Ford closes the oldest factory in Brazil and leaves a truck company in South America



The 88th International Geneva Motor Show
FILE PHOTO: The Ford logo is represented on the company's stand at the 88th Geneva International Motor Show, in Geneva, Switzerland, on March 7, 2018. REUTERS / Denis Balibouse

February 20, 2019

By Marcelo Rochabrun, Alberto Alerigi and Ben Klayman

SAO PAULO / DETROIT (Reuters) – Ford Motor Co. said on Tuesday it is closing its oldest plant in Brazil and closing its commercial heavy truck business in South America, a decision that could cost more than 2,700 jobs in the US. frame of a looming restructuring losses around the world.

Ford had previously said the global reorganization, which would affect thousands of jobs and eventual plant closures in Europe, would entail $ 11 billion in costs.

After this announcement, analysts and investors expected a similar restructuring in South America. Ford CEO Jim Hackett said last month that investors should not wait long for the South American restructuring plan.

The plant to be closed is located in Sao Bernardo do Campo, an industrial suburb of Sao Paulo in operation since 1967. It first produced several models of automobiles before moving mainly to trucks in 2001. It manufactures F models -4000 and F-350 trucks, as well as the small Fiesta car, a late seller.

The closure of the plant could mean that Ford is refocusing on the heart of its automotive business in the largest economy in Latin America, based in a much newer factory located in northeastern Bahia. But the job cuts in the Brazilian industrial center are a psychological shock for the new administration of far-right President Jair Bolsonaro, who is fighting an unemployment rate of over 11%.

Ford's latest cuts come as investors look for signs of progress on the company's alliance with Volkswagen AG, which already includes commercial vans and vans, but may soon expand to electric and autonomous cars. The two builders also committed to collaborate on other projects, which could include combining capabilities in regions such as South America.

Ford's shares closed up 3.4% to $ 8.83 in New York.

"You can not reduce your costs on the road to long-term prosperity," said David Kudla, director of Mainstay Capital Management in Michigan, a company that previously held shares in Ford. "We want to know the future, what you do for mobility services and autonomous vehicles."

This closure is also a blow to the industrial suburb of Sao Paulo, where the Brazilian car industry was born and which has long motivated its industrial growth. It is also at this place that former President Luiz Inacio Lula da Silva, imprisoned, became famous as a trade union leader who organized massive strikes that contributed to the end of the military dictatorship.

The Sao Bernardo union did not have an immediate comment. But the mayor of Sao Bernardo, Orlando Morando, complained angrily that Ford gave no warning and did not discuss the closure with the workers.

"The 2,800 families directly affected and 2,000 others indirectly affected deserved a chance to respond. It's an act of cowardice, "Morando's office said in a statement.

A spokesman for Ford refused to provide a precise figure for job cuts but acknowledged that there would be "a significant impact" and said the automaker would work with unions and other concerned parties to "get the job done." next steps".

Ford President of South America, Lyle Watters, said Tuesday that the builder remained "engaged" in South America, a region where it is not profitable at the moment.

SLOW GROWTH

Sales of Ford cars and light trucks rose 10% between 2017 and 2018 in Brazil, a 15% increase after the recession for the entire industry.

In the truck sector, it ranks fourth, with sales less than half those of Mercedes Benz and Volkswagen.

Ford announced in October that it would stop building its compact Focus cars in Argentina in May 2019 as part of efforts to end its losses in the region.

Kleiton Da Silva, an employee and union representative at the remaining Ford plant in Bahia, said the automaker was in talks to cut 650 workers, which the automaker said rose to 4,604.

US automaker No. 2 expects to record special pre-tax charges of about $ 460 million, most of which is recorded this year, the statement said.

(Report by Ben Klayman in Detroit and Marcelo Rochabrun and Alberto Alerigi in Sao Paulo, edited by Matthew Lewis, Dan Grebler and Bill Berkrot)


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