December 22, 2016 / 4:40 AM / 2 years ago

Ford expands Australian R&D budget after manufacturing halt

SYDNEY, Dec 22 (Reuters) - Ford Motor Co said on Thursday it will boost spending on design capability in Australia by A$150 million ($109 million) in 2017 at a plant where the company shuttered production in October.

Ford ended 91-years of making cars in Australia when it closed its production line in the Melbourne suburb of Broadmeadows amid a decline in Australian manufacturing and the dwindling popularity of the big sedans it made there.

The company will now spend a total of A$500 million on Australian research and development over three years, it said in a statement. It will spend A$450 million in 2017, an increase of A$150 million compared with last year, and A$50 million over three years to upgrade design and testing facilities.

Ford’s Australian design facility is one of three “key centres” capable of full vehicle development worldwide, alongside Detroit, Michigan and Cologne, Germany, spokesman Wes Sherwood told Reuters.

Ford spent $6.7 billion on research and development globally in 2015, according to its 2015 annual report, and a fortnight ago announced it would borrow $2.8 billion to spend on developing new technology.

“Ford, like the other big carmakers in the US, got caught making too big cars that were a bit outdated and they’re still scrambling to catch up,” said Michael Rafferty, an associate professor at the school of management at the Royal Melbourne Institute of Technology University.

Rival auto makers GM Holden and Toyota are set to follow Ford and close down their Australian production lines next year, acting on decisions taken in 2013 when the Australian dollar was above parity against the U.S. dollar, making local manufacturing expensive.

$1 = 1.3810 Australian dollars Reporting by Tom Westbrook; Editing by Stephen Coates

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