Ford stops producing vehicles in Brazil as part of its restructuring plan

Business

By CAPosts 13 January, 2021 - 10:12am 26 views

Ford announced this week that it will stop producing vehicles in Brazil this year, which will cause the closure of three plants, the loss of 5,000 jobs in the South American country and pre-tax charges of about 4.1 billion dollars for the US manufacturer. This decision is part of the $ 11 billion restructuring plan, announced in July 2018 by then CEO Jim Hackett, which seeks to make Ford a more profitable company by 2022. So far, the global restructuring plan has resulted in the sale of its vehicle subscription service, Canvas, and a reduction in its installed capacity globally.

© iStock Editorial Ford was the sixth automaker to sell the most cars in 2020, with 119,406 registered vehicles (including automobiles and light commercial vehicles), with 7.14% of the total, according to data from the sector association Fenabrave.

In 2019, Ford closed its plant in Venezuela due to the low demand for vehicles that caused the crisis in that country. That year, the manufacturer also decided to exit the trucking business and ended production at the São Bernardo do Campo plant. Now, the company has decided to also close the three plants it has in Brazil because the COVID-19 pandemic amplified the underutilization of the company's manufacturing capacity, which was mainly dependent on local demand. "We know these are very difficult, but necessary, actions to create a healthy and sustainable business," Ford CEO Jim Farley said this week in a statement. "We are moving towards a lean and asset-light business model as production in Brazil ceases." Production will cease immediately at Ford's Camaçari and Taubaté plants, and manufacturing of some parts will continue for a few months to support inventories for aftermarket activity. Troller's plant in Horizonte, Brazil, will continue to operate until the fourth quarter. These closures affect about 5,000 employees, mainly in Brazil, Ford spokesman TR Reid said in a conference call with reporters. Commercial vehicle sales fell 26% in Brazil last year and are not expected to rebound to 2019 levels until 2023 with an emphasis on sales from less profitable fleets, according to Ford. Although Ford assures that the measure is due to the precarious situation the business is going through in the midst of the coronavirus pandemic, the president of Brazil, Jair Bolsonaro, attributed on Tuesday the decision of the corporate to close its three plants in the country at last of multi-million dollar government subsidies. 'What does Ford want? Ford has yet to tell the truth, right? He wants subsidies, 'Bolsonaro said during a talk with supporters that was videotaped and posted on social media. Bolsonaro criticized the decision of past governments to subsidize the industry with taxpayer money. With the exit of manufacturing in Brazil, the market will receive imported cars from Argentina and Uruguay, and perhaps some units of the Bronco Sport and the Mach-E electric model, whose production recently began in Mexican plants. With information from Reuters

Source: MSN