Ford announced on Monday the closure of all its car factories in Brazil, where it had operated for a century, in a decision that will leave almost 5,000 people out of work.
The announcement comes within the framework of a restructuring of the Detroit group’s production (United States) in South America, where it has been running deficits for several years, aggravated by the collapse of the sector in Brazil in 2020 due to the coronavirus pandemic .
The news fell like a bomb in Brazil, which has record levels of unemployment and struggles to emerge from the recession, and multiplied criticism against the government of Jair Bolsonaro for its difficulties in creating a favorable business environment.
The firm will supply the regional market from its production in Argentina, Uruguay and other sources.
The costs of the measure in Brazil will have an impact of 4.1 billion dollars on Ford’s coffers, the company said in a statement.
“We know that these actions are very difficult, but necessary, to create a healthy and sustainable business,” said the president of the company, Jim Farley, quoted in the document.
Operations will cease immediately at the Camaçari (Northeast Bahia state) and Taubaté (inland São Paulo) plants. A third factory in Ceará (northeast) will continue to operate until the last quarter of the year.
Ford will maintain a test center in Tatuí (interior of Sao Paulo), as well as its regional headquarters in the economic capital of Latin America.
Ford installed its first factory in Brazil in 1921, in Sao Paulo, to produce 4,700 cars and 360 tractors per year.
“Manufacturing operations in Argentina and Uruguay and sales organizations in other South American markets will not be impacted,” stated Ford’s note.
Ford announced in November its return to Uruguay after more than three decades, with a plant that will create 200 jobs.
“By closing production in Brazil, we are changing towards an agile and reduced business model (…) We are going to accelerate the availability of the benefits resulting from connectivity, electrification and autonomous technologies, effectively supplying the need for environmentally friendly vehicles. more efficient and safe ”, added the brand.
“The sector saw a strong consolidation in recent years. General Motors in particular moved very aggressively to exit markets without financial interest. Ford’s exit from Brazil confirms that they want to make the same decisions in underperforming markets ”, said Karl Brauer, analyst at the specialized portal CarExpert.com
“It’s 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 larger than that of others, ”said Brazilian Vice President Hamilton Mourao, speaking to CNN Brazil.
The unions at the Bahia factory called a protest on Tuesday morning.
“Warning for Brazil”
The president of the Chamber of Deputies, Rodrigo Maia, of the DEM party (center-right), affirmed that “the closure of Ford is a demonstration of the lack of credibility of the Brazilian government, of clear rules, of legal security and of a system rational tax ”.
“Our system has turned into a madhouse in recent years, with a direct impact on the productivity of companies,” added Maia.
“Global Ford closed factories in the world because it is going to focus its production on more profitable trucks. It has nothing to do with the political, economic and legal situation in Brazil ”, replied Fabio Wajngarten, executive secretary of communications for the Brazilian Presidency.
But the Federation of Industrialists of the State of Sao Paulo (Fiesp) regretted the announcement. The decision is a consequence of the lack of an agenda that “improves the business environment and increases the competitiveness of Brazilian products” and is a “warning for Brazil,” he said.
The sale of new vehicles in Brazil collapsed by 26.16% in 2020 under the impact of the coronavirus pandemic, according to the National Federation of Motor Vehicle Dealers (Fenabrave). 2.05 million cars were patented last year, up from 2.787 million in 2019.
The pandemic is in a new ascending phase in Brazil, the second country with the most deaths from covid-19, with more than 203,000 deaths.