Sydney
PM: Today is a very sad day for the workers at Ford who have heard the news today that their jobs will come to an end in October 2016.
This is a very sad day for those workers and for their families. Our thoughts are with them on what is an incredibly difficult day for them.
This is also a day of anxiety and sadness for the communities of Geelong and Broadmeadows, and also for those who work in the supply chain supplying automotive parts to Ford.
I want to take this opportunity to explain what will happen from here and what government is determined to do in these circumstances.
First, to the workers at Ford; these workers are proud working people who do a great job making Ford cars.
This is very hard news for them today given how proud they are of what they do and the significance of Ford and their work at Ford in their lives and the lives of their families.
For those working people as they absorb this news, I want to say to them we will make sure that you are not left behind.
The Government will be providing the most intensive form of employment assistance that we can provide to help people as they source opportunities for the days beyond October 2016 when Ford ceases to manufacture in Australia and those jobs come to an end.
We will be working with you to help you get a new opportunity beyond Ford.
For those in the supply chain; we understand that this is a day of anxiety for you.
We are already working with automotive suppliers to help them diversify their markets.
Today I announce that we are adding to that assistance.
As a Federal Government, we will put an additional $10 million into that work and the Victorian Government has committed an additional $2 million creating a fund of $12 million to assist those who work in the supply chain.
And to the communities of Geelong and Broadmeadows who also would be very distressed today absorbing this news.
We want to work with you and support you as your communities look for the new sources of strength and opportunity in your area; the new places where people will get work and make a living.
Today I announce that we will be creating a fund to work in support of those communities.
The Federal Government will allocate $30 million to this fund, the Victorian Government will allocate $9 million to this fund, and today I call on Ford to make a substantial contribution to this fund as well.
The fund will work with local communities so that we can source new opportunities for those communities, new work for people to have in the place where they are proud to work and so happy to live.
For Australians generally, I understand many people will hear today's news and it will worry them. I understand that and I want to say to Australians that here in our nation we show time after time how good we are when we work together.
We worked together through the global financial crisis to create the strong economy that we have today: an economy that is growing, an economy with low unemployment, with low debt, with low interest rates and with job opportunities for people.
The economy that we have today has many sources of strength but the high Australian dollar is putting a lot of pressure on some industries, particularly manufacturing.
We have been working to respond with our billion-dollar plan for Australian jobs so that we can continue to be a country that manufactures goods that we want locally and that the world wants to buy from us.
We will continue with all of that work, including in automotive because Australians are very good at manufacturing goods, and we will continue to be a nation that manufactures goods for the future.
I will turn now to Dr Emerson for some comments and then we will take questions.
MINISTER EMERSON: Thanks PM. One of the considerations that affected Ford's viability is the fact that it operated on a relatively small scale by international standards, and even by national standards.
Ford is producing less than 40,000 vehicles per annum. That's headed towards around 30,000, whereas Toyota and Holden are producing more than 90,000 vehicles a year each.
Ford has established a factory in China that is producing 250,000 vehicles per annum so the economies of scale were not there for Ford's operations in Australia and that has been a major consideration.
I have had the opportunity to speak briefly to Mike Devereux, the CEO of Holden and also to Max Yasuda, the CEO of Toyota.
Mr Devereux has already put out a release about its commitment to continue to working with the Australian Government.
They have identified opportunities through to the year 2022 and that's good news for Australian manufacturing, and auto manufacturing in particular.
And Max Yasuda, in a brief conversation, indicated that Toyota would continue to invest in and operate here in Australia.
As the Prime Minister said, this is a very sad day for the workers.
This is an incredibly loyal workforce at Ford and they would be understandably distressed, as would their families and the broader communities of Geelong and Broadmeadows and those suppliers as well.
We will continue to work with them to develop alternative jobs, alternative industries for these areas that actually do have a very positive future. But there is no doubt that today is a sad day for those workers and their families.
JOURNALIST: Prime Minister, you promised Ford last year $34 million of assistance. Ford says it still expects to receive that money, does the Government intend to still give it to them?
