The auto industry has faced many obstacles over the past few years, but things have already started to pick up, and a fine example of this is how General Motors has been able to dig themselves out of a hole. Ford was in a bit of crisis as well, but instead of relying on a government bailout, they were able to offload a few of their investments to put some more money back in the pot.
Ford may have escaped the hardship that GM had to endure, but things have still been a little tough for them, but even more so in Australia. We say this because there’s now news that Ford Australia is to terminate car production in 2016, and the culpability is down to a strong currency.
Because the currency is so strong this is causing issues for manufacturers, as costs are much higher for them. There are two Ford Australia plants; the engine plant will close first followed by the vehicle assembly plant. There will be a total of 1,200 job losses, which will have an adverse effect on the economy.
When both plants close by 2016 this will be a sad day for Australia, as they have been producing Ford vehicles since 1925. However, nothing can be done with the Australian dollar worth more than the US dollar, along with declining sales. To put things into perspective, The New York Times reports that Ford Australia costs are four times that of their Asian counterparts and twice as much as Ford in Europe.
Let’s hope that General Motors Australia does not go down the same route, as they have already cut 18 percent of its workforce, if this were to happen then it could be an even bigger blow to the auto industry in Australia. All the time that their dollar is trading so high there will always be that risk.