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The Persuader

My personal blog, started in 2006.



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23.05.2013

No surprises from Ford Australia, but it sends the wrong message for manufacturing

Ford’s announcement today that it will end car production in Australia is no surprise, with the closures of Broadmeadows and Geelong. It was always a case of when, not if.
   The official excuse is that no one is buying big cars any more, and the Australian dollar being too strong.
   However, the real reasons are more to do with Ford’s own share price, globalization, and consolidation, a process that began years ago.
   My comments, as well as those from Australian members at the AROnline Facebook group, have constantly targeted Ford for intentionally under-marketing its Falcon sedan, and I made the bolder step of saying it was a plan to shut the plant.
   There is a nugget of truth in the Ford claim. Falcon sales have been trending downwards. But whereas Falcon was once a very extensive range, the current one consists of sedan and ute body styles. The economies of scale are not there, while rival Holden is able to keep the Commodore in the top 10 of passenger car sales in Australia with plenty of models off the same platform.
   Upgrades to Broadmeadows would have cost a huge amount for Ford, and even now, there are aspects of preparing the bodyshells that are outsourced abroad that have proved uncompetitive.
   The Falcon is not a big car by modern standards. It’s smaller in most dimensions (excepting overall length) than the Mondeo. It’s no surprise that there isn’t room for a car with a large engine to fit in between Focus and Mondeo. Big car sales aren’t exactly down—because people are lapping up offerings from Japanese brands (like the Mazda Atenza, or 6) that have the sort of space Falcon has. And having a single two-litre Ecoboost Falcon, with an engine half the usual size for fuel economy reasons, was a half-hearted response (where’s the marketing for that?).
   The changes in leadership at Ford were also a sign that things weren’t going well.
   And have you visited a Ford dealer 
 lately? I’ve been taking photos over the last year at Capital City Ford on what is on their forecourt, to prove my point. Last week was the first time I had seen a Falcon in the main new-car lot in that time (top photo). True, there were always Territorys, but a visitor would have got the impression that Ford is the Fiesta, Focus and Mondeo company. If you don’t push the cars in marketing, and at point of sale, then naturally the numbers will go down.
   Why did I have confidence in taking my position? Simple: Ford’s very predictable. The same technique of under-marketing was used to kill the Contour and Mystique in the US, a car which buyer trends would have told you would sell really well. Ford is very political and head office has suffered from NIH (not invented here). Things have improved under Alan Mulally, but Falcon never fitted in with those long-term plans. We’ll likely see an LWB Fusion as a Falcon replacement—there’s life in the CD platform yet—but the impact on the Australian economy is going to be pretty huge.
   It might slow the brain drain here given the multiplier effect in the Australian economy, but overall, news this big doesn’t send a good signal to the public about manufacturing Down Under—when in fact the statistics, even here in Wellington, show that manufacturing remains a viable industry, if it can be done smartly.
   Holden has managed to do reasonably well with its export programme, so the idea is that one should work more smartly. However, I doubt the Australian motoring and business media are going to focus much on the positives today.

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Filed under: business, cars, globalization, leadership, marketing, media—Jack Yan @ 00.05

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