PM: Yes we do because that $34 million package was about the models that are going to be produced and to be produced until October 2016.
So that money was pledged for a purpose and it will still be used for that same purpose. That is, enabling jobs to continue to October 2016.
What we know now is that the manufacturing jobs won't continue beyond that.
Ford will continue to employ people in Australia; 1,500 people - 1,100 of them in design and engineering - but around 1,200 workers today have been given the very hard news that their jobs won't be there after October 2016.
So our thoughts are definitely with them and obviously we have made preparations for the announcements that we have given you today as to how we will support those working people and also the regions that are affected by today's announcement.
I don't want anybody to be left behind as a result of this. I don't want people to feel that there isn't assistance available. It will be available. It will be there.
JOURNALIST: Prime Minister, Ford has been granted around $1.1 billion by both conservative and also Labor governments over the past 12 years or so. Was there a time earlier that maybe governments should have bitten the bullet and realised it was just simply not a viable industry for Australia?
PM: Well I don't agree with your characterisation that making cars isn't a viable industry for Australia.
You have just heard the words of Dr Emerson there, where he has spoken today to Toyota and to Holden and Dr Emerson has pointed out they are manufacturing at a larger scale than Ford.
It is not easy days in manufacturing. The strength of the Australian dollar obviously bears down on Australian manufacturing and it does make it a difficult environment for manufacturing to prosper.
We wanted to make sure - there are around a million Australians employed in manufacturing - that we are still a nation that makes things, that manufactures goods. That's why we have worked with the car industry and will continue to work with the car industry.
MINISTER EMERSON: If I can add there, both Toyota and Holden are plugged into regional and global value chains or supply chains and that is something that Ford had not been able to do through its manufacturing operations.
Through the R&D facility, yes, it will be doing research and development for the global business of Ford.
But these other two manufacturers have seen the opportunity, indeed the necessity, of tapping into those global supply chains and that has helped keep them in a position and at a scale that Ford was not able to achieve.
JOURNALIST: Some would argue that continuing with the $34 million subsidy is throwing good money after bad. We should cut our losses now and pull out. What do you say to that?
PM: I think you have got to be very clear what the $34 million is for, and the $34 million is supporting the cars that will be rolling off the production line, employing people in Geelong and Broadmeadows until October 2016.
That's the purpose of the $34 million.
JOURNALIST: Do you feel that all the Federal Government money that has gone into Ford that this is a bit of an act of betrayal by Ford in terms of not continuing on with production?
PM: What I feel today is I feel an incredible sense of disappointment for the working people who have had this news today.
I've been to Ford in Geelong, I have been to Ford in Broadmeadows, my home in Melbourne is in Altona so it's not that far away.
I'm actually around the corner from where Toyota manufacturers, so I've had the opportunity as Prime Minister and as a local member to meet a lot of people who work in the car industry.
They are really proud of what they do. They're really at a very high skill level, always striving to improve.
For many of them it has been the job they've had for decades and decades.
So today what I feel is a real sense of disappointment for the almost 1,200 people who have got this news.
JOURNALIST: But you must be disappointed with Ford as well Prime Minister. Did they give you any indication at all when you committed that last amount of funding, that this was anywhere on the short-term horizon?
PM: Well the last round of funding was for the purpose that I have described so it was about the manufacturing that will happen up until October 2016.
In terms of discussions with Ford, I should just explain, Minister Combet is unwell today and that's why Dr Emerson is here as acting Minister for Innovation and Industry.
Minister Combet was briefed by Ford on Sunday about this pending announcement and we have been able to make preparations since for what we have announced today.
I was in a position to speak to the Premier of Victoria yesterday and I'm pleased that we are working together at what is a difficult time in Victoria for both Ford in Geelong and Ford in Broadmeadows, a difficult time for those working people and for those communities.
I am pleased that I am able to work with the Premier of Victoria to make the announcements about assistance and support today.
