Headlines proclaiming that Ford, Holden and Toyota are pulling out of Australia have stirred a range of claims, everything from Australia losing its engineering skills to future problems getting servicing and replacement parts.
The scale of workforce redeployment and job losses is distressing. The companies will stop bolting together a handful of models in Australia but the reality for car buyers is that very little will change.
Testing facilities to remain
All three companies have committed to retaining their local automotive testing facilities along with much of their engineering, design and development work.
Headlines don’t show that, at present, the three companies import about three-quarters of their total Australian model range. When buying a fully imported Ford Mondeo or Holden Captiva, for example, you don’t question maintenance and parts supply, partly because Australian consumer law requires manufacturers to support the vehicle for a reasonable time after purchase and general maintenance and repair is a sound business in itself.
Today’s automotive companies must think globally. While computers can rapidly churn out all manner of body styles, the designs are based on volume platform sharing, which is the key to achieving the impressive value-for-money trend we have witnessed in the past decade.
The world is shrinking
It’s no longer economic to design, engineer and construct a mainstream vehicle platform for a small market. And, as communication technology shrinks the world, the argument that a production line must be next to engineering facilities is no longer true.
Vehicle assembly lines can be set up anywhere, car companies regularly demonstrate their ability to do just that with changing economic environments. But engineering, design, testing and development come first.
The increasing refinement and popularity of light commercial utilities, SUVs and AWD wagons has undermined the appeal of Australia’s traditional large rear-wheel-drive sedans, and Australia faces a paradigm shift.
Ford Australia, for example, was responsible for the design and engineering of the successful locally built Territory; and the Ranger and Everest models, assembled in Thailand.
History of innovation
From the Caldwell All-Wheel-Drive/All-Wheel Steer vehicle first demonstrated on the sands of Botany Bay in 1913, to Lew Bandt’s unique coupe/utility concept and the world-beating Repco Brabham, Australia has consistently produced innovative design and engineering.
When producing the new Monaro in 2001, Holden’s small team of engineering decision makers chose to bypass the expensive and time-consuming “Alpha and Beta” panel fit and structure testing. Instead, they took the design directly from the “Unigraphics” computer program to production, a process only previously used in the aerospace industry.
Feeding innovative engineering today, Australian universities embrace the Society of Automotive Engineers “Formula SAE” program, where students design, engineer and construct a formula vehicle as part of their engineering studies.
Program delivers skilled engineers
The program is designed to meet the needs of the automotive sector and challenges students to fully program-manage and cost their project. It means that car companies have a ready, local supply of skilled engineering expertise. Australia’s formula SAE teams are consistently among the best in the world.
Demand for engineers at the proving grounds will grow.
Britain’s vehicle assembly plants faced a similar rapid decline in the 1980s. In his article for the London Telegraph newspaper titled “The fall and rise of the British car industry”, journalist Mike Hawes wrote that the biggest drivers of growth in the UK have come from a three-pronged approach. Substantial yet focused investment, collaboration with the workforce and suppliers, and a fundamental shift to areas of expertise. In the UK’s case – premium products. Today, 80 per cent of the cars designed and manufactured in Britain are for export. One of the best examples is the Jaguar Land Rover group (JLR). Its new owners, India’s Tata, has invested substantially over five years, doubled sales and nearly tripled annual pre-tax profits.
Play to your strengths
Rolls Royce quadrupled sales to 4000 units per annum over the same period. It’s a matter of playing to your strengths. Blossoming sales of Britain’s prestige cars, principally Range Rover, Jaguar, Aston Martin, Rolls Royce and Bentley was summed up by Professor David Biley of Aston University: “This drive-up market has meant that growing middle classes in emerging economies are clamouring for the cachet that having a luxury British car delivers”.
We need to imagine an equivalent cachet of “designed and engineered in Australia.” As Mike Wright, executive director at JLR says: “if you’re not designing and engineering great new cars to manufacture and then sell them around the world ... that’s where you’re in trouble.”
While the network of original equipment suppliers to local vehicle manufacturing will reinvent themselves, there are automotive component suppliers who have prospered globally without a local supply contract. For instance, Britain’s specialist engineering firms and component suppliers chose to produce world-class components for any industry that came knocking.
Research and development
Australia is often cited as one of the best countries in the world for automotive research and development. Well away from the world’s gaze, with a vast landscape, significantly variable weather conditions and arduous back roads and tracks.
Toyota says Australia is its benchmark for worldwide “rugged” suspension development, pointing out that its latest version of the Hi-Lux was developed here.
Melbourne, in particular, is in an enviable position, ringed by three world-class vehicle testing facilities, capable of refining and engineering products for three of the world’s largest automotive manufacturers, Toyota, General Motors and Ford. All three have committed to retaining and developing facilities here as part of their global strategy which has the potential to see Victoria become a centre of excellence for automotive design and engineering.
Ford says it will be Australia’s largest auto employer post 2017, with about 1500 highly-skilled employees principally across engineering and design.
The Broadmeadows head office, currently under reconstruction, will become the Asia Pacific Product development Centre (APPDC), which will provide the headquarters for a design and virtual reality centre and oversee the world-class Lara/You Yangs Proving Ground and Geelong research, development and testing facilities.
Ford’s program director Asia Pacific, David French says the “facilities will host the full range of automotive design, engineering, development, testing and validating vehicles for the globe”.
Following nearly $2 billion invested over the past six years, including $300 million in 2015 alone, Ford’s Australian engineers pioneered an industry-first crosswind prediction method, enhancing its electric power assist steering, Everest’s forward collision warning and simulation testing of fuel economy in powerful yet efficient diesel engines.
Toyota’s proving ground at the Linfox facility in Anglesea, is less well known. Here, Toyota develops heavy-duty off-road vehicle performance, dynamics and reliability testing for “tough markets”.
Toyota will keep all vehicle evaluation, engineering of accessories and training facilities currently in Victoria.
“Post-2018, these functions will be relocated to Altona as part of a centre of excellence,” says Mark Dobson, Toyota’s product planning manager.
Toyota will employ more than 130 staff on engine performance, competitor benchmarking, software and accessory design and engineering for Oceania.
“More than 80 per cent of the world’s road types are found in Australia ... It is a great environment to confirm and validate performance testing of 4x4 suspension or steering calibration, and testing under-body armour, bull bars and tow bars. Australian engineers and technicians have an innately strong car culture, which for OEMs (original equipment manufacturers) means they achieve a lot with very little,” he says.
GM’s Australian vehicle design team is globally renowned for work in concept car design and construction.
Having developed his career at Holden, Michael Simcoe was recently appointed GM vice President of Design, worldwide.
Australian design director Richard Ferlazzo says the studio is the only GM design centre outside Detroit with the in-house capability of creating fully functional concept cars from the ground up.
Post the 2017 shut-down of manufacturing, Holden will employ more than 400 engineers, designers and technical training staff and will retain the Lang-Lang engineering proving ground as well as the Port Melbourne design centre.
Holden’s engineering capability at the proving ground is highly regarded. “We have a large team working on engine and transmission calibration work, as well as dynamics, driveline quality and NVH,” vehicle development manager Jeremy Tassone says. Also of value to GM is the southern hemisphere location that allows out-of-season warm weather testing for northern hemisphere colleagues.