Ford announced today that it will cease making vehicles in Australia in 2016 and axe 1,200 jobs, having produced its first car in the country in 1925.

Ford Australia chief executive Bob Graziano made the announcement as he revealed a loss of A$141 million ($136 million) after tax in the last financial year, with losses of A$600 million over the last five years.

“Unfortunately we will cease our manufacturing operations in October 2016. As a result, approximately 1,200 jobs will become redundant when those sites close,” he said.

Graziano said the decision was the result of local manufacturing being “driven by increasingly challenging market conditions — including market fragmentation and the high cost of manufacturing.’’

The jobs will go at Ford’s Broadmeadows and Geelong manufacturing plants in Victoria state, which will close.

“We know this announcement is very difficult, especially for our employees,” said Graziano.

“Providing support to those in our team whose roles will be affected is a key priority for us during this three-year transition period.”

While manufacturing will stop, Ford will remain in Australia as an importer and dealer, employing some 1,500 people.

Auto sector in trouble

Australia’s auto industry is struggling with the effects of the high local dollar, which has traded near or above parity with the greenback for almost two years, squeezing exports and compounding rising production costs.

Though Australia did not go into recession during the global financial crisis, domestic confidence has failed to return to pre-crisis levels, also hitting car sales.

Canberra extended a A$3.2-billion bailout to the ailing sector at the height of the global downturn and stepped in with additional lifelines to Ford and General Motors subsidiary Holden last year.

Ford first began making vehicles in Australia in 1925, when Model T cars rolled off the production line in Geelong.

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