JOURNALIST: A month ago you'd indicated to the Geelong Advertiser that you believed the car industry in Geelong would not survive a Coalition Government under its car plan. Does the announcement today mean that simply Ford was not going to survive either party's plan for the car industry?
That ultimately the car industry at Ford was not going to survive at Geelong no matter which party was in power?
PM: Well I am not going to make any political comments today. The purpose of the assistance that we have provided to the car industry is because we do want to be a nation that has car manufacturing happening.
That's important to us because it is jobs, but it is also important to us because it is skills and innovation.
When you go to many places in Australia where people are manufacturing things - making a part of a plane, I have gone and visited that and seen what they are doing with the Dreamliner - when you talk to people doing that manufacturing and say where did you come from, how did you end up here, what's your background, very, very often they will say to you I got my start in car making, I got my skills in car making.
And now here I am manufacturing a part for a plane or manufacturing other sorts of goods.
That's why car making is important to us. It is an important component to a broader manufacturing sector so you get the innovation and skills that you need.
That's the purpose of the car investment that we have engaged in as a government, and earlier governments have obviously engaged in investment too.
JOURNALIST: Dr Emerson, it may not as yet be a wipe-out in Whyalla, but we have today seen wipe-outs of jobs in Victoria.
Now the Opposition is no doubt saying this is a vote of no confidence in the economic policies of the Government; the carbon tax, the increases in superannuation et cetera. What would you say to that?
MINISTER EMERSON: I'd say that the weight of the Australian dollar has been borne very heavily by Ford.
The Australian dollar ordinarily as commodity prices come off would have come off with it.
That had not happened, although in the last little while the Australian dollar has fallen below parity.
That offers encouragement for manufacturers in this country and businesses that are exporting as well.
So there was no reference to the carbon price in this decision.
I think it is a combination of a high dollar and the fact that Ford has been operating at a very low scale, not only by national but certainly by international standards, so it has not been able to reap the economies of scale that are being reaped by factories such as the Ford plant that has been built in China to produce 250,000 vehicles per annum compared with what will be around 30,000 vehicles per annum up to this period of October 2016.
PM: Can I just say before your next question, this is too serious and hard a day, too serious and hard a day for too many people for people to play silly games about it.
I think that will just turn people's stomachs.
That's not what we are here to do. We are here to explain very carefully the assistance that will be available for people because people will be hurting today, and so we want to explain to them what is going to happen next and the way in which they are going to be supported.
JOURNALIST: Can I just go to Geelong for a moment, because Geelong clearly has had the announcement of closure of the Shell refinery. There is a question mark over the Alcoa refinery in Geelong. And now the Ford plant which Geelong has basically been built on. I mean it really is for even regional Australia a very important manufacturing sector of Australia.
These are three significant body blows potentially to the town.
PM: I have spoken today to our local members in Geelong and to our local member in Broadmeadows, so to Maria Vamvakinou, to Richard Marles, to Darren Cheeseman.
And in one of those conversations, one of them did remark to me that Geelong has had to absorb difficult news in the past and it's the kind of place where people pull together and they think very deeply about their future and they create strategies for the future.
There is a strong civic leadership there, strong representation, and Geelong will be working through this news today, and we will be working through with them in the same way that we will be working through with Broadmeadows, and I was able to have that conversation with Ms Vamvakinou about Broadmeadows.
JOURNALIST: You've played a significant contribution to the supply chain issue involved in all of this, $30 million. But some experts say that without Ford, one of the three key makers going, that the supply chain won't have the critical mass to be able to exist in this country and it will threaten the very existence of the other two.
And some of those commentators include Jack Nasser. What do you say to that? Are you worried about the survivability of the other two makers?
PM: You are right, we already have a $30 million program working with the supply chain and what I have announced today is, between us and the Victorian Government, we will be adding an extra $12 million; $10 million from the Federal Government, $2 million from the Victorian Government.
There are issues that we will need to work through on the supply chain but we need to do that carefully and methodically. I am not a believer in snapshots.
