Ford closes Brazil plant, scales back in South America

20 Feb 2019

Ford dealership Ford has stated it is closing a factory in Brazil after over 50 years, as the company stops selling large commercial trucks in South America.

The U.S. car manufacturer said it saw "no viable path to profitability" for the Sao Bernardo do Campo plant, where around 2,800 people are employed, BBC reports.

This latest announcement is part of a global restructuring plan and follows warnings of thousands of job losses in the UK and Europe.

President of Ford of South America, Lyle Watters said Ford remained "committed" to the South American region, saying the firm is focused on improving its offerings and realising "a leaner, more agile business model".

The thousands of job cuts are a major setback in a country where the unemployment rate is already over 10%.

Mr Watters added: "We know this action will have a major impact on our employees in São Bernardo and we will be working closely with all our stakeholders on the next steps.”

Ford made the decision to close the factory and leave the heavy truck business as it contends with a steep fall in profits fuelled by its international operations.

Revenue fell 9% in South America in 2018, and the company lost market share in most countries.

As well as the closure in Sao Bernardo, Ford will stop manufacturing its Focus model in Argentina in May this year, within efforts to end its losses in the region.

The firm added that it has reduced salaries and administrative expenditure in the region by over 20% over the past few months.

Ford’s latest cuts comes at a time when investors are looking for progress on the firm’s alliance with Volkswagen AG. As well as commercials vans and trucks, both firms have agreed to work together on other projects, which may include merging their capacity in South America, according to Reuters.

David Kudla, head of Michigan-based Mainstay Capital Management stated: “You can’t cost cut your way to prosperity in the long term. We want to hear about the future, what you’re doing for mobility services and autonomous vehicles.”

Sales of Ford cars and light trucks increased by 10% between 2017 and 2018 in Brazil, trailing a 15% post-recession rise for the entire industry.

Ford ranks fourth in the trucks business, with under half the sales of Mercedes Benz and Volkswagen.