Transcript of doorstop interview with Senator Kim Carr, Victorian Premier John Brumby and Ford Australia CEO Marin Burela
Announcement about Ford Geelong engine plant, Geelong
Subjects: Geelong engine plant, EastLink, Victorian racing industry, Twelve Apostles viewing platform, Royal Children's Hospital redevelopment
REPORTER: What was the turning point for Ford?
MARIN BURELA: In terms of the decision that we made? Well, there were many different factors, but we just simply took a view that said, look, we’ve invested an enormous amount of money and time in our people, in the facilities that we have here. We looked at the technology advances that were taking place both here and in the world, and we challenged our team here in Australia.
And we found some breakthrough solutions, we used some innovation, and we’ve managed to find a way to make the engine viable, compatible, to move us forward into the Euro IV world. And that’s a great success story, not only for the manufacturing side, but it’s a true testament to the people of Ford of Australia, and the quality and the intellect that we have here that has, in fact, enabled us to make this decision.
REPORTER: So does this mean you won’t be sacking anymore workers here in the foreseeable years?
BURELA: Well…the thing that we’ve said today is that we have now told our people, 400 of them, that they now have a job and they have a future. And…we were only here some 12 months ago advising people that we were closing the plant down in 2010. So…we’re looking forward to a successful future.
We’re very much a company that’s looking at not only this as a stepping stone, but…through the government…plan and the Green Car Fund, in particular, we’re looking at other technologies, as well, that will become the cornerstone and the enablers that will take us forward even beyond the very immediate future.
REPORTER: Premier and Senator, any direct Federal or State funding involved?
JOHN BRUMBY: Well, I think, just to back up what Marin has said here, I think when world circumstances changed, and in the run-up to the Federal Government’s car plan, there were a lot of discussions between the company, the State Government and the Federal Government, and we looked at what we could do to change circumstances. And, as Marin has said, the company itself looked at innovation, at new technology; we looked at what the Federal plan might offer; we looked at what we could offer.
So we have made a contribution towards this. We have been a partner in what we think is a huge investment for the industry. And it’s a $21 million investment by the company. It’s hundreds of jobs here; it’s hundreds of jobs in the supply chain. You think of all of the families, the spouses, the kids that all depend on people continuing to have jobs; this will have a big positive ripple effect right across the economy.
So I think it’s a good example of working together. We’ve worked with the industry in the past. We’ve worked with Ford, of course, in relation to the Ford Focus manufacture, which starts in 2010-11, and we’ve worked with them on this announcement. And I, I think…we couldn’t have done this 18 months ago – it just wasn’t possible to do that: global circumstances were different; different people running Ford; different Federal Government.
We’ve now been able with those changed circumstances, different President, different Federal Government, different car plan, different environment, and the result is a fantastic outcome.
REPORTER: And can we ask how much?
BRUMBY: You can, but we don’t disclose that.
REPORTER: And federally?
KIM CARR: Yes, well, we’ve – as I indicated last week – are in a process of assessing a number of projects from all of the companies in terms of the Green Car Innovation Fund. We’ve announced a $6.2 billion package to provide the financial framework for us to go into a process of co-investment, on the basis of mutual obligation, so that…we can attract new investment to the industry and we can modernise the industry very quickly, and produce cleaner, greener and cheaper vehicles.
And that’s exactly what we’re doing. In particular, in regard to this case, Marin and I started conversations on these matters six weeks ago, and this is not a project that has attracted Green Car Innovation Funding. We have supported this project to the tune of $13 million, and we will obviously be talking to the company about other projects in terms of improving the fuel efficiency of all the vehicles within the Ford fleet, as we are with everybody else.
It is my expectation that, by 2010, we will see on Australia roads Australian-made vehicles which will be up to 20 per cent cheaper to run in terms of the amount of fuel that they are using. We will see a much more diversified set of technologies employed, so we’ll have different types of engines, we’ll see different types of fuel systems driving those engines, and it’s my expectation that we can rapidly transform this industry by attracting new investment, and providing new opportunities for high-skilled, high-wage jobs.
REPORTER: So, Premier, is the State matching that funding from the Federal Government…?
BRUMBY: Oh, no, I’m not going into the detail of that. We don’t…we have a longstanding policy on that, as you know, for good reason, but we’ve made a significant contribution.
