Ford to close oldest Brazil plant, exit South America truck business
SAO PAULO/DETROIT: Ford Motor Co said it will close its oldest factory in Brazil and exit its heavy commercial truck business in South America, a move that could cost more than 2,700 jobs as part of a restructuring meant to end losses around the world.
Ford previously said the global reorganisation, to impact thousands of jobs and possible plant closures in Europe, would result in $11 billion in charges.
Following that announcement, analysts and investors had expected a similar restructuring in South America. Ford Chief Executive Jim Hackett said last month that investors would not have to wait long for the South American reorganisation plan.
The factory slated for closure is in Sao Bernardo do Campo, an industrial suburb of Sao Paulo that has operated since 1967. It first produced a number of auto models before being switched predominantly to trucks in 2001. It makes the F-4000 and F-350 trucks, as well as the Fiesta small car, a sales laggard.
The factory closure may mean Ford is refocusing on the core of its car business in Latin America’s largest economy, based in a much newer factory in the northeastern state of Bahia. But the job cuts in Brazil’s industrial heartland represent a psychological blow for the new administration of far-right President Jair Bolsonaro, which is battling an unemployment rate above 11 per cent.
Ford’s latest cuts come as investors watch for signs of progress on the company’s alliance with Volkswagen AG, which already encompasses commercial vans and pick-up trucks but may soon expand into electric and self-driving cars. The two automakers have also pledged to work together on other projects, which could include combining capacity in regions like South America.
Ford shares closed up 3.4 per cent at $8.83 in New York.
“You can’t cost cut your way to prosperity in the long-term,” said David Kudla, who heads Michiganbased Mainstay Capital Management, a firm that previously owned Ford stock.
“We want to hear about the future, what you’re doing for mobility services and autonomous vehicles.” The closure is also a blow to the industrial outskirts of Sao Paulo, where Brazil’s automotive industry was born and which long drove its industrial growth. It is also where imprisoned former president Luiz Inacio Lula da Silva came to fame as a union leader who organised massive strikes that helped harken the end of the military dictatorship.
The union in Sao Bernardo did not have an immediate comment. But Sao Bernardo Mayor Orlando Morando complained angrily that Ford gave no warning and failed to discuss the closure with the workers.
“The 2,800 families directly affected and another 2,000 indirectly affected deserved a chance to react. This is an act of cowardice,” Morando’s office said in a statement.