I remember when Mitsubishi in South Australia announced that it was going to close. People on that day said, well, if we move from four to three, the supply chain won't be viable, only to see that supply chain move and adapt to manufacturing then.
We want to see the supply chain move and adapt for what is the manufacturing landscape now.
MINISTER EMERSON: And through organisations such as Austrade, just as we were talking about ensuring that our auto manufacturers are locked into regional and global supply chains, that applies too to the component manufacturers.
An opportunity, if we get this right, to produce components on a world scale for a much larger number of vehicles, and Austrade will continue to facilitate that sort of work identifying customers in our region which, as you know, is rapidly expanding.
So I think we should think beyond just producing for the domestic market and look for opportunities to produce for the global market and particularly the rapidly expanding market of the Asian region.
JOURNALIST: Prime Minister, can you explain the mechanism by which the high dollar is hitting Ford so much? As I understand it, it is really domestic manufacturing that we are talking about. If anything, any overseas inputs would actually be cheaper. So why is the high Australian dollar affecting the domestic export industry?
PM: You have answered your own question, it is because the dollar is high, imports are cheaper.
So when you take yourself out to buy a car and you look at all of the models that are available and I think in explaining this today, the CEO of Ford said that there were around 360 different kinds of cars available in Australia.
When you take yourself out to buy a new car, the high Australian dollar means that imported cars are comparatively cheaper than they used to be.
Now, many people, they want a Ford. They want a Ford Territory and they are going to go down to the dealership and they are going to buy a Ford Territory or they are going to buy a Ford ute.
But for a lot of people they will look and see comparisons and so it has made it tougher for our car manufacturers that imports are comparatively cheaper than they used to be.
MINISTER EMERSON: Similarly on the export side, the Australian dollar returns from any exports are reduced by the very high value of the currency.
So Ford is squeezed, both in terms of competition from imports and its capacity to export and it has not had that capacity to export whereas the other manufacturers have had their exports curtailed somewhat by the high Australian dollar but their strategies have been based on producing at least a proportion of their total runs for exports.
JOURNALIST: Prime Minister, you have spoken about how the dollar makes industry uncompetitive or makes it more difficult to compete, what about wage claims? Because there is no doubt that there have been significant wage claims in the car industry which has seen in the past obviously jobs lost. Are wage claims a part of the reasons why the car industry in Australia is uncompetitive?
PM: I don't accept the premise of your question.
Yes, there has been wage bargaining at our car manufacturers and it was ever thus, they have always had bargaining rounds and bargaining agreements and worked through and worked through in a very sophisticated way.
One thing I can tell you about car workers and the unions that represent them, is they know everything that there is to know about the car industry.
They take a very sophisticated perspective to it.
So they understand the economics of the industry as they bargain and as they work with their employer for wages, yes, but also for productivity gains. We have very productive car industry workers, very highly skilled car industry workers.
We are not going to compete with the countries of our region on wages.
That is not the future for Australia to say what is the lowest wage in China or in Vietnam or in Indonesia and let's pay an Aussie worker less than that.
That is not a vision of the future for Australia that I would ever give a tick to.
What that means is, because we are a country that proudly has got a track record of treating people decently and fairly and that is one of our proudest achievements.
Given that, what that means is you have to be innovative, you have got to be productive, you have got to be very smart about how you do things.
That is why we are continuing to work with manufacturing to be unique at what we do or the best at what we do and to compete on that basis, not on ever undercutting wages.
JOURNALIST: Minister, on undercutting wages, do you think when Ford refers to its costs being four times that they are in Asia, would that be mainly wages, or something else?
MINISTER EMERSON: I think it would be very much related to scale.
If you are producing 30,000 vehicles in a state-of-the-art car manufacturing and China is producing 250,000, you just need to do the arithmetic and realise there are enormous economies of scale from producing 250,000 vehicles.
Economies of scale that have not been available to Ford and that, for better or worse, it has not integrated itself into global markets to the extent that Toyota and Holden have sought to do.
PM: Can I thank everybody very much.