But I think you’ve got to look at this in the bigger context: as I said, this is a substantial investment; this is quite a turning point, I think, for the industry. It is not to say that there are no big challenges out there, or that everything’s going to be rosy for the industry – it’s not. It’s a very, very difficult environment at the moment. But amidst all of the challenges, I think, of the last year, this is a turning point. The decision with Toyota early in the year on the hybrid vehicles was a turning point. The Federal Government’s car plan was a turning point.
But this is a significant and positive step forward. It’s one we think which is so significant to certainty and to confidence to investment and jobs in Geelong. And, as I’ve said, it has a flow-on effect right across the Victorian and Australian economy. And I think at a time when jobs are at a premium, here and internationally, any investments that we make in partnership with the company to secure investment and to secure jobs, I think is a great outcome for the state.
REPORTER: Do you expect another turning point, as you call it, in relation to Holden or GM?
BRUMBY: Well, Kim might comment, but I’ve…met – we’ve got 60 per cent of the industry here in Victoria – I’ve met with all of the leaders for the car industry over recent months, and as I’ve said to you before, and happy to repeat today, I think, in the medium term, the outlook for the industry is very positive.
And I would endorse what Senator Carr and what Marin have said today: that is, in the medium term, we will see more investment, significant increases in investment; we will see new technologies; we will see new products; we will see a renaissance of the industry in this state. But it wouldn’t have happened, I believe, without the partnership approach that you see evident today, and it wouldn’t have happened without the very generous support of the Federal Government through their car plan.
CARR: This project today is one of many projects that we are working on with the automotive industry. All manufacturers are talking to us about new projects. I indicated this last week that there would be a series of new projects announced over the coming months. And, of course, there has been some commentary in the media that, in the period of a global economic crisis, how could it be possible there be new investment in the industry. Well, we’ve proved the naysayers wrong. This is an example of why there will be new investment in the industry and how we can transform this industry, and because it’s so important to this economy and to our society, it’s absolutely critical that we are successful.
Now, we know there are immense challenges facing the industry. But there is a determination, an absolute determination, by all the different players in this industry for it to succeed. And irrespective of the global economic crisis, it is my belief that we can succeed in building a highly effective, highly efficient, much more environmentally friendly industry in this country, employing people in high-skilled, high-wage jobs.
REPORTER: Minister, less Australians are buying cars. Is there a need to help out car sellers, as well?
CARR: Well, we’re in the process of discussing a number of very practical proposals with the industry, and we are once again seeing that decisions are being taken by companies that otherwise would have gone the other way if we hadn’t intervened. So there is a process developing, and that partnership is being extended through this issue, particularly of the car dealers.
But there are also concerns in regard to the manufacturers, and their access to finance. I am particularly concerned about the rationing of credit. This is not just a problem that’s arisen in the last five minutes; this is a problem that’s developed over recent months. And irrespective of that concern, it is still my belief that we can provide the right policy framework to unlock the liquidity crisis that is facing manufacturing in this country at the moment, and be able to produce outstanding results like the Ford Motor Company have done today.
REPORTER: Senator Carr, can I ask you about the Holden workers in Adelaide with the extension of the shutdown there.
CARR: Yes.
REPORTER: What can be done, if anything, by the Federal Government [inaudible]?
CARR: Well, we are working with the company. That’s the first thing. We are working with the unions. We are building a partnership to ensure that we move through this storm as quickly as possible, and that we emerge from this economic storm in a much stronger position than we otherwise might be.
Look, this is the equivalent of a cyclone blowing through the world economy. We are doing much better than most countries. You look at the sales, for instance, of vehicles: they’re much, much stronger in this country.
The companies of Ford, Toyota and General Motors are doing much better here in Australia than their parents are. I mean, Toyota – and people don’t talk about this – but Toyota has seen a 74 per cent drop in its profitability.
So, we are seeing the effects of the global economic crisis blowing through our economy. We are working closely with the industry, and all the different parts of it, to make sure we move through that as quickly as possible and emerge much stronger as a result of it.
REPORTER: Premier, with the trouble at ConnectEast, does that make you think twice about tollways and, also, the viability of the Frankston Bypass?
BRUMBY: Well, I think you’ll have to wait for our transport plan in terms of any future announcements on transport. And we’re…sort of, dotting the i’s and crossing the t’s in terms of the transport plan.
I don’t tend to comment today on EastLink, or ConnectEast. They’ll make their own comments about that. But the project is…a good project. We’ve got a great record of delivering big projects in this state, and I expect you’ll see more big projects delivered in this state in the years to come.
