Ford to Shut Down Production in Australia

Ford Motor Co. says it will phase out production operations in Australia by October 2016 after losing $600 million in the country in the past five years.

The move will shut down Ford's assembly plant and engine factory outside Melbourne. Last year the company cut vehicle output 29% in the country because of sharply declining demand for its Falcon fullsize sedan and other models.

Ford plans to retain about 1,500 employees in non-manufacturing jobs in Australia, most of them designers and engineers.

The company says unfavorable exchange rates contribute to operating costs in Australia that are twice and nearly four times as high as those of its European and Asian units, respectively.

Jac Nasser, a former Ford CEO and now chairman of Australian mining giant BHP Billiton Ltd., says Ford's departure could trigger the collapse of Australia's auto industry. Nissan and Mitsubishi have already ended local production. Ford's decision will leave General Motors and Toyota to support the industry's supply base.