Ford's cash injection keeps Falcon alive

Ford's Falcon name plate is safe until 2016. Photo / Supplied

The Ford Falcon will continue to be produced in Victoria until at least 2016 after a AU$103 million investment from the car company and the state and federal governments.

Acting Victorian Premier Peter Ryan says the announcement secures the immediate future of the Falcon and the 3500 jobs at Ford's Geelong and Broadmeadows plants.

"This secures the jobs that are here, but there was a concern about particularly 300 jobs that were perhaps at risk because of design-related issues. Now those jobs are secured," Mr Ryan told reporters at the Geelong plant on Tuesday.

The $103 million will be used to make the Ford Falcon and Ford Territory - both produced in Victoria - more fuel efficient by reducing CO2 emissions.

The upgraded models will be released in 2014 and will ensure the vehicles will continue to be produced at the Geelong and Broadmeadows plants until at least the end of 2016.

Ford Australia's vice-president for manufacturing Alan Holly said the engine upgrades will enhance the appeal of the cars to consumers by reducing CO2 emissions by about five per cent.

"As well as benefiting the environment, this investment is also good news for jobs, providing direct employment for around 300 people during the design and engineering phases, supporting jobs and investments across our supply chain and of course providing ongoing work for our plant staff at Geelong and Broadmeadows," Mr Holly said.

"In today's climate of uncertainty and change, a four-plus year pathway for any product is pretty good news."

The federal government will provide $34 million but Ford and the state government would not specify their contributions.

Prime Minister Julia Gillard said the announcement was great news for the future of the automotive industry in Australia.

Federal Manufacturing Minister Kim Carr, who also made the announcement at the Detroit Motor Show in the US, said the government was working with the company to ensure its future in Australia.

"This announcement is an important step in our ongoing commitment to strengthen the sector," Senator Carr said in a statement.

Ford Australia president Bob Graziano said Australia was one of only 13 countries in the world with the capabilities to design, develop and produce vehicles from the ground up.

"There's no doubt the large car segment is challenging, but it can remain viable if we continue to provide buyers with what they want - fuel efficiency, design excellence and features that enhance safety and the driving experience," he said.

The Australian Manufacturing Workers' Union said the $103 million investment to refresh Ford's current model line-up was a major boost to the company's fortunes and a long-awaited sign that the bad times may be over.

The $103 million is the latest stage in Ford's efforts to make its engines more fuel efficient, which began with a $232 million investment in 2009.

Most of the body parts are produced at the Geelong stamping plant with the vehicles assembled in Broadmeadows.

- AAP