Ford idles its factory as FBT puts brakes on sales

August 22, 2013 | News | No Comments

Author: Joshua Dowling
Publication: carsguide.com.au

Ford warns of more shutdowns if sales slide and FBT changes are not reversed.

Struggling car maker Ford has foreshadowed more production shutdowns as the Rudd Government’s changes to Fringe Benefits Tax puts the brakes on Falcon sales. Ford factory workers began the first of 12 “down days” today and tomorrow as the company admitted forward orders for the Falcon sedan slumped in the fortnight immediately after the FBT changes were announced on July 16.

“We can confirm today is the first of extra down days in August and September as a direct result of the proposed changes to FBT,” said Ford Australia spokeswoman Sinead Phipps. “We saw lower sales in the last two weeks of July and our dealers have told us they expect Falcon sales to dip in August and September. We will see what happens after the election to decide if we need to schedule more (production) down days.”

In July Ford reported the Falcon’s lowest ever monthly sales result — just 594 deliveries — in the car’s 53-year history. The Victorian Minister for Manufacturing, David Hodgett, said an emergency meeting of the Premier’s Ford Taskforce was held on Tuesday and that the Victorian Coalition Government was “deeply concerned” about the impacts of the FBT changes on the car industry.

This is a dark day for automotive manufacturing in Victoria,” said Mr Hodgett. “Ford has the first of six stop work days today, with the second tomorrow. This is just the tip of the iceberg in terms of the impacts being felt right across the sector.”

The Federal Chamber of Automotive Industries has forecast a 20 per cent drop in sales of Australian-made cars — twice the rate of decline of sales of imported cars. “The impacts of Kevin Rudd’s ill-considered decision are huge. Dealers are already reporting drops in sales and up to 70 per cent say they are facing the prospect of laying off staff,” said Mr Hodgett. “These FBT changes are a serious blow to the automotive manufacturing industry, which already faces considerable challenges including the high Australian dollar, inflexible workplace laws and the carbon tax.”

Earlier this week the Australian Fleet Lessors Association reported a 37 per cent drop in forward orders for fleet cars in the first two weeks of August. “It is clear that these FBT changes were proposed with no consultation to industry or studies into the effect they would have,” said Mr Hodgett. “I call on Kevin Rudd to reverse his policy on changing the FBT, before it does irreparable damage.”

Last week, the chief operating office of Ford, Mark Fields, warned the FBT could kill the Falcon ahead of its October 2016 deadline. Mr Fields said he and his Detroit colleagues were monitoring the impact of the FBT closely.

We will continue to monitor the environment … including things like the FBT. I’m not going to provide an opinion on why the government decided to do that . They have their reasons for doing that. But as a manufacturer we have to respond to that and clearly we have seen some impact to it. That’s why we’ve taken the 12 down days … because it comes back into our strategy of matching production to demand.”

The chief executive of the Federal Chamber Automotive Industries, Tony Weber, said: “As each day goes by nothing has changed our view about the negative impact of the FBT changes. Now the impact is even being seen by executives from Detroit.”

Ford now employs 1200 manufacturing workers after 340 redundancies in November 2012, of which only 140 were voluntary. The company says it is not yet considering any further job cuts but would look to introduce further down days if demand continued to slump.

Our global policy is to match factory output with customer demand,” said Phipps. Ford currently builds 148 cars per day, including Falcon sedan and ute and the Territory SUV. At its most recent peak in 2004 and 2005 Ford built 520 cars a day.

This reporter is on Twitter: @JoshuaDowling

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