October 07, 2016

Horse 2172 - Ford Exits Left, Pursued By A Bear

We have arrived at the 7th of October 2016, which means that some time today, the last Falcon ever produced will leave the factory at Broadmeadows and then the doors will be shut on Ford manufacturing cars in Australia. Why this isn't the cause of national outrage is totally beyond me because while governments talk about Australia being the clever country or becoming an innovation nation, business has demonstrated that it's perfectly happy to take our money but doesn't think enough of Australians to give them jobs.

The argument put forward by Ford is that it isn't economical to build cars in Australia but when you're receiving government subsidy payments which exceed your entire operating expenses and are then sending 100% of your profits overseas to take advantage of taxation rules, then forgive me if I think that this, in the words of Henry Ford himself "is bunk". Ford Australia never made a profit because all revenue was consolidated to head office and then there were charge backs to Ford Australia in things like management fees which ensured that they would always be assessed at a tax loss in Australia.
Ford had made applications to Detroit to build the Focus in Australia and I suspect that had they been allowed to do so, it would have benefitted from the pounding that Australian engineers would have put it through; just like the Cruze did over at Holden. The Focus would have undergone the same torture as the Falcon did at You Yangs and it would have resulted in a car which would have been the best in the world. Australians being a parochial and tribal people, would have pit the Focus against the Cruze in the same way as the Falcon and Commodore have been but instead, both Ford and GM have consigned both to market irrelevancy.
The truth is that if they wanted to, Ford could have built the Focus, Ranger, Ikon or any number of other cars in their lineup in Australia but the reason that they didn't wasn't that Ford Australia wasn't profitable but that it wasn't profitable enough. As an importer, they will still pay zero tax in Australia but now they won't really incur any expenses either. Of course, virtually all of the auto makers operate like this and so the eventual departure of Ford, Toyota and General Motors is as inevitable as every other company that manufactures things in Australia.

What I find particularly galling is that what has replaced the Falcon in the Australian lineup, is the  Mondeo which is more expensive but for less car, and the Ranger which replaces the Ute and is also more expensive for less car and coupled with the added bonus of being smaller and worse quality. The Falcon has spent 53 years being engineered for Australian conditions which includes vast unbroken stretches of dirt roads but the Mondeo is a motorway burner which is scared of leaving the black top and the Ranger is a pickup truck which looks like it's only capable of being a tradesperson's vehicle and not a farm car. The Ute was famously invented by Ford in Geelong after a lady wrote a letter and asked for a car which she could drive to church on Sunday and take the pigs to market on Monday.

It isn't just the car manufacturing plant itself which will shut down but all of the incidental industries which surround it which will also fade away. There are the manufacturers of things like gearboxes, electrical units, air conditioning systems, auto glass makers and all of the companies which make all of the little things like light globes, filters, hoses and fittings, clamps, pumps, brake pads and fluids which also all suffer. The evidence that all of these things also go away is obvious every time that I go to work on the train in Sydney, because the site of the old Ford factory in Homebush is now just another housing estate. The place where Cortinas, Escorts, Meteors and Lasers were built, is now just another nondescript bit of road. None of the associated industries are in the area and there is really no need for them to be there either.
I expect that what will happen to the Broadmeadows factory is that rather than someone buying it and making actual stuff, it will be sold off to housing developers who will turn it into housing which will be built on the cheap and the people who own it, will never have to live there. Like the rest of the Australian economy, the only machine that will make any money on the site will be property and the profits will go to the rentier class.
In the broader scheme of things, from this time next year, Australia will be the only country in the G20 which will not produce a car and I've even heard this as an argument that we should change which side of the road that we drive on but really that just seems to me to be a proxy by the motor manufacturers to foist even worse quality cars upon us for the same or more money.

I will confess that I used to have a Ford Ka and it was the best car that I have ever driven and so in this whole automotive holy war, I want to see Henry's signature staring up at me from the centre of my steering wheel, but this is straining the relationship. We currently have a Mazda which is nice but I wanted a Ford Fiesta. Now that Ford have decided to just become an importer like almost everyone else, their star in the automotive constellation will fade in Australia. In my mind, Ford have lost a notch of bias and so they kind of cease to be an automatic contender for my consideration I don't think that I'm so strange as to be atypical in my fads and fancies and if this holds true for me then multiply that by the entire market and Ford Australia has just driven themselves down on road to Irrelevancy Town and I don't know if they have the money to afford the petrol to get back home again.

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