Ford to close in Australia?

Car manufacturer reported to close its local factories

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published May 23, 2013 9:34 am AEST

Ford Australia is expected to announce the closure of its Broadmeadows car factory and its Geelong engine plant, according to Melbourne's Herald Sun.

The struggling car maker was due to announce its financial results today, but News Limited reports that the media conference, expected to be held around 10.45am, will be "more than that". The paper reports that Ford will become an import-only brand. Just last month, Ford's Asia-Pacific president Dave Schoch cast doubts over its Australian operations, saying the company has made commitments to the Australian-made Falcon and Territory until 2016, but had nothing beyond that to announce.

Sales of Ford's Falcon have fallen to the lowest levels since the Broadmeadows factory opened in 1960, with Ford's overall sales in Australia last year, lower than 20 years ago. Consumers have taken a liking to smaller passenger cars and SUVs, with sales of all large passenger sedans sliding. The strong Australian dollar has made imports cheaper, while our high labour and input costs have made locally made cars uncompetitive.

The news has implications for the local manufacturing industry, with more than 55,000 employees in the automotive industry and supporting another 200,000 jobs, including industries such as car parts, steel manufacturers like BlueScope Steel Limited (ASX: BSL) and Arrium Limited (ASX: ARI) ex-OneSteel, and car dealerships owned by the likes of AP Eagers Limited (ASX: APE) and Automotive Holdings Limited (ASX: AHE).

The news comes as Holden unveils its all new Commodore in Canberra today. Ford is reported to have said that the timing is a coincidence, but its news looks likely to push the Commodore's launch onto the back pages.

Foolish takeaway

We'll hear from Ford officially at around 10.45am. The Federal government has vowed to support workers that may lose their jobs, with an estimated 1,200 workers directly affected. One wonders how long it will be before General Motors Holden is forced to follow Ford, and become an import only brand.

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