Monday, May 27, 2013

The Real Cost of Falcon's Demise!

Before we get all emotional about why Falcon failed to get traction outside the Australian market we need to be reminded of the major contributor to the end of this iconic model.

The answer is simple: independence! Ford Australia is known colloquially in Dearborn as ‘The Falcon Motor Company of Australia’ and that’s the major reason for its ultimate demise. However, others also paid a price for this independence!

The Ford Australia Falcon Team (over the past several decades) fought so hard to retain its uniqueness and its existence, that it simply slipped from relevance to the Ford global model catalogue.

It could not be profitably exported because it simply did not align with any other global Ford model, and its unique parts, service and training requirements meant that it was simply too costly to ‘support’ in export markets.

This ‘uniqueness’ has also had a serious and very deleterious, knock-on effect for the Australian parts suppliers who supported Falcon. Because Falcon was both uniquely Australian, and outside the Ford global supply chain, Ford Australia virtually forced Australian component suppliers to produce unique components for a car (Falcon) that could not be used in any other Ford car anywhere else in the world. Thus, Falcon was so unique, that its demise will take down an unnecessarily large number of Australian component manufacturers. Some news commentators have said that for every single job lost in Ford manufacturing, there will be four jobs lost in the component industry.

This, by itself, is a travesty. Ford Australia, by keeping Falcon going, against all logical assessment, and spinning off on a trajectory far way from Ford’s global product developments, has not only cost Ford employees their jobs, but also many more jobs in the fragile Australian automotive components industry.

Equally sad, is that if responsible members of successive Australian federal governments had taken a cold, hard assessment of the local manufacturing situation (instead of the politically-expedient course of pumping money into a dead and dying business), would understood that investing in helping Australian component manufacturers gear up to supply global makers - would have had a greater, and more beneficial outcome to retain local manufacturing and design skills.

Australia’s component manufacturers have demonstrated many, many times that they are flexible, innovative and energetic in developing solutions; manufacturing to tight budgets and deadlines; and responding positively to the huge demands placed on them by Australia’s car manufacturers. When you hear manufacturers talking about ‘getting costs down’ you can bet a component supplier somewhere is getting kicked to cut their profit margins and sell their goods to manufacturers for a cheaper price.

Australia’s component companies have existed completely at the mercy of the car makers. They need their business, just to stay afloat, and the fact that past and present governments have not recognized their world class skills is another travesty.

This is where Australia’s true future in manufacturing lies. Just because a car is a big, visible component hides the fact that individual, smaller components are manufactured to fine tolerances, quality and competitive cost, and this ignores the real value of investing in this sector.

If there are four jobs in the component sector that will be lost for every Ford job, shouldn’t that suggest that the component industry is bigger, and more deserving of support than the big car corporations?

Just think, properly supported and encouraged, our component makers could be making bits and pieces for every car manufacturer in the world and exporting them!

Boy, wouldn’t that be a turnaround, and a timely slap in the face for the car companies!

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