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Thread: Australia's Industry on Brink

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    Australia's Industry on Brink

    Ford’s Mulally Warns Oz PM of Industry on Brink
    By Alan Harman

    There’s a sense of disquiet in the Australian auto industry as Ford Motor Co. President and CEO Alan Mulally flies in to tell Prime Minister Kevin Rudd he will need to freeze car import tariffs at 10%, not cut them to 5% in 2010 as planned, if the domestic auto industry is to survive.

    Mulally’s meeting with Rudd today follows Ford Motor Co. of Australia Ltd.’s announcement it is slashing production up to 25% and laying off up to 300 to 350 workers in the face of slowing sales of locally built models under pressure from a slowing economy, high fuel prices and a flood of imports.

    In mid-November, Falcon and Territory production will be cut to 40 vehicles an hour from 52, dropping the daily build rate to 285 from 365.

    The industry was shaken further when Ford Australia President William (Bill) Osborne announced his resignation after just six months in his current position. He will take over as CEO of an unnamed non-automotive company in the U.S.

    Osborne joins his predecessor, Tom Gorman, as Ford Australia’s second boss in six months to exit not only the company but also the industry.

    Osborne still will be in Canberra with Mulally for the talks with Rudd and Industry Minister Kim Carr.

    The government is considering its response to a review of future aid for the auto industry led by former Victoria Premier Steve Bracks. The review calls for the tariff rate to be halved as scheduled.


    Ford’s Mulally campaigns for tariff freeze in Oz.
    With Ford Australia’s decision to cut production and jobs, car makers and labor unions are stepping up a campaign calling for the tariff to be frozen and for the government to kick in more financial support.

    They say Ford Australia’s plan to reduce production by 18,000 units – the company built some 73,000 vehicles last year – will be a disaster for the car parts sector. Some estimate the ripple effect will cause thousands of job losses.

    The general rule of thumb is for six or seven additional jobs to be lost for every position eliminated at a vehicle assembly plant, Australian Manufacturing Workers Union National Secretary Dave Oliver says.

    The Ford cutbacks are going to have a significant impact, he says, and the government needs to act with caution and reject the proposal to further slash tariffs, because the industry needs continued support as it adapts to a changing global market.

    Related Stories
    Oz Auto Industry Disputes Government Plan to Cut Import Tariffs
    Ford Australia President Resigns; Worker Layoffs, Production Cuts Ahead
    “The proposal to further slash tariffs would put Australia out on a limb ahead of the rest of the world. Australian’s are sick of having their jobs martyred for the theory of free trade,” Oliver says in a statement.

    “At a time when the rest of the world is maintaining and freezing their tariffs, a reduction in Australian tariff protections will have serious trade implications.”

    Federation of Automotive Products Manufacturers CEO Anna Greco tells the Melbourne Age the Ford Australia move will put even more pressure on the parts sector where she says many companies are teetering on the brink.

    “When your industry is already under incredible pressure, every additional pressure ends up making more and more businesses marginal,” she says.

    Industry Minister Carr tells Sky News TV he expects further job losses throughout the Australian industry.

    “We know that the industry is facing these acute challenges, and I can’t say with any certainty that there won’t be further announcements in regard to job losses,” he says.

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    Re: Australia's Industry on Brink

    Mr Ford president exhibits a lot mor candor about what's ailing the car industry off shore than they do here in the states. It's about the tariffs, not "quaaaaaaaaaaality" or building what people waaaaaaaaaaaant as most people sing about here in the US

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    Re: Australia's Industry on Brink

    Quote Originally Posted by Henry
    Mr Ford president exhibits a lot mor candor about what's ailing the car industry off shore than they do here in the states. It's about the tariffs, not "quaaaaaaaaaaality" or building what people waaaaaaaaaaaant as most people sing about here in the US
    Yes, that's true. But as far as the US market goes, there's also the cold-cocking that Ford (and GM and Chrysler) got by putting most of their eggs in the SUV/truck basket - on the assumption that low gas prices would stay low indefinitely. That was a titanic error of judgment. Toyota, Honda and Nissan are suffering setbacks in the truck/SUV area, too - but they have the fallback of a range of reasonably efficient smaller cars that our domestics just don't have.

    As an example: It's unforgivably stupid that GM tool so long to get the Cobalt and Astra intro production (the Cavalier should have been retired circa 1995). How did Chrysler allow itself to piss away the Neon's market? Why is the Ford Fiesta a 2010 model?

    Meanwhile, these companies are paying their CEOs as much as $30 million (Mulally) at the same time they're trying to force long-time employees and retirees to accept pennies on the dollar for the modest bennies they agreed to pay them as part of their legally binding employment contracts.









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    Re: Australia's Industry on Brink

    Quote Originally Posted by Eric
    Quote Originally Posted by Henry
    Mr Ford president exhibits a lot mor candor about what's ailing the car industry off shore than they do here in the states. It's about the tariffs, not "quaaaaaaaaaaality" or building what people waaaaaaaaaaaant as most people sing about here in the US
    Yes, that's true. But as far as the US market goes, there's also the cold-cocking that Ford (and GM and Chrysler) got by putting most of their eggs in the SUV/truck basket - on the assumption that low gas prices would stay low indefinitely. That was a titanic error of judgment. Toyota, Honda and Nissan are suffering setbacks in the truck/SUV area, too - but they have the fallback of a range of reasonably efficient smaller cars that our domestics just don't have.

    As an example: It's unforgivably stupid that GM tool so long to get the Cobalt and Astra intro production (the Cavalier should have been retired circa 1995). How did Chrysler allow itself to piss away the Neon's market? Why is the Ford Fiesta a 2010 model?

    Meanwhile, these companies are paying their CEOs as much as $30 million (Mulally) at the same time they're trying to force long-time employees and retirees to accept pennies on the dollar for the modest bennies they agreed to pay them as part of their legally binding employment contracts.
    Yeah, its pretty sick. These CEO's should actually pay to work there with the job they have done.

    Another reason US companies can't compete is that they have let bean counters run the companies. That's why replacement parts are low quality made in China crap.


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