What is the effect of the decline of Ford Australia’s productivity on its cost efficiency, production, and profit? discuss. Ford to shut down Australian production by 2016Published time: May 23, 2013 09:50The Ford Motor Company has decided to wind down production in Australia after 85 years. Thecar maker says the closure of two plants and the loss of 1200 jobs is because of production losses andthe small market."Manufacturing is not viable for Ford in Australia for the longer term," said Chief Executive of FordAustralia Bob Graziano. "Our locally-made products continue to be unprofitable, while our importedproducts continue to be profitable."Analysts estimate the company has approximately $580 million in losses in the last fiscal year,and profit fell by 72 percent. Ford's decision in Australia follows effort to also close shop in Europe.Graziano told reporters Australian production was no longer sustainable, as it was double thecosts of Europe and quadruple the costs in Asia. The average hourly manufacturing salary in Australia in2011 was $46.29, slightly lower than in Germany but 30 percent higher than the US and Japan, andnearly 75 percent higher than Brazil, according to US Department of Labor data.This could be a warning for other foreign auto makers- Toyota and General Motors - which bothcurrently plan to keep operations running.The Australian government already highly subsidizes the car industry through a $5.4 billion fund,$34 million of which is allocated to Ford Australia.Two plants in Melbourne and Geelong in the state of Victoria will be closed by 2016, givingworkers 3 years notice, and offering a government rescue support package of $39 million.Australia's auto industry directly employs 45,000 people across the country, and another250,000 indirectly, according to the Federation of Automotive Products Manufacturers.Australia's population in 2012 was 22.8 million, a small market to sustain both local productionand sales.Car registrations in Australia decreased to 93,423 in April of 2013, down 1,531 from March,indicating a drop in sales.Metals and and plastics industries, two of Australia's core, are expected to feel the impact of theplant closure.There has been speculation that the Carbon tax is a driving factor behind Ford's decision to haltproduction.Victoria Premier Denis Napthine, though confident of recovery, blames the carbon tax for hiking upproduction and manufacturing costs. The government has proposed to ditch the tax this comingDecember, but will not likely alter Ford's decision to pack up and leave for cheaper labor and moreprofitable production.

Productivity can be referred to as the increase in the total output using the same amount of inputs.…

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What is the effect of the decline of Ford Australia’s productivity on its cost efficiency, production, and profit? discuss.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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