Ford To Close Factory In South America As It Scales Back Operations

After operating for more than fifty years, United States based auto manufacturing company Ford has announced that it would close down a factory in Brazil. This is part of the strategy of the company to end selling of heavy commercial trucks in entire continent of South America.

It saw “no viable path to profitability” for the Sao Bernardo do Campo plant, said the US carmaker. The plant currently employs about 2,800 people.

This is the latest measure by the company its global restructuring strategy. The company had earlier issued warnings of loss of thousands of jobs in the UK and in mainland Europe as a part of the restructuring process.

Ford is till “committed” to the South American region, said Lyle Watters, president of Ford of South America.

The current focus of the company was to enhance the offering to customers and the implementation of “a leaner, more agile business model”, he said.

According to labour organisations, the closure of the Brazil plant would result in about 2,800 job cuts. This would be bad news for the economy of the country because it already has an unemployment rate of more than 10 per cent.

“We know this action will have a major impact on our employees in São Bernardo and we will be working closely with all our stakeholders on the next steps,” Watters said.

Cargo trucks, F Series pick-ups and the Fiesta are manufactured in the unit that is to be closed down and once the inventories are sold off, the sale of those models would be completely stopped, Ford said.

In recent years, there has been a steep fall in the profits of Ford primarily because of the losses of its international operations and this decision of closing down the Brazilian factory and stopping the manufacture and sale of heavy trucks is believed to be driven by those losses.

While losing its market share in most countries in the continent, Ford reported a loss of 9 per cent year in year in revenues from South America. In a similar decision taken by Ford recently, the company announced that it would stop[ the manufacturing of its Focus car in Argentina in addition to the closure of the plant in Sao Bernardo.

Over the past few months, the company has reduced by more than 20 per cent salaries and administrative costs in the regions, Ford said.

According to Ford, the company would be hit by expenditure of $460m because of the closure of the plant in Brazil primarily incurring costs because of separation and termination payments for employees, dealers and suppliers.

The Sao Bernardo do Campo assembly plant has been operational since 1967 and is one of the two plants of the company in the country.

(Adapted from BBC.com)

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