The transfer is a part of its $11bn world restructuring and can have an effect on 5,000 workers, principally in Brazil.
Ford Motor Co says it would shut its three vegetation in Brazil this yr and take pre-tax costs of about $4.1bn because the COVID-19 pandemic worsened the corporate’s under-utilisation of its manufacturing capability.
Manufacturing will stop instantly at Ford’s vegetation in Camacari and Taubate, with some components manufacturing persevering with for just a few months to assist inventories for aftermarket gross sales. The Troller plant in Belo Horizonte, Brazil, will proceed to function till the fourth quarter of 2021.
Ford officers mentioned the motion was a part of the $11bn world restructuring beforehand introduced by the US automaker, of which it had accounted for $4.2bn via the third quarter of 2020. Ford shares closed greater than 3 p.c greater on Monday on Wall Road.
The plant closures have an effect on about 5,000 workers, principally in Brazil, Ford spokesman TR Reid mentioned on a convention name with reporters.
Business car gross sales fell 26 p.c in Brazil final yr and will not be anticipated to rebound to 2019 ranges till 2023 with an emphasis on much less worthwhile fleet gross sales, Ford mentioned.
“We all know these are very troublesome, however obligatory, actions to create a wholesome and sustainable enterprise,” Ford Chief Government Jim Farley mentioned in an announcement. “We’re shifting to a lean, asset-light enterprise mannequin by ceasing manufacturing in Brazil.”
Ford officers mentioned the plant closures are a part of the corporate’s technique to realize 8 p.c world working margins. Ford, which has operated in Brazil for greater than a century, has begun discussions with its unions and others concerning the layoffs.
Brazil’s economic system ministry lamented Ford’s determination to finish manufacturing within the nation and mentioned it strengthened the necessity for reforms to enhance the enterprise local weather.
In Camacari, in northeastern Brazil, the union referred to as an emergency assembly on the manufacturing unit gates on the first shift on Tuesday to take a stance on the lack of 4,059 jobs.
A ‘very arduous blow’
“This very arduous blow took us unexpectedly. We by no means imagined that Ford might shut its factories in Brazil,” mentioned union chief Julio Bonfim in a video message to the employees.
The newest plant closings come after Ford shut a heavy-duty truck manufacturing unit in Brazil in 2019, taking a $460m cost. Ford can be left with one giant manufacturing unit in a area the place founder Henry Ford established a presence early final century.
South America has been a persistent cash loser for Ford for a lot of the final 16 years. The corporate reported pre-tax losses of $386m there within the first three quarters of final yr. Ford will report its fourth quarter earnings on February 4.
The closures marked one other retreat by Ford in a creating market after the Dearborn, Michigan-based firm final month referred to as off its automobile three way partnership with India’s Mahindra and Mahindra Ltd.
Because of the plant closures, Ford will finish gross sales in South America of its EcoSport SUV, Ka subcompact automobile and T4 SUV as soon as inventories are bought.
Ford retains a plant in Argentina and one other in Uruguay.
Ford mentioned it would preserve its product growth centre in Bahia, its proving floor in Tatuí, Sao Paulo and its regional headquarters in Sao Paulo.
Of the $4.1bn in costs, Ford mentioned it expects to report about $2.5bn within the fourth quarter of 2020 and about $1.6bn in 2021. The costs embody about $1.6bn in non-cash costs and the remaining in money, primarily in 2021 to cowl the layoffs.