Ford closure: What it means for South Australia Ford puts the brakes on Australian operations, a shocking terror attack in London and the Barossa's new TV campaign CLOSURE of Ford's motor manufacturing in Australia will be a severe blow to this state. Ford Australia has announced the closure of its Broadmeadows car factory and Geelong engine plant in October 2016, a move that will cost 1200 people their jobs. South Australia is home to many car component makers, which are based in Adelaide to be near Holden but also supply Ford and Toyota. Many industry analysts say they need the volume of supplying all three - or at least two - to be viable. It's too early to say whether their will be a cascading effect where the suppliers are forced to close. And then the loss of the suppliers makes it even harder for Holden, which already is under pressure. But that is the danger. The industry works on a just-in-time delivery system where components arrive at Holden only as and when they are needed. Lengthening that supply chain will certainly make it less efficient and potentially more expensive. That's the sort of blow Holden cannot afford. Closure also will cause ripples though the talent pool of automotive workers. Immediately, there will be extra people on the labour market - joining the hundreds leaving Holden already looking for work. In the longer term, there would be no work and no incentive for newcomers. That scenario is a path that would inhibit the industry from ever being re-established. CAR MAKERS RESPOND: Holden and Toyota 'to remain unaffected' Australia's two remaining car makers Holden and Toyota say their operations will remain largely unaffected by Ford's decision to cease local manufacturing in 2016. Ford's factory output in recent years has fallen so low that Toyota and Holden will likely be able to take up the slack. "Despite Ford's announcement to end local manufacturing we believe the industry can survive in Australia and has already adjusted in large part given Ford's relatively low production volumes," Holden boss Mike Devereux said this afternoon. The announcement by Ford today is a reminder of really just how tough it is for manufacturers in Australia. Holden said its plans to continue manufacturing cars until 2022 - including a new Cruze small car a new large sedan to replace the VF Commodore in 2016 - are unchanged. A media statement from Toyota Australia said in part: "Toyota is saddened to learn about Ford Australia's decision. The operating environment is extremely tough at this time but Toyota believes that car manufacturing is an important contributor to the Australian economy. Toyota is still building cars at its Altona plant for domestic and export markets. In December 2012, Toyota opened a $330 million refurbished engine production facility producing petrol and hybrid engines for locally built cars as well as for export to Malaysia and Thailand. More than 70 per cent of the Camrys built in Melbourne are exported to the Middle East. Ford's news came on the same day Holden launched the new Commodore. But Ford says the timing was a coincidence. The boss of Ford Australia, Bob Graziano, said he was informed of the decision to shut the Australian factories by email late last night. Graziano told workers the news in the cafeteria on the Ford production line at Broadmeadows about 9am this morning. "It was difficult news for them to hear but they're professionals and I think they were quite appreciative that I lived up my commitment to tell them before we told anyone else as soon as the decision was taken," said Mr Graziano. LOCAL REACTION: More Holden workers likely to seek redundancies MORE Holden workers will seek redundancy packages in the wake of Ford's decision to stop building cars in Australia, Australian Manufacturing Workers" Union state secretary John Camillo predicts. Mr Camillo said the mood at Elizabeth's Holden plant was sombre following Ford's announcement today that it will close its Broadmeadows car factory and Geelong engine plant in October 2016 at a cost of up to 1200 jobs. " (Holden workers) are already trying to come to terms with their own redundancy packages and this is just another hit for them," Mr Camillo said. I imagine more people at Holden would put their hands up to take a redundancy package following this announcement. Holden will cut 400 jobs at Elizabeth by the end of June. Mr Camillo said about 750 Holden workers had already expressed an interest in taking a voluntary redundancy package - about a third of the plant's workforce. He said the South Australian car industry would be dead within five years without continued government investment. "It's central that every government supports its car industry," Mr Camillo said. Every country that has a car industry throughout the world has some type of co-investment to support its future and Australia should be no exception. It has to have strings attached and rely on a contract. This should include how much Holden put in, employment numbers and how long they will build the cars for. That is the only way we can guarantee Holden and Toyota will be around in the future. Mr Camillo said the union would seek details from Ford to help access the impact on Adelaide car parts suppliers. He said suppliers to Ford might have to merge with other companies to survive or diversity to supply defence and mining companies. Playford Mayor Glenn Docherty said Ford's decision left a cloud over Holden's future at Elizabeth. They are two separate companies but it probably does leave the question, what is the long-term viability of Holden? Mr Docherty said. We need to look at how we continue to diversify South Australia's economy. A Holden closure wouldn't just be a hit for the north, it would also be a hit for the whole of SA. Mr Docherty, who is a Liberal candidate for the state seat of Newland, said the State Government needed to develop a clear plan to ensure Holden's long-term future at Elizabeth. POLITICAL REACTION: Taxpayer support is 'crucial' Ford Australia chief executive Bob Graziano made the bombshell announcement today, blaming high cost pressures in Australia which he said were twice as high as Europe and close to four times that of Asia. Mr Weatherill has told ABC Radio he had spoken to Holden boss Mike Devereux this morning and the pair remained committed to working with the automaker to support its local operations. Motor Trades Association chief executive John Chapman said many component makers needed to supply to at least two of the nation's three car makers to remain financially sustainable. The loss of Ford from the marketplace would deliver a blow to many. "To lose one of three of your markets is going to be significant," he said. He said Ford's decision to announce closure three years before it occurs was a "saving grace." He said many component makers had skills which could be adapted to mining and defence. "It's how you structurally adjust and allow them to leave the industry, or indeed find new markets, because we've got some very talented people in manufacturing in this country," he said. Australian Industry Group chief executive Innes Willox said "the loss of 1200 jobs over the next three years is deeply concerning as are the implications for the many businesses and employees linked into Ford." Adding value through design, technological, product and process innovations is a core direction for the future of Australian manufacturing. The challenge is to nurture and to develop these capabilities. There is a role for policy to communicate these opportunities and to facilitate the transition, particularly among our small and medium-sized manufacturers.