying heavily on trucks but they aren’t doing that bad in other segments.

    The Econoline, Escape, Explorer, and Fiesta are either #1 in their segments or on track to be for the 2013 CY. ”

    Ford has got its act together in the US that is for sure, knows the market well. Outside the US has a lot of issues.

  • avatar
    RobertRyan

    Nice summing up about who killed the Ford Falcon in Australia from a news website.
    “Who killed the Ford Falcon? In short, it was YOU…

    You – who wanted a high driving position… and paid more for an SUV that grazes its floorpan entering a driveway.

    You – who didn’t want to buy a ‘thirsty’ six-cylinder… so you bought a small SUV instead, with ‘economical’ permanent four-wheel drive, petrol engine and auto transmission.

    You – who wanted to downsize to a small or mid-size sedan for the daily commute… only to find it won’t tow ski boats or accommodate the whole family at weekends.

    You – who was put-off by the lack of a diesel option… and ignored the EcoLPI option and the EcoBoost alternative.

    You – who wanted better resale… and then paid through the nose to have your volume-selling European sedan serviced.

    You – who couldn’t be seen in a taxi… and bought a Prius.

    You – who complained about Australian build quality… and bought a Cruze.

    You – who didn’t want to be tagged as a bogan… so you bought a dual-cab one-tonner with a bull bar.

    You – who boasted about buying Australian… but failed to find out your SUV was built in Korea.

    You – who lamented the death of the local V8 sedan… and then didn’t buy it when it returned.

    You – who preached Australia needs a vibrant local auto industry… and then made Mazda3 the most popular car in the country.

    You – who screamed black and blue about a third brand entering V8 Supercars… but you haven’t bought a locally-built new car in the past 20 years.

    • 0 avatar
      Scoutdude

      So many of those statements would apply to the Panthers, except the one about being called a Bogan, with the Panthers you’d be called out for driving an “old man’s car”. The Panther also never got any engine options, other than CNG, which was quickly turned into a CNG prep package for aftermarket suppliers to convert.

      • 0 avatar
        RobertRyan

        @Scoutdude
        The current Falcon is a very nice car to drive. Everyone I talked to who drives them(including myself) find them very reliable, safe and great cars to drive. So the somewhat nonsensical comments are hard to fathom.

        • 0 avatar
          Scoutdude

          While some of those reasons may be nonsensical or a stretch of the truth, the fact is if the Falcon was still the best selling car down under then it would be very unlikely that Ford would be discontinuing it.

          • 0 avatar
            outback_ute

            Don’t be so sure – the Commodore sold 30,500 in 2012. On top of that you can add some utes (5000 or so), and some Caprices (another couple of thousand). Yes they export to the middle east and the USA but I would be surprised if that added 10,000 cars in 2012. The Commodore is in exactly the same boat – there won’t be another one, it will see out the current model cycle just as the Falcon will do.

            Officially Holden are still manufacturing in Australia post-2016, but I wouldn’t be surprised to see that change, especially if there is continued sentiment against subsidising the industry. They don’t make money selling Cruzes and with a fwd ‘Commodore’ would surely lose export opportunities to the same car built in other parts of the world.

            I’d be (and am) very sorry to see the industry disappear, as I think a healthy manufacturing industry is an important thing for a developed country to have.

            As a side note perhaps the third-largest vehicle manufacturer post-2016 will be building military vehicles.

  • avatar
    olddavid

    WTF is a “bogan”? Why would a rational secure adult be concerned if some reticent wanna-be hipster calls you one? My mental picture of Australians doesn’t fit with the characterization of nervously buying a particular car to avoid being thought of as anything abnormal by their snobby judgmental neighbors. Most of the few I’ve met were adventurous youngsters, hitch-hiking or busing the world on what they called “walkabout”. A great idea that should be a universal tradition to allow kids to experience the real world from everyone’s point of view before embarking on a career track. Bogans, indeed. There are probably many factors in the Ford sales decline, but being called some name certainly cannot be in the top 100.

    • 0 avatar
      RobertRyan

      “bogans” are rednecks. You are right it was a combination of the “fickleness” of the buying public (see above); Ford management incompetence i.e. No advertising and difficult economic conditions ; High Australian Dollar.

  • avatar

    come to Brazil Athos. The local car industry will continue thriving for the foreseeable future.

    • 0 avatar
      Athos Nobile

      Thanks for the invitation :). Your second one.

      How’s crime over there? is the police (or the gov) as corrupt as the Venezuelan one? How close is Dilma to the Castro brothers?

      Would be good to have some parrilla and a feijoada with you.

      At the moment we stay here. I want to finish this post grad (to update and upskill myself) and I may have to pull a career or industry change.

      • 0 avatar

        It’s on the decline. I’ve said it here before, but almost 90% of homicides are direct or indirectly linked to drugs. take that away and we’re pretty calm. Don’t fool yourself though, I believe the level of petty crime is pretty high, but on the whole the situation is much improved.