REPORTER: So, you haven’t been kept informed about the traffic volumes on Eastlink?
BRUMBY: Oh, no, I understand that EastLink are making some comments to the exchange today, and I’ll leave that to them.
REPORTER: So, you’re not concerned about it?
BRUMBY: I’ll leave that to them.
REPORTER: Is Victoria’s racing industry being short-changed in the new arrangements?
BRUMBY: Well, I don’t believe so. We’ve put a very responsible and generous offer on the table, and…the industry’s very important to us. It’s an industry that employs more than 50,000 people across the state, and we’ve made it very clear that we will support the industry on terms, going forward, which are no less favourable. And that’s what we intend to do.
And we’ve reduced the tax rate on the wagering licence, I think, down to seven and a half, 7.6 per cent; it’s a very substantial reduction, and that means that more revenue would flow back to the racing industry.
So we think that number’s about right. But we’ve always said we’re prepared to talk to the industry, and if we need to finetune those arrangements, we’re happy to do that. So you’ll see argument back and forth, I think, over the next little while about whether the number’s right, whether the number’s not right. But we’ve got an iron-clad commitment to this industry, and that is that we will support it on terms which are no less favourable, and that’s what we intend to do.
REPORTER: Do you think the Ernst & Young figures are wrong?
BRUMBY: Well, I think there’s a variety of ways you can interpret them. These are all…about assumptions you make, going forward. And certainly we’ve, as a government, have been strong supporters of the racing industry, and we continue to be strong supporters, going forward. It’s the pre-eminent racing industry in Australia, and we want to keep it that way.
So, we think our numbers are pretty right; we’re generally pretty good with our numbers. But you’ll see other people put a different view.
And the Racing Minister will sit down to discuss that with the industry, and we’ll end up with a formula, I repeat, which is guaranteed to be no less favourable.
REPORTER: Do you support a fee to use the viewing platform to see the Twelve Apostles?
BRUMBY: Look, I haven’t…seen any of the detail about it. I heard about it this morning, and I don’t know whether it’s a serious proposal or not. It’s not something we’re looking at. It hasn’t come from government, so I don’t know whether it’s come from local tourism operators, or the local community – I’m not sure where it’s come from. But it is certainly not something we’re looking at, and it’s not on my agenda.
REPORTER: Premier, how confident are you that the Royal Children’s Hospital development will continue to be secure given, like, Babcock & Brown’s continuing poor form?
BRUMBY: Well, all of the arrangements there are fully secured. So, that’s a very big investment: it’s over a billion dollars. And I think I’ve been asked this question two or three times before, whenever there’s speculation about Babcocks: that is, the arrangements are fully secured.
So, that hospital will continue to be built. It’s, I think, at the moment it’s about eight days ahead of schedule, so we’re pleased about that, and it’ll be a fantastic children’s hospital. So there is no risk to the children’s hospital; there is no risk to the construction schedule.
REPORTER: Marin, can you confirm how many Ford jobs have been saved or retained by today’s announcement?
BURELA: Certainly. Today we’re announcing that the Geelong engine operations will retain 400-plus jobs, moving forward beyond 2010. So we’re very, very pleased, because…this is a significant step, obviously, forward in terms of the creation of jobs, the retention of jobs, but also up-skilling of the people of Ford of Australia.
REPORTER: And was the announcement last year that 600 jobs would be lost when the plant closed?
BURELA: Well…I can’t comment on exactly what was announced last year, but…what you need to understand that over the last 12 months are what we’ve done: we’ve right-scaled our business based on the demand currently in Australia. So the numbers that we have now are just over the 400 level, and that’s the numbers that we expect to retain.
REPORTER: Okay. And with a 40-year-old engine being retained, does this qualify as a green announcement? Is this something that you put out there as an environmental positive?
BURELA: Well…let’s just be clear about this. Right? The announcement that we have made today is a significant announcement with regard to both engineering, technology and investment in the facilities and investment in our people. We are committed to and we have a plan that will take this engine to a Euro IV level of emission, delivering the needs of what Australia is, in fact, looking for with regard to motoring.
So, to answer your question very, very directly, it will meet the needs: it is environmentally heading in the right direction, it builds on the framework that the Federal Government has outlined in terms of…where the industry is going, and we’re very confident that we have made the right decision.
BRUMBY: Thank you very much.
BURELA: Okay, thank you.
BRUMBY: Very good.