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Ford shuts down Brazilian manufacturing and costs $ 4.1 billion

Production at Ford’s plants in Camaçari and Taubaté will stop immediately, and some parts production will continue for several months to support inventories for aftermarket sales. The Troller plant in Belo Horizonte, Brazil, will continue to operate until the fourth quarter.


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Ford officials said the action was part of a previously predicted $ 11 billion global restructuring.

Ford Motor Co. announced on Monday that the COVID-19 pandemic has exacerbated the company’s underutilization of manufacturing capacity, closing three plants in Brazil this year and paying approximately $ 4.1 billion in pre-tax costs. Production at Ford’s plants in Camaçari and Taubaté will stop immediately, and some parts production will continue for several months to support inventories for aftermarket sales. The Troller plant in Belo Horizonte, Brazil, will continue to operate until the fourth quarter.

Ford officials said the action was part of a $ 11 billion global restructuring previously predicted by U.S. automakers, which accounted for $ 4.2 billion by the third quarter of 2020. .. Ford’s stake closed more than 3%.

Ford spokesman TR Reed said in a conference call with reporters that the factory closure was affecting about 5,000 employees, primarily in Brazil.

Brazil’s industrial vehicle sales fell 26% last year, according to Ford, and are not expected to return to 2019 levels by 2023 with a focus on unprofitable fleet sales.

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Ford will discontinue sales of the EcoSport SUV, Ka subcompact car (Aspire sedan) and T4 SUV in South America as soon as the stock is sold.

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“We know these are very difficult, but necessary actions to create a healthy and sustainable business,” Ford CEO Jim Farley said in a statement. “By stopping production in Brazil, we are moving to a lean, low-asset business model.”

Ford officials said the factory closure was part of the company’s strategy to achieve a global operating profit of 8%. Operated in Brazil for over a century, Ford has begun discussions with unions and others about layoffs.

Brazil’s Ministry of Economy lamented Ford’s decision to end production in the country and said it strengthened the need for reforms to improve the business environment.

In Kamasari, northeastern Brazil, the union called an emergency meeting at the factory gate on Tuesday’s first shift to confront the loss of 4,059 jobs.

“This terrible blow surprised us. I never imagined Ford could close a factory in Brazil,” union leader Julio Bonfim said in a video message to workers.

The closure marked another recession in Ford’s developing market after the company, based in Dearborn, Michigan, closed its auto joint venture with Mahindra and Mahindra in India last month.

As a result of the plant closure, Ford will discontinue sales of the EcoSport SUV, Ka subcompact car and T4 SUV in South America as soon as the inventory is sold.

Ford has factories in Argentina and Uruguay.

Ford said it would maintain a product development center in Bahia, a test site in Tatuí, São Paulo, and regional headquarters in São Paulo.

Ford expects to record approximately $ 2.5 billion in the fourth quarter of 2020 and approximately $ 1.6 billion in 2021 out of $ 4.1 billion in expenses. This cost will be approximately $ 1.6 billion in non-cash costs and the rest will be paid primarily in cash in 2021. Dismissal.

(This story has not been edited by NDTV staff and is automatically generated from the syndicate feed.)

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Ford shuts down Brazilian manufacturing and costs $ 4.1 billion

Source link Ford shuts down Brazilian manufacturing and costs $ 4.1 billion

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