        The police, taken as a whole, is probably not as corrupt as Venezuela’s and neither is the government. Dilma herself is not so linked to Castro though she does pay lip service to her party’s leftist tendencies. She does believe in spending though.

        The fact of the matter is we need qualified people. Engineers, skilled technicians can all find a job. Would you believe the gov wants to import 4000 Cuban doctors?

        If you ever do come down, I’ll pay you a feijoada!

        • 0 avatar
          Athos Nobile

          “Would you believe the gov wants to import 4000 Cuban doctors?”

          Yes, but… I don’t have enough words to tell you that is a terrible terrible idea. Is the Brazilian government paying the Cuban one for that “service”? You understand that what they will do, other than curing people, is indoctrinate them, spy for a foreign country and yours too? There’s an upside and is that they’re so hungry (literally) that they will go into places a Brazilian doctor will NEVER EVER touch. And because of that, people will love them. Which takes us back to their disadvantages.

  • avatar
    RobertRyan

    @doctor olds
    “Your emotions around Mullaly deciding to throw in the towel in Australia are understandable,’

    No it is not Mullaly it is the Ford Corporate culture, that is slowly killing the company as an International entity. Mullaly’s poor business sense is the cherry on top the cake. I have been talking to a former senior engineering Aviation executive who was describing the dynamics of the Airline industry(to simplify the discussion for this message board) He described Mullaly’s unwanted intervention in the Dreamliner project. He wanted the specifications changed AFTER the project had been started. I believe the Dreamliner as a ongoing engineering project was started when he left the Company, but had considerable input prior , in the planning stages but changed his mind during that period.

    • 0 avatar
      Scoutdude

      The fact that Mullaly came from the highly cyclical airplane industry was a huge boon to Ford. W/o his insistence on dumping the brands that made up PAG and mortgaging the blue oval for all it was worth Ford would have also been looking for handouts. He foresaw saw that the annual sales pace could not be maintained and a crash was coming. He is also the reason for the death of the Falcon. As I’ve mentioned here before when he took the reins there were plans to update the Falcon platform and make it Ford’s RWD platform. It would have eventually underpinned the Mustang and Panther cars in the US and instead of you getting a “refreshed” 2014 Falcon you’d be getting a “new” 2014 Falcon or would already have a new Falcon. Shortly after mandating that the Taurus name be reintroduced he dropped the axe on those plans. So yes you can blame Mullaly for pulling the plug on Aussie manufacturing. He was quite enamored with the original Taurus, studied it’s development and took a number of lessons back to Boeing after spending time in Dearborn, according to my Father an executive at Boeing in that era. So he was predisposed to the Taurus.

  • avatar
    doctor olds

    Ford’s board of directors love Mullaly and compensate him handsomely. They apparently (and surely!) know more than you about the industry and the business.

    • 0 avatar
      RobertRyan

      So they are paying at CEO a Kings Ransome!! Now that is unusual! CEO’s of FAILED , BANKRUPTand POORLY PERFORMING companies also got paid Kings Ransoms.
      So is Ford going to do a 180% turn in the US?

  • avatar
    RobertRyan

    @doctor olds
    @Ryan-No response to the comment that AB Volvo builds where they sell? I did my homework by reviewing AB Volvo’s 2012 operating report to provide you the data that 14 of the 16 Volvo truck manufacturing facilities are NOT in Sweden”

    It is not a trick question, Yes Volvo DOES BUILD TRUCKS IN SWEDEN(name the place) and yes the do export to where they are not building trucks, that is why they are a global entity. The other Swedish concern does the same and HAS SOME PRESENCE IN THE US. The other Swedish manufactirer has an almost equally global reach.
    Come on “doctor olds” a 12yr old kid got this right straight away, you with your supposed “Automotive background” should not be struggling.

    • 0 avatar
      doctor olds

      @Ryan- My experience is in the 95+% of the auto market that does not include HD trucks! I don’t claim to know much about them as I have never had any particular interest. Never any professional involvement in the sector.

      You tell me how many HD trucks AB Volvo Builds IN Sweden. I get the impression you really don’t know. The global volume of such vehicles is a sliver of the auto market. OICA lists N.A. for the number of commercial vehicles manufactured in Sweden Swedish ownership of foreign operations is quite irrelevant to your argument that they are successful automotive exporters.

      I have to give up, being unable to read your mind. It would not be a surprise for a 12 year old to know about a lot of things that don’t come to my mind! If you are referring to IKEA, a name a 12 year old my well know, they are owned by Netherlands based organizations and Koenigsegg is certainly not it.

      • 0 avatar
        RobertRyan

        @doctor olds
        Your ignorance in matters like this stuns me and supposedly you were employed by GM???.
        From the Volvo website.
        “The Tuve plant in Gothenburg is the only plant that builds Volvo FH16. The plant also supplies Volvo factories across the world with material”
        By the Way the Tuve plant in 2011, 19 901 trucks were produced there. Another 10 214 complete truck kits (Knock Down), were packed into boxes and shipped to destinations like India, Thailand and South Africa, where they were built up on site.

