Ford Motors Co. has announced it will cease its manufacturing operations in Brazil, where it has been operating for more than a century and controls 8% of the automotive industry.
In an effort to maintain global operating margins, the company announced Monday two plants will be shut down immediately, while a third one will close by the end of 2021. The decision, which will cost Ford about $4.1 billion in pretax charges, is expected to leave about 5,000 people unemployed.
“With more than a century in South America and Brazil, we know these are very difficult, but necessary, actions to create a healthy and sustainable business,” Ford CEO Jim Farley said. “We are moving to a lean, asset-light business model by ceasing production in Brazil.”
Brazilian Economy Minister Paulo Guedes lamented the decision, but he said in a statement that it “goes against the strong recovery observed in the majority of the country’s industrial sectors.”
Meanwhile, Brazil’s center-right House Speaker Rodrigo Maia said on Twitter it represents “a sign of the lack of credibility of the Brazilian government,” of which he has become a fierce critic.
“I hope that Ford’s decision alerts the government and the parliament so that we can move forward in modernizing the State and guaranteeing legal security for private capital in Brazil,” Maia added.
The fifth largest automaker in Brazil, Ford indicated it will continue to serve the Brazilian market with cars sourced from neighboring countries, including Argentina and Uruguay. It also said it will maintain its South America headquarters and proving grounds in São Paulo, as well as its product development center in the northeast state of Bahia.
