Ford Australia to build Focus hatch in 2011

Ford has announced that it will add production of the next-gen Focus hatch to its Campbellfield plant in Australia, less than a year after the new model is launched across Europe. The first Australian models will roll off the production line in 2011 and will create 300 new jobs for the small Aussie outcrop, which last week announced plans for the closure of its engine plant.

The decision comes as popularity for Australia’s traditional large RWD sedans drops amidst rising fuel costs and tougher competition. By contrast, small car sales have been on a steady rise, increasing from 15.4% to 21.7% of the market over the past ten years.

The new model, which is being designed and engineered in Europe, will be a completely integrated operation and not simply assembly of imported knocked down modules. Ford expects to build up to 40,000 units per year, with a bulk of these earmarked for export to New Zealand and South Africa with more countries to be announced closer to production.

Click ahead for an internal company memo from Ford Australia prez. Tom Gorman.

Hello team,

Although this is the second Driving Forward you've received from me in less than a week, I believe that the news I have to share with you today is exciting and positive, regarding Ford's future in Australia and New Zealand. Against the backdrop of the difficult news we shared with you last week, it also closes the loop in revealing our long-term strategy.

Although difficult news for our employees and the Geelong community, the engine announcement we made last week is definitely the right decision for our company, our vehicles and our future competitiveness.

There is no doubt that it was hard news for everyone to hear and it was definitely difficult news to deliver. However, as I said to you and the media last week, sometimes the hard decision is the right decision.

The media attention given to our decision has been immense – with reactions varying from emotional reporting to other, more balanced analytical reports.

The majority of the negative reporting has centred on confusion about the long-term viability of our company in Australia. We will be putting that speculation to rest with the announcement we will be making today.

You may well ask why we separated our two announcements and left ourselves open to the speculation we've seen. The answer to that is simple – we weren't in a position to be able to confirm this second stage in our plans until today.

We are now ready to outline our total product manufacturing strategy. We started with communication sessions across our sites in Australia this morning and then held a press conference with the Premier of Victoria Steve Bracks, the Federal Industry Minister Ian MacFarlane, the Victorian Treasurer John Brumby, and the Victorian Manufacturing Minister Theo Theophanous, all joining me for our announcement. We have also communicated with our dealers via a Fordstar broadcast.

Like our engine decision, the announcement we are making today is also the right decision. In this instance however, I'm pleased to say, it has no negative connotations.

In 2011, we will become the first Australian car manufacturer to respond to the increasing popularity of smaller vehicles by producing our own small car, the globally successful Focus at our Campbellfield assembly plant.

At least 40,000 Focus cars will be built annually alongside our Falcon and Territory model lines.

Approximately 15,000 will be exported to New Zealand and South Africa, along with other markets, which we'll announce closer to 2011.

That leaves us with approximately 25,000 Focus vehicles to sell here in Australia each year. Importantly, manufacturing Focus here will allow us to increase our local allocation if we believe the market demands it.

We are excited about the benefits that will flow from this new initiative. From a corporate perspective, it will allow us to run our assembly plant at full capacity. It will drive increased utilisation at our Stamping Plant in Geelong and add approximately 300 new jobs across our business.

It is also very positive news for local component suppliers, with talks beginning immediately to determine opportunities for their involvement in the fully integrated manufacturing process.

You may have read speculation that we would announce a CKD assembly program. Producing Focus in Australia will definitely NOT be a CKD program – it will be a completely integrated manufacturing operation.

From a sales perspective, in Australia it will give us all a locally manufactured small car with which to tackle the largest segment.

We're all aware of the factors that have driven increased sales of smaller vehicles - particularly rising fuel costs and changing consumer lifestyles. These factors have all led to a dramatic shift in customer choices over the last few years.

Focus will represent the most fuel efficient and environmentally friendly vehicle produced in Australia. Our current diesel Focus offers fuel economy of 5.6 litres per 100 kilometres and CO2 emission levels of only 148 grams per kilometre. We will be producing both diesel and petrol variants, which will give us a huge competitive advantage.

Make no mistake – this action will make us a leader in the market as we respond to the changing market dynamics. It will also provide us with significant opportunities to increase our share of the private, business and government segments of the market.

Manufacturing Focus in Australia will also improve our ability to ensure Australian and New Zealand specific customer demands are considered more openly as part of the design and development process.

The combination of a fantastic small car that is designed and engineered in Europe and built in Australia will provide us with a unique position in the market.

You may well ask how we can viably produce a small car in Australia when for years the car industry has said it was uneconomical to do so. The answer to that question is simple - a number of factors have changed since small cars were last produced here.

First, as I outlined earlier, the increased demand for smaller vehicles we have seen in Australia means there is much more opportunity for domestic sales in this segment than there was 10 years ago.

Second, domestic production will allow us to better control the vehicles we build and the features they include – when our dealers want them. We will no longer have the excuse of being capacity constrained in the largest vehicle segment when we can control what we build and when.

And third, our ability to access significant regional export markets will allow us to spread the cost of this program over a higher volume base.

There is no doubt that this announcement is good news for our company, our dealers and local component suppliers.

However, in the context of the engine announcement we made last week, we all need to ensure we remain respectful of the difficulties being faced by our colleagues in Powertrain operations.

Both of these announcements are the right decisions for the long term success of Ford in Australia. One of them obviously has much more of an impact on people's lives and we must respect that, even while we move forward in other areas.

In closing, I'd like to thank each of you for your support, particularly over the past week. It has been a difficult period for all of us but, now that our total product manufacturing strategy is clear to the market, we can move forward with our new Falcon launch and rebuilding our market share in both markets.

Let's keep Driving Forward.

Tom