CANBERRA (Reuters) — Ford Motor Company is set to announce it is closing its two Australian auto plants and will cease production in the country by 2016 as it struggles with sliding sales, high costs and a strong Australian dollar, local media reported on Thursday.
Ford plans to close its engine plant in Geelong and its assembly plant in Broadmeadows, both in the state of Victoria, by 2016, News Ltd. reported.
Ford was not immediately available for comment but had planned an announcement for later on Thursday, and unions were bracing for bad news.
"This is not only a bad day for employees, but it is a seriously bad day for the automotive industry," said David Smith, national secretary of the vehicle division of the Australian Manufacturing Workers Union.
Ford, which built 37,000 vehicles in Australia last year, has been in the country since 1925 and employs more than 3,000 people, according to its website.
The prospect of Ford closing its Australian production operations highlights the challenges the country faces as a near decade-long mining boom begins to fade. Policymakers have been hoping other sectors of the economy such as manufacturing, construction and retail will start to pick up the slack, but evidence has been scant so far.
The Australian dollar has traded above parity with the U.S. dollar for most of the past two years or more — it fell to about 97 cents only this week — making it more difficult for Australian manufacturers to compete on a global stage.
Last month General Motors Holden, the local unit of GM, said it was cutting 500 jobs, or 18 per cent of its workforce, as the unprecedented strength of the Australian dollar left it unable to compete with foreign rivals.
Ford's former global head, BHP Billiton chairman Jac Nasser, recently predicted the inevitable demise of the Australian car manufacturing industry, warning the closure of one would lead to shutdowns at all three including GM and local Toyota plants.
Countries including the United States had done more to support car manufacturers, Nasser said, also hitting out at Australian automotive buyers for shunning locally manufactured products.
"It's clear that the general feeling in Australia is they're not patriotic around their automotive industry, and in most countries around the world they are," Nasser said.
Treasurer Wayne Swan said he would wait for Ford's announcement, but added that the government's priority was to support local workers and communities that might be affected.
"We have to support jobs and growth in Australia, and the Australian economy is going through an important transition. Our economy is affected dramatically by a persistently high Australian dollar, which provides challenges for some industrial sectors," Swan told journalists.
Boosted by a stronger dollar helping drive down import costs, Australian buyers have shifted increasingly to carmakers like Mazda and Hyundai, which have seen market share grow on sales of fuel-efficient small cars and popular SUVs.
At home in North America, Ford is faring better and announced on Wednesday it was adding a week of production at most of its factories to build an extra 40,000 vehicles.
The Australian government, however, continues to subsidize car manufacturers and has been determined to keep the industry afloat and protect jobs after Japan's Mitsubishi closed its Australian car plants in 2008.
The government has committed A$5.4 billion in extra assistance for car manufacturers until 2020. The Australian automotive industry employs about 55,000 people and supports 200,000 other manufacturing jobs.