Published: Thu, January 14, 2021
Economy | By

Covid-19 impact: Ford announces closing of Brazil manufacturing operations

Covid-19 impact: Ford announces closing of Brazil manufacturing operations

On Monday, Ford said it planned to stop operations at its Camaçari and Taubaté plants immediately, though some production of parts will continue for a few months to support inventories. The industrial plant of Horizonte (CE), responsible for the manufacture of the Troller T4, will have its activities closed in the last quarter of 2021.

Vehicle sales dropped 28.57% and that of buses by 33%.

As a result of the plant closures, Ford will end sales in South America of EcoSport SUV, Ka subcompact auto and T4 SUV once inventories are sold.

The multinational automaker stated on January 11 that it would end its production in the said South American region.

"We know these are very hard but necessary actions in order to create a healthy and sustainable business", Ford president and chief executive officer Jim Farley said.

"The Covid-19 pandemic increased the industry's persistent idle capacity and the drop in sales, resulting in years of significant losses", it said. "We are moving to a lean, asset-light business model by ceasing production in Brazil".

Ford said it expected the wind-down to cost $4.1bn, including separation payments, and was working to find buyers for the plants.

Claiming to be "surprised" by Ford's decision, Vice President Hamilton Mourao said only that the company "made a lot of money" in Brazil and that it could have delayed its exit.

"This is not good news".

The company celebrated 100 years of operations in Brazil in 2019. The country's lower house Speaker Rodrigo Maia said on Twitter that the closings are "a sign of the lack of credibility of the Brazilian government".

The company would maintain its product development center in Bahia, as well as its proving ground and regional headquarters in Sao Paulo.

Ford officials said the plant closures are part of the company's strategy to achieve 8% global operating margins.

Watters added that, in addition to the recently confirmed production of the next-generation of Ranger and the arrival of the Bronco, Mustang Mach 1 and Transit van, Ford plans to announce other all-new models, including a new plug-in vehicle.

President Bolsonaro claimed that Ford did not tell the truth about its decision, noting it wanted to continue receiving subsidies of about US$4 billion.

Like this: