The move is part of its $ 11 billion global restructuring and will affect 5,000 employees, mostly in Brazil.
Ford Motor Co is announcing that it will close its three factories in Brazil this year and take pre-tax charges of around $ 4.1 billion as the COVID-19 pandemic has exacerbated the underutilization of its manufacturing capacity.
Production will cease immediately at Ford’s Camacari and Taubate factories, with production of some parts continuing for a few months to support inventory for aftermarket sales. The Troller plant in Belo Horizonte, Brazil will continue to operate until the fourth quarter of 2021.
Ford officials said the move was part of the $ 11 billion global restructuring previously announced by the US automaker, which was worth $ 4.2 billion in the third quarter of 2020. Ford shares closed up more than 3% Monday on Wall Street.
Plant closures affect around 5,000 employees, mostly in Brazil, Ford spokesman TR Reid said on a conference call with reporters.
Commercial vehicle sales fell 26% in Brazil last year and are not expected to rebound to 2019 levels until 2023, with the focus on sales of less profitable fleets, Ford said.
“We know these are very difficult, but necessary, actions to build a healthy and sustainable business,” Ford CEO Jim Farley said in a statement. “We are moving to a lean and light business model by ending production in Brazil.”
Ford officials said plant closures were part of the company’s strategy to achieve 8% of global operating margins. Ford, which has operated in Brazil for more than a century, has started discussions with its unions and others over the layoffs.
Brazil’s economy ministry lamented Ford’s decision to end production in the country and said it reinforced the need for reforms to improve the business climate.
In Camacari, in northeastern Brazil, the union called an emergency meeting on Tuesday at the factory gates during the first shift to take a stand on the loss of 4,059 jobs.
A “ very hard blow ”
“This very hard blow took us by surprise. We never imagined that Ford could shut down factories in Brazil, ”union leader Julio Bonfim said in a video message to workers.
The latest plant closures come after Ford closed a heavy-duty truck plant in Brazil in 2019, taking on a charge of $ 460 million. Ford will end up with a large factory in an area where founder Henry Ford established a presence at the turn of the last century.
South America has been a persistent loser for Ford for most of the past 16 years. The company reported pre-tax losses of $ 386 million in the first three quarters of last year. Ford will release its fourth quarter results on February 4.
The closures marked another setback for Ford in a developing market after the Dearborn, Mich., Based company last month canceled its auto joint venture with Indian Mahindra and Mahindra Ltd.
Due to plant closings, Ford will end South American sales of its EcoSport SUV, Ka subcompact and T4 SUV once stocks are sold.
Ford maintains a plant in Argentina and another in Uruguay.
Ford said it will maintain its product development center in Bahia, its proving ground in Tatuí, Sao Paulo and its regional headquarters in Sao Paulo.
Of the $ 4.1 billion in fees, Ford said it expects to record about $ 2.5 billion in the fourth quarter of 2020 and about $ 1.6 billion in 2021. The fees include about 1 , $ 6 billion in non-cash charges and the remainder in cash, mostly in 2021 to cover layoffs.