        Can you provide me a complete rundown of F150 production, how many and where? That was your main competitor at GM.

        • 0 avatar
          Athos Nobile

          The margin on a HD truck is huge compared to what can be had on a car. Even a luxury one.

          I have seen some paperwork and compared it directly with the dealer price for some units. Unfortunately, I can’t generalize or establish a trend from there. But it gave me a rough idea.

          Volvo’s volumes should be in the 200-500K units/year range, considering they own Volvo, Mack, Renault and UD (and I am not up to date to know what else) and are likely behind Mercedes. The core of the “big truck” market is compose by medium range units like the EuroCargo line from IVECO. HD tractors are a good money maker, but not the biggest movers volume wise. AFAIK Volvo doesn’t play in the light truck (below 4T) market.

          So, summarizing, the volumes are low and the pace of change is slower that the one found in passenger vehicles. The investments are still massive.

          HD trucks, maybe even light duty commercial vehicles, are goods that can be manufactured profitably on low scales in high cost countries like Sweden. Cars OTOH play in another league. So this is not an apples to apples comparison.

          • 0 avatar
            RobertRyan

            @Athos Nobile
            Yes it is , but comparing like against like, the same principle applies. Volvo does not have a huge HD market in its home Country. It has managed to develop a huge market globally.
            When competing against PACCAR, Navistar and Mack in their home market in the US, it appeared this European “David” with a funny name had no chance against the established “Goliaths ” of the US Trucking Industry.
            NOKIA has an even more surprising story from an even much smaller and more isolated population base than Sweden. It still is the 3rd best selling handset globally.

  • avatar
    doctor olds

    Actually, the board sets objective measures that determine executive compensation based on achieving results. They are paid for their talent, and much less than many celebrities and sports figures who contribute far less to society.

    I am not a Ford or Mulally fan, just trying to bring a real world business perspective here.

    I have pointed out their $1,000 per vehicle interest cost disadvantage compared to GM would make it hard for them to sustain their current success, the financial bulk of which comes from the F150. Their truck will see some real competition from the new Chevy Silverado and GMC Sierra soon. They have fallen behind Hyundai-Kia in global volume and are very far behind GM in this measure.

    • 0 avatar
      RobertRyan

      @doctor olds
      That is the theory. At many shareholder meetings people have been outraged at the “bonuses” boards give to poor performing CEO’s.
      As far as Ford’s F’series and the Silverado I think the $1000 will not be a major factor.

  • avatar
    doctor olds

    Some people find outrage about just about anything you can imagine, particularly those under the spell of class envy propaganda thanks to their favorite politicians.

    $1,000 / vehicle is about $5.7B a year off from Ford’s bottom line compared with their primary competitor in America, GM. This is a huge number. If you think it is trivial, you really don’t understand business!

    • 0 avatar
      RobertRyan

      @doctor olds
      I am getting the impression you have a very basic knowledge of business finance, that is why I am finding surprising you were any form of management at GM You have previously said that you did not have a clue what Vans GM made elsewhere and showing on this thread very little basic Automotive general knowledge. i.e a 12yrold knows more. Have you worked out yet what the other two Swedish vehicle manufacturers are? it is not hard IF you were in the Automotive Business.

      • 0 avatar
        doctor olds

        Ryan- Your opinions are amusingly childish. It is no wonder you identify with a 12 year old.

        I was in the automobile business, not the automotive trivia business.

        • 0 avatar
          RobertRyan

          @doctor olds
          What as? It would seem not in management.You do not have a clue about your direct competition and are vague at various aspects of GM?

  • avatar
    doctor olds

    Is your reading comprehension really that poor? Re-read what I have written if you really care to understand and learn, though that is not your agenda, obviously.

    Why in the world should ANYONE in an auto company care where a competitor builds, especially in the HD Truck segment in which the company does not even participate or even F150, for that matter?

    Why would you expect anyone outside of a competitor analysis staff to know such trivia?

    Your ideas of what is and what matters are naïve and childish through the eyes of a 40 year experienced engineer.

    • 0 avatar
      RobertRyan

      @doctor olds
      You have never worked in the Automobile industry and that is obvious from your replies. You do not have a clue about basic questions on the industry. Your more of a “fantastist” who wish they had.

      “Why would you expect anyone outside of a competitor analysis staff to know such trivia? ”
      I am still waiting on details of the F150?

      • 0 avatar
        danio3834

        “I am still waiting on details of the F150?”

        The automotive industry is a big place. I have a better idea of how many F150s were built and where from having direct involvement with such things at one time, but how many HD trucks are made in Sweden is about as relevant to my day as the price of tea in China.

  • avatar
    doctor olds

    Live in your fantasy land while I enjoy my pension from a 39 1/2 year career! The difference between us is that I know what I am talking about.

    Again, why do you think an auto engineer, or anyone outside of a competitive analysis group would have any interest whatsoever in what you see as so important?


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