Focus Supplies Tight, But Ford Australia Chief Defends Sourcing Choice

Ford Australia says reversing its decision to build the Focus small car locally was the right one, but it is facing short-term supply constraints as a result.

The latest Focus hatchbacks and sedans on sale in Australia are sourced from Germany, until production for the Australian market moves to Thailand in mid-2012.

Company president Bob Graziano tells The Age newspaper the decision to not build locally will cost Ford Australia sales for about a year, as the supply of Focuses from Europe will be tight.

Australia’s 5% import tariff will be dropped when production begins in Thailand, with which it has a free-trade agreement. Graziano predicts that will make the Focus more price-competitive against segment-sales-leaders such as the Mazda3 and Toyota Corolla.

Ford Australia said in 2007 it would build 40,000 Focus models annually starting this year to meet the growing demand for small cars. It scrapped that plan in 2009, opting to spend A$232 million ($236 million) on more fuel-efficient engines for its locally built models, including development of a diesel Territory and 4-cyl. Falcon.

Graziano tells The Age he is confident the company made the right move, even though rival GM Holden has started local production of its Cruze small car.

He says from the One Ford global product standpoint, the decision to build the Focus at sites such as Europe and Thailand is beneficial, because Ford wants as much scale of product as it can get.

“I believe they were the right decisions when they were taken, and they remain the right decisions today,” Graziano is quoted as saying.

The newspaper reports Graziano wouldn't say whether the company might change its mind again on Focus production in Australia, saying the attention is on its local product.

"We're just in the process of rolling out all that technology," he says. “We think that's what customers are looking for in the large-car segment.”