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Ford to close two production plants in Australia

The closures are expected to axe 1,200 jobs

Ford Motor Company is planning to close its two production plants in Australia by the end of 2016, primarily due to high business costs in the country compared with Europe and Asia.

The automaker, which began production in Australia in 1925, currently operates two  plants in the state of Victoria.

Bob Graziano, president of Ford Australia, said: “Our costs are double that of Europe and nearly four times Ford in Asia.”

Graziano added: “We also modelled some pretty aggressive assumptions about government support and labour costs, some of which we did not think would be palatable to any government or Australian taxpayers. Even with these assumptions the business case did not stack up, leading us to the conclusion that manufacturing is not viable for Ford in Australia in the long term.”

The automaker, however, will retain a product development centre as well as 200 dealerships in the country.

The closures will axe 1,200 jobs, which is almost half of the company’s local workforce.

Over the last five years, Ford Australia posted losses of approximately A$600m and for the financial year to December 2012, the company had a loss of A$141m (US$136m).

The announcement by Ford would be the latest blow for an industry which has been facing pressures in the wake of cheaper imports. General Motors and Toyota Motor have also been struggling to make profits despite the support of local government.

Only 8,500 locally manufactured cars were sold in the country, a dip of 16 per cent compared to April 2012.

The car industry employs around 50,000 people and contributes about A$4.5bn per annum to the economy, according to the statistics of the Reserve Bank of Australia.

Recently, Holden, a subsidiary of General Motors in Australia, reduced 500 jobs due to strong dollar and sluggish demand.