Ford to close Australia engine plant, shed 600 jobs

MELBOURNE, July 18 (Reuters) Ford Motor Co.'s loss-making Australian unit said on Wednesday it will close an engine plant in Geelong, outside Melbourne, cutting 600 jobs as it switches to imports from the United States.

The Geelong plant, which opened in 1926, is the smallest of Ford's three production plants in Australia and will close in 2010.

Australians increasingly are buying smaller vehicles than Ford's flagship local model, the six-cylinder Falcon, and cheaper and more fuel-efficient imports are gaining market share.

''The Australian car market has fundamentally and permanently changed,'' said Ford Australia President Tom Gorman.

Ford Australia, the country's third-ranked automaker by sales in the six months to June 2007 behind Toyota Motor Corp. and General Motors Corp.'s Holden, swung to a net loss of A.3 million in 2006, from a net profit of A8.2 million in 2005.

Its sales fell 10 percent in the first half of the year, according to industry figures.

Ford said a new V6 engine will be imported from high-volume U.S.

plants that will be producing about 1 million engines per year by 2011. By contrast, Ford's Australian operations currently produce 70,000 engines a year.

The company said it is continuing with ''signifcant investment'' in new emissions technology programs and wants to improve its ability to respond to demand for alternative fuels and better fuel economy.

The Australian government gave Ford a grant of A million in 2005 to try to make the in-line six-cylinder engine more efficient, Industry Minister Ian Macfarlane said.

Ford told Reuters last week it was considering expanding exports as one option to become more profitable in the tough Australian market.

Total Australian car sales topped a record 1 million units in the year to June, according to industry figures.

REUTERS SR PM1605