Ford will cease production at their manufacturing plants in Brazil this year – as part of a restructuring plan to cut costs and boost efficiency
Ford Motor Co has announced its plan to shut down three of its Brazil plants this year – Camacari, Taubate and Troller plants. The company cites cost cutting factors and need to boost efficiency as reasons for this decision and to take pretax charges of around $4.1 billion (Rs 30,100 crores approx).
The current COVID-19 pandemic situation has augmented the company under-utilization of its manufacturing facilities. This closure would help to balance out production and will affect around 5,000 employees in Brazil, says Ford in a statement.
Ford’s plants in Camacari and Taubate
Ford will bring production to an immediate standstill at its Camacari and Taubate plants with only some parts production to continue for some months so as to support inventories of after sales services. However, production will continue till the fourth quarter at the company’s third plant in Troller in Belo Horizonte, Brazil.
Ford Motor Co will also end sales of its EcoSport, Ka (Figo) and T4 once inventories are sold out. This is a part of the company’s $11 billion global restricting plan of which $4.2 billion was accounted through the third quarter of 2020. Under the same plan, Ford had recently decided to exit from its JV with Mahindra in India.
Following this closure, vehicles sold in Brazil will come in from Argentina, Uruguay and other markets. The company has faced severe losses in the region wherein vehicle sales fell by 26 percent in the past year and is not expected to reach 2019 levels anywhere in the near future.
In fact markets are only set to revive by 2023. The closure of these plants are a part of the company strategy to achieve 8 percent global operating margins. The Brazil plant has been in operation for over a century but falling sales have led to this decision.
Up to 5,000 Jobs Affected
Ford Chief Executive Jim Farley has issued a statement to this effect and as the company faces a lean business future the closure of production in Brazil is the only other alternative. The company has commenced discussions with unions and others about the layoffs.
In Calacari, the Union called for an emergency meeting at factory gates on Tuesday to take a stand against job losses of around 4,059 workers. However, where its customers are concerned, the company promises full customer support via sales, service and supply of spares along with warranty in Brazil and South America.
Ford’s JV with Mahindra called off
Ford Motor Co has also called off its joint venture with Mahindra and Mahindra. The current market scenario would have meant significantly higher investments for both parties, above what was earlier envisioned and this did not make business sense to either parties.