Sao Paulo (AFP)
Auto maker Ford said on Monday that losses exacerbated by the coronavirus outbreak would see it shut down its three factories in Brazil, where it has operated for a century, cutting some 5,000 jobs.
The losses continued despite progress in phasing out unprofitable products, including exiting the heavy-duty truck business, cutting costs and launching new products, according to a company statement.
“A sustained unfavorable economic environment and the additional burden of the pandemic have made it clear that much more is needed to create a sustainable and profitable future,” added South American Ford Director Lyle Watters.
The Covid-10 pandemic, the company said, “amplifies the industry’s capacity for persistent inactivity and sluggish sales that have resulted in years of significant losses.”
Ford said production would cease immediately at its Camacari and Taubate factories, with only some parts manufacturing continuing for a few months.
The Troller factory in Horizonte will operate until the fourth quarter.
Ford has said it will end sales of EcoSport, Ka and T4 once stocks are sold.
“With over a century in South America and Brazil, we know these are very difficult, but necessary, actions to build a healthy and sustainable business,” said Jim Farley, President and CEO of the management of Ford.
By closing its factories in Brazil, the company was moving towards a “lean and lean business model”, he added.
– Car sales down –
Ford would continue to serve South America with cars sourced from Argentina, Uruguay and other markets, he said.
Sales of new vehicles in Brazil fell by more than 26% in 2020 due to the health crisis, the Fenabrave automobile federation announced last week.
Car sales fell 28.57% and bus sales by 33%.
The closures will result in one-time costs of around $ 4.1 billion, Ford said.
The news came like a bomb in a recessionary Brazil, which is grappling with record unemployment, and sparked criticism over the inability of Jair Bolsonaro’s government to create a favorable business environment.
Ford opened its first plant in Brazil in 1921, in Sao Paulo, to produce 4,700 automobiles and 360 tractors per year.
In 2019, the company closed its plant in Sao Bernardo de Campo after 52 years of operation, affecting some 2,800 workers.
In November, Ford announced its return to neighboring Uruguay after an absence of three decades, to assemble transport vehicles for the South American market and create 200 jobs.
– ‘A madhouse’ –
” It is not good news. Ford made a lot of money in Brazil… I think it could have delayed the decision and waited because our consumer market is bigger than the others, ”Brazilian Vice President Hamilton Mourao told CNN Brazil.
Rodrigo Maia, the opposition chairman of the lower house of the Brazilian parliament, said the closures were a “demonstration of the Brazilian government’s lack of credibility, clear rules, legal certainty and a rational tax system.”
“Our system has become madness in recent years, with a direct impact on the productivity of businesses,” he said.
Karl Brauer, analyst at CarExpert.com, said there has been a lot of consolidation in the auto industry in recent years.
“General Motors, in particular, took aggressive steps to exit the market, which made no financial sense. Ford pulling out of Brazil confirms it is ready to make the same decisions in underperforming markets. ”
Ford said it will maintain its product development center in Bahia, as well as its testing ground and regional headquarters in Sao Paulo.
The company said it would work with unions to develop a “fair and balanced plan” to mitigate the impact of the closures on workers.
Brazil is the country in the world with the second highest number of coronavirus deaths, with more than 203,000 lives lost.
© 2021 AFP