SAO PAULO/DETROIT: Ford Motor Co said on Tuesday it would exit its heavy commercial truck business in South America in a plant closing that could cost more than 2,700 jobs, part of a global restructuring meant to end losses in different regions.
Ford previously said the reorganization would result in US$11 billion in charges. The factory in Sao Bernardo do Campo, an industrial suburb of Sao Paulo, has operated since 1967 and was Ford's first plant in Brazil. Although it once produced a number of auto models, it now makes F-4000 and F-350 trucks, as well as the poor-selling Fiesta.
Ford said on Jan. 10 it would cut thousands of jobs and look at plant closures in Europe as part of its plan to return to profit in the region.
Following that announcement, analysts and investors had expected a similar restructuring in South America. Ford Chief Executive Jim Hackett said last month that investors would not have to wait long for the South American reorganization plan.
Ford shares were up 3 percent at US$8.80 on the news in late afternoon in New York.
The closure of the factory may mean Ford is refocusing on the core of its car business in Latin America's largest economy, based in a much newer factory in the northeastern state of Bahia.
But the job cuts in Brazil's industrial heartland will represent a psychological blow for the still new administration of far-right president Jair Bolsonaro, who is battling an unemployment rate that is above 10 percent.
A representative for the union in Sao Bernardo did not have an immediate comment.
Brazilian Ford dealers' association head Luiz Albuquerque said the move eased a sense of uncertainty.
"For the car dealers, this gives us a sense of calm," said Albuquerque, "because Ford has been losing money in the region for the past four or five years and the closure of the truck business will almost completely erase that loss."
Albuquerque had met with the Ford leadership last week where they had guaranteed new investments in cars for the next three or four years.
Ford South America President Lyle Watters said on Tuesday the automaker remains "committed" to South America, a region where it is not currently profitable.
“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 in a statement.
The No. 2 U.S. automaker expects to record pretax special charges of about US$460 million, with most of that recorded this year, it said in the statement.
Ford said Tuesday's announcement follows other moves, including reducing salaried and administrative costs in the region by more than 20 percent over the past few months.
(Reporting by Ben Klayman in Detroit and Marcelo Rochabrun and Alberto Alerigi in Sