CLIMATE SPECTATOR: Ford's thirsty car failure

Climate Spectator

Yesterday car manufacturer Ford announced 440 people, primarily from its manufacturing operations located in Melbourne and Geelong, will lose their jobs. According to Ford Australia, the closures are a direct response to changing customer preferences, which have driven a continued industry-wide decline in the sale of large vehicles. Ford Australia president Bob Graziano said: "Customer preferences are continuing to move rapidly towards more fuel efficient vehicles.”

The tragedy is that this has been a like watching a train wreck in slow motion, with government complicit in the fiasco.

As described in the March Climate Spectator article, Killing manufacturing with kindness, a neighbour of mine, a former design engineer at Ford, related a sad story to me that illustrates this point. The Ford Australia president at the time addressed the staff a few years ago to announce that the company was in financial stress. High oil prices had led buyers to turn away from Australian-made cars in favour of more fuel efficient imported alternatives.

At this point a frustrated engineer pointed out to the CEO that ‘Blind Freddy' could have seen this coming many years previously. He lamented to the CEO that over that period they had engine design and development equipment sitting idle. This could have been used to develop a highly fuel efficient diesel or smaller capacity turbo-petrol engine and ensured the ongoing viability of the Australian car.

As the chart below illustrates, out of the top 15 motor vehicle suppliers to the Australian market in 2010, Ford had the worst CO2 emissions and fuel economy due largely to its heavy dependence on the thirsty Falcon and Territory.

Corporate Average CO2 Emissions for Light Vehicles (2010) in Australia


Source: Australian Government Department of Infrastructure and Transport (2011)

The thing is that even back in 2002 and 2003, when I was working on fuel economy issues in the government's Greenhouse Office, it was plainly evident that Ford's domestic manufacturing was incredibly vulnerable to rises in oil prices. And in 2005 and 2006, with a spike in oil prices, this vulnerability was thoroughly exposed.

Yet the company took until 2011 to integrate a diesel engine into its Territory (which now comfortably outsells the thirsty petrol six), and only just introduced a more economical 4-cylinder alternative for the Falcon in April this year.

A large part of this sluggishness comes down to the fact that Detroit ultimately calls the shots and hasn't been all that interested in allowing its Australian subsidiary to address its fuel economy vulnerability. Unless, of course, Australian governments cough up the money to pay for it.

But it's also been a product of governments' unwilling to take the tough decisions that would have forced Ford to lift its socks.

As described in Climate Spectator yesterday (Australia's laughable fuel economy standards, July 17), the current and past Commonwealth governments have dragged their feet on motor vehicle fuel economy standards, and we lag the rest of the developed world and even some developing countries.

In addition, fleet buyers, particularly government fleets, have been happy to spend other people's money pursuing their Peter Brock and Dick Johnson delusions, instead of buying cheaper and more economical motor vehicles.

One in three Australian-made cars are sold to government fleets, and these public servants like to furnish themselves with cars capable of acceleration times that not that all that long ago would have rivalled a Porsche (the Ford Falcon accelerates from zero to 100km/h in 6.9 seconds).

I had to deal with this mentality first-hand when, for my past sins, I was assigned the job of improving the Commonwealth government fleet's fuel economy. In a process reminiscent of Yes Minister, senior public servants progressively watered down a pronouncement by John Howard to improve the fuel economy of the Commonwealth fleet so it didn't affect their own company cars and also provided an extensive range of other carve-outs. At best it would add slightly more Mitsubishi Magnas and Toyota Camrys and slightly less Falcons and Commodores.

It was a joke by any measure, yet the resistance to even this was extraordinary. I was told by fleet administrators that the target was not able to be implemented as there would be incredible resentment at having to drive – shock, horror – 4-cylinder vehicles. One person said to me that until Peter Brock started driving a Camry she would be unable to follow-through on our requirement!

The cars affected weren't part of any remuneration package. They were pool vehicles to be used solely for work purposes during working hours.

We should feel sorry for the 440 workers who are about to lose their jobs. But no one should feel sorry for Ford Australia who chose to specialise in gambling against the oil price and against efforts to lower Australia's carbon emissions.