In recent news that came as a shock to many, Ford company has announced that it will shut down the manufacturing units present in Brazil, South America. Ford has three plants in Brazil and all these will be reportedly closed this year.
Pre-tax charges of about 4.1 billion dollars as the Covid 19 pandemic amplified the company’s underuse of its manufacturing capacity. Production will cease immediately at Ford’s plants. These plants are present in Kamakari and Taobaota with some parts production continuing for a few months to support the inventories for aftermarket sales.
The Troller plant in Bello Horizonte will continue to operate until the fourth quarter of 2021. Ford officials said the action was part of the 11 billion dollars global restructuring previously forecast by the US automaker, of which it had accounted for $4. Ford shares closed up more than 3%. The plant closures affect about 5000 employees mostly in Brazil, Ford spokesmen T.R.Reid said on a conference call with reporters on Monday.
Industry vehicle sales fell 26% in Brazil last year and are not expected to rebound to 2019 levels until 2023 with an emphasis on less profitable fleet sales, Ford said.
“Though these are difficult decisions, some actions to create a healthy and sustainable business” Ford chief executive Jim Farley said in a statement.
Ford Officials said the plant closures are part of the company’s strategy to achieve 8% global operating margins. Ford, which has operated in Brazil for more than a century, has begun discussions with its unions and others about the layoffs.
Brazil’s Economy Ministry lamented Ford’s decision to end production in the country and said it reinforced the need to improve the business climate. In Camacari, in northeastern Brazil, the Union called an emergency meeting at the factory gates to take a stance on the loss of 4,059 jobs. The closures marked another retreat by Ford in a developing market after the Dearborn company last month called off its auto joint venture with India’s Mahindra and Mahindra Ltd. As a result of plant closures, Ford will increase sales in South America of Ecosport SUV, Ka subcompact car and T4 SUV once inventories are sold.
Ford said it will maintain its product development centre in Bahia and regional headquarters in Sao Paulo. Ford’s India operations could benefit through an increase in export.
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