Ford has confirmed it will cease its manufacturing operations in Australia by October 2016 with the loss of 1200 jobs.
Ford Australia President and CEO Bob Graziano said the company made a loss of A$141 million (NZ$169m) after tax in the last financial year, with a loss of A$600 million (NZ$720m) over the last five years.
Ford Australia employs more than 3500 people at its manufacturing plants at Broadmeadows, in Melbourne's north, and Geelong.
In January last year, the federal government contributed A$34 million (NZ$40.8m) to Ford's A$103 million (NZ$123.6m) production upgrade, and the Victorian government an unspecified amount.
At the time the company said the upgrade would mean the Territory and Falcon models would continue to be made in Victoria until 2016.
Mr Graziano said the costs of manufacturing cars in Australia was uncompetitive.
"Manufacturing is not viable for Ford in the long term," he told reporters at Broadmeadows early this afternoon (NZ time).
Mr Graziano said all entitlements would be protected for the 1200 employees whose jobs are affected, and the company will work through the next three years to provide support.
"During the next three years it's our intent to manufacture [the Falcon, Territory and Falcon Ute]," he says. "We will continue to work with our workers here during that transitional phase."
"The decision was not made lightly ... we understand the very real impact of this decision."
"It just doesn't make sense for us longer term."
The reduced demand for large cars was a factor in the company's decision, Mr Graziano said.
"There's been a significant change in terms of the total number of vehicles sold in the large car segment," he said.
The company would still roll out the new models of the Falcon and Territory next year but production would cease in October 2016, Mr Graziano said.
Ford would maintain a presence in Australia beyond that date.
"Ford will remain a significant employer in Australia, with more than 1500 team members, as will our network of more than 200 dealers around the country," he said.
Mr Graziano said despite efforts to restructure the business, locally made products continued to be unprofitable while imported products were profitable.
"Our cost structure remained uncompetitive ... it is double that of Europe and four times that of Ford in Asia," he said.
Mr Graziano said the company had made aggressive assumptions about possible future government car industry support and lower labour costs, which he did not think would be acceptable by Australians and would not have made the business profitable.
"We did not leave any stone unturned but even with these assumptions the business case did not stack up," he said.
Mr Graziano said around 650 jobs would be lost in Broadmeadows, while 510 positions would go at Geelong.
He said no decisions had been taken on the company's motorsport teams or about its premium car brand Ford Performance Vehicles.
Australia's Treasurer Wayne Swan promised the "government will do everything within our power to support workers and local communities that may be affected by a decision taken by Ford".
Acting Industry Minister Craig Emerson said ensuring workers and their families in affected communities were looked after was a "top priority".
"Workers need to be given every opportunity to find new jobs and regional economies and communities need to be assisted in securing new investment and employment opportunities,'' Mr Emerson said.
Australian Manufacturing Workers Union national secretary Paul Bastian told Melbourne radio station 3AW manufacturing was ''in crisis'' in Australia and called for a stakeholders meeting with government.
"We want to take politics out of it and have a bipartisan approach to ensure we have a manufacturing industry,"
"We don’t want jobs played as a political football ... it's a disaster for workers.
"We just can’t stand by and say 'that’s how things go'."
The Australian-produced Ford Falcon has been in sales freefall for the past decade. In 2002, the Falcon sedan and wagon accounted for 54,629 sales locally, while last year that number had dropped to just 14,026.
Ford Australia also produces the Falcon Ute, which has also seen a drop in sales over the past 10 years. In 2012 just 5733 units were sold, compared to 17,883 in 2002.
The Falcon-based Territory SUV has bucked the trend, however, cashing in on the growing consumer preference towards SUVs. It sold 13,583 units in 2004 when it was introduced, and in 2012 managed 14,646 sales.
Australian-made car sales have recently hit record lows, including the Holden Commodore, which held the top spot on the sales charts for 15 years straight.
The Ford announcement comes at the same time as Holden is launching its new-generation VF Commodore.
-Fairfax Media Australia and AAP
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