The future of Falcon and Territory

Ford Australia boss Tom Gorman has declined to guarantee a long-term future for the company's flagship Falcon and Territory models. In announcing the decision to build the small Ford Focus in Australia from 2011, Gorman also pointed to “opportunities to walk away” from less profitable business.

“Over time, what you really want to do is pursue the most profitable business so if it gives us some opportunities to really revenue-manage and go after profitable segments and maybe walk away from some less profitable business ... you have that opportunity when you are at full capacity,” Gorman says of the plans to build 40,000 Focus cars at the company's Broadmeadows site.

But Gorman wouldn't directly identify what those less profitable models might be.

“It is probably inappropriate that I do that today (identify the less profitable business),” he says.

“You can imagine that in certain segments we have better margins than in others ... that is a hypothetical question until we are at full capacity.”

Gorman's comments come after CARSguide revealed last Saturday that the Territory might be under threat in future production plans. With only three models to be built in Australia; Focus, Falcon and Territory — the obvious targets for rationalising are the two large cars which compete in shrinking segments.

While Falcon will still be relatively new in 2010 once the switch has been made from the inline six to a new V6 engine and with a high fleet demand, Territory will not have those defences.

Gorman says initial Focus production projections of 40,000 could expand with additional export opportunities and continued local market growth. “Of the 40,000, we are anticipating 25,000 domestic and 15,000 will be export,” he says.

“Now if we do 2000 Focus we are walking around like it's a real success but that has to become a bare minimum for us. Some of the other players like Corolla and Mazda3 routinely do 3000 a month. If we can lift our numbers to 2500 a month religiously that is 30,000 right there.”

Gorman says Australian Focus production will initially be in right-hand drive only, with exports to South Africa and New Zealand but additional export markets are being identified.

“This is a watershed event for us in Australia, really going after what is the largest segment of the market and having the opportunity to control that product locally should be a huge advantage for us,” Gorman says.

“If you go back 10 years, small cars used to be less than 100,000 units in the marketplace and this year there is likely to be 220,000-225,000 in Australia. We are not happy as a distant number three player and localisation should help us.”

The good news flow-on for Ford, less than a week after announcing the 2010 closure of the Geelong engine plant and subsequent loss of 600 jobs, is that Focus production will have benefits for Ford and its suppliers.

Plus there are 300 extra jobs at Broadmeadows and unspecified further job opportunities at Geelong.