Ford Shuts Brazil Production and Cuts 5,000 Jobs

Ford will post about $4.1 billion of pretax charges to shut Brazil production and cut 5,000 jobs.
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Ford Motor Co.  (F) - Get Report said Monday that it would shut three factories in Brazil and cut about 5,000 jobs as part of its restructuring efforts.

Shares of the Dearborn, Mich., company at last check were up 3.3% to $9.30.

Ford will cease production at the Camaçari, Taubaté and Troller plants during 2021, "as the covid-19 pandemic amplifies persistent industry idle capacity and slow sales that have resulted in years of significant losses."

Ford said it expected to record pretax charges of about $4.1 billion for the moves.

Production at Camaçari and Taubaté will stop immediately, with some parts production continuing for a few months to support inventories for aftermarket sales. The Troller plant in Horizonte, Brazil, will continue to operate until the fourth quarter.

Ford will maintain its customer-support operations with sales, service, aftermarket parts and warranty support in Brazil and South America. The automaker will also keep its product-development center in Bahia, its proving ground in Tatui, Sao Paulo, and its regional headquarters in Sao Paulo.

"The South America team made significant progress in turning around our operations, including phasing out unprofitable products and exiting the heavy truck business,”  Lyle Watters, president of Ford South America and the International Markets Group, said in a statement.

While these efforts improved results, Watters continued, "the sustained unfavorable economic environment and the additional burden of the pandemic made it clear that much more was necessary to create a sustainable and profitable future."

Jim Farley, Ford's president and chief executive, said the company is "moving to a lean, asset-light business model by ceasing production in Brazil and serving customers with some of the best and most exciting vehicles in our global portfolio."

The closures are part of a long-term $11 billion restructuring plan that began with former CEO Jim Hackett.

"We will work earnestly with unions, employees and other stakeholders to develop measures to help deal with the difficult impact of this announcement," Watters said.

Last week, Ford said that fourth-quarter U.S. sales slipped 9.8%, as the coronavirus pandemic dragged down truck sales.

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