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.…

Answered: What is the effect of the decline of…

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

See similar textbooks

Related questions

Q: and their fix veek. The t BurgerHub rkers eek)

Q: please sir please solve these questions 29-an addition made to the TC or TVC as output is…

A: 29)The addition made to the Total Cost (TC) or Total Variable Cost (TVC) as output is increased by…

Q: Determine whether it is true or false The difference between economic profit and accounting profit…

A: According to given question In simple words economic profit is gradually referred to as in general…

Q: Beyond a certain level of output, the short-run marginal cost witl rise because there is no fixed…

A: Law of diminishing return to scale implies that as the number of a variable input is raised keeping…

Q: Use the line drawing tool to add the short-run and long-run rental housing supply curves to the…

A: Market dynamics is the dynamic interaction of supply and demand, price changes, and consumer…

Q: Explain how the following events may affect the profit rate for a U.S. firm and industry (be sure to…

A: a.The oil is an important and essential commodity which is required for the growth of the economy.…

Q: Distinguish between implicit and explicit costs and give examples of each. In addition, explain how…

A: Explicit Costs are those costs that are directly observed like the cost involved in hiring labor or…

Q: Ali is the managerial accountant in charge of Company A, which sells water bottles. He previously…

A: Given: Fixed cost (FC) = $200,000 Variable cost (VC) = $5 per unit Selling price (P) = $10

Q: QUESTION SEVEN The average total cost of producing a commodity is given by ATC = 1000'g + 100 -…

A: As per the policy , we are allowed to solve the first three parts in case multiple sub parts.

Q: QUESTION 8 Select all that are true regarding marginal profit: O When marginal revenue exceeds…

A: Marginal profit is the profit procured by a firm or person when one extra or marginal unit is…

Q: A firm hasaverage variable Costs of RO 60 per unit, average fixed costs of RO 40 per unit and can…

A: The profit of the profit maximizing firm is maximized at a point where marginal revenue is equal to…

Q: What are the kinds of cost which firm face in short run. Explain theoretically and graphically the…

A: Short run refers to the time period where some of the factors of production remain same throughout…

Q: Use the following data to analyze the condition when the product proce is set at $41 Assume the…

A: Profit maximizing conditions for a competitive market are - Necessary Condition : P = MC Sufficient…

Q: "I know that it's the thing to do," insisted Pamela Kincaid, vice president of finance for Colgate…

A: Calculate NPV of the project with discount rate of 14% and20%.

Q: The difference between economic profit and accounting profit is that economic profit is calculated…

A: Out-of-pocket costs are expenditures that appear to have been incurred. Employee compensation and…

Q: The table below shows the total daily output for a firm producing specialty cakes and operating with…

A: The objective of the question is to calculate the short-run costs for a firm producing specialty…

Q: If your revenue during the first year of business is $48,000, and you incurred $4,000 in expenses…

A: It can be defined as the profit taking into account both the explicit costs of a business and the…

Q: An electronic-parts manufacturer with U-shaped short-run cost curves is producing 15,000 units per…

A: Cost function shows how the cost of the production of a good changes with the change in the quantity…

Q: N = 10000, f = 0.75, S = 0.04, T = 150, G = 100, B rr = 0.1, = 1000, 0.5 = cr= 1. Calculate the…

A: Given, N = 10000 ; population s = 0.04; saivngs rate G = 100; government spending B = 1000; lump…

Q: In the long run, should we perfectly competitive firms a positive accounting profit? Explain your…

A: Perfectly competitive firms are firms operating in a market structure where there are many small…

Q: A firm has the following information on production and costs from past data: Output (Y) Total Cost…

A: Cost refers to the sum of money that is incurred in the process of production of a good or service.…

Q: If the MC is 10 dollars and the MR is 10 dollars in a perfect market and the ATC is 5 dollars and…

A: Maximum profit refer to the amount received by the seller and a price which is paid by the consumer…

Q: (a) Explain the slopes of the long-run supply curves in each industry. (b) If Australia and Korea…

A: (a) Explain the slopes of the long-run supply curves in each industry.(b) If Australia and Korea had…

Q: Suppose that Smith Co sells 15 coats for $69.00 per coat. Each coat costs $44.00 to produce, and…

A: Microeconomic firm theory investigates how businesses maximize profits through manufacturing,…

Q: 11 The average cost (SR and LR) of Q = 50,000 is $10. / 5o,000,10) Ac SRE LR (s0,000, 1a) %3D With…

A: Given Diagram

Q: If SRTC 200+2q+4qwhere q is output, the firm's short-run supply function is a.P = 2 + 8q for P >= 2…

A: Short run is that time period in which some variables are considered to be fixed whereas in long…

Q: With the aid of appropriate graphs, explain the relationship between the Law of Diminishing Returns…

A: Note:- Since we can only answer one question at a time, we'll answer the first one. Please repost…

Q: demonstrate and explain how costs concepts help in managing production between the shortrun and…

A: When businesses change output levels over time in response to anticipated economic gains or losses,…

Q: The table below shows the short-run production function for Mateo's Metalworks. Number of Welders 1…

A: Since you have posted a question with multiple sub-parts, we will provide the solution only to the…

Q: The difference between economic profit and accounting profit is equal to: zero implicit and…

A: Profit is the benefit incurred in trade activities. The difference between cost and the income…

Q: Calculate the break even and profit maximizing levels of output and price. What is the relationship…

Q: 200 + 10q + 0.5g", where q is the number of units they produce. What is the shut-down price for this…

A: (1) SRTC = 200 + 10q + 0.5q2 variable cost (VC) is that part of SRTC which depends on quantity (q)…

Q: Does this mean Firm 2 would abate 2 units?

A: The initial question discussed the optimization of package size and price for gourmet bran muffins…

Q: Compare and explain absolute and comparative advantage by giving examples

A: A country or organization is said to have an absolute advantage, it requires fewer assets—by and…

Q: On Aug 28, 2023 the Factory Efficiency Index (FEI) closed at 10,572.02; the day before it closed at…

A: The factory efficiency index is defined as an index that is used to measure the efficiency level of…

Q: If the economic order quantity 600 units, annual demand 9,000 units, and order costs $30 per order,…

A: The expenses of retaining unsold goods are referred to as holding costs. These charges, together…

Q: In 2002 Boeing reduced employment by 33,000 workers due to reduced demand for aircraft. What does…

A: The marginal revenue product(MRP) is the extra revenue that the firm can earn by employing an…

Q: Initially, the contribution margin for a good is 74.94. If fixed costs are $1191 and an anticipated…

A: Economics is the study of how individuals and societies allocate scarce resources to satisfy…

Q: If marginal revenue is -0.009 241,020 and the cost per unit is 1.5, how much do profits increase by…

A: Profits are the excess of revenue receipts over the costs incurred by the firm. Profits are…

Q: Show the effect of a 25% profit tax on the accounting profit of all firms in a competitive industry.…

A: The profit is the excess revenue made by the firm from the sale of the goods and services from the…

Q: otal Revenue Cost of Lemonade Wages

A: Accounting profit is the subtraction between total revenue and explicit cost. A firm's payments to…

Q: Assume that the following marginal costs exist in catfish production: Quantity produced (units per…

A: Hi Student, thanks for posting the question. As per the guideline, we are providing answer for the…

Concept explainers

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).

Question

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 2016
Published time: May 23, 2013 09:50
The Ford Motor Company has decided to wind down production in Australia after 85 years. The
car maker says the closure of two plants and the loss of 1200 jobs is because of production losses and
the small market.
"Manufacturing is not viable for Ford in Australia for the longer term," said Chief Executive of Ford
Australia Bob Graziano. "Our locally-made products continue to be unprofitable, while our imported
products 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 the
costs of Europe and quadruple the costs in Asia. The average hourly manufacturing salary in Australia in
2011 was $46.29, slightly lower than in Germany but 30 percent higher than the US and Japan, and
nearly 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 both
currently 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, giving
workers 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 another
250,000 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 production
and 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 the
plant closure.
There has been speculation that the Carbon tax is a driving factor behind Ford's decision to halt
production.
Victoria Premier Denis Napthine, though confident of recovery, blames the carbon tax for hiking up
production and manufacturing costs. The government has proposed to ditch the tax this coming
December, but will not likely alter Ford's decision to pack up and leave for cheaper labor and more
profitable production.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Figure: Costs of Oil Production. $50 30 15 Marginal Average Quantity (barrels of oil) Assuming that price equals marginal cost, the profit of producing 8 barrels of oil is: $240. It cannot be determined from the information given. $400 $160.
The gap that exists in a graph between total costs and fixed costs represents the variable costs of the company. True or false
A cashew (a type of nut) farmer, named Ted, generated a large economic profit this year from a great season of increased demand for his nuts. Why is it doubtful that Ted will ever realize these same significant long run economic profits in the future fo his nut farm?
A firm’s short-run marginal cost______________________________. increases with output remain constant within the relevant range shows the change in total costs that results when an additional unit of output is produced includes the cost of machinery and equipment
Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would…
Engr. Sy wants to calculate the break-even point for the number of jobs needed for the new transport service. He has given you the following figures for the first month of operation. Fixed Cost P 59 Variable Cost for each job P2.63 Selling price for each job P18.72 Calculate the break-even point.
The way in which accountants and economists analyse the costs of a firm differ. Discuss the difference between accounting costs and economic costs of a firm.
Discuss the sort run and long run supply of the company. Which factors are important for short-run and long-run? Provide graphical analysis for each period and clearly state the condition for supply of firm in both time horizon.
answer quickly
The followings are the examples of typical economic decisions made by the managers of a firm. Determine whether each is an example of what, how and for whom Should the company expand its business to international market or concentrate on the domestic market? Should the company buy or lease the trucks that it uses to transport its products to market?
- Given the following information, determine the quantity that must be produced so the firm will break even Fixed cost= $30,000 Price= $8.90 Variable Cost per Unit (AVC)=$7.40
Find the value of explicit cost of the firm if the revenue generated is $8000 and the accounting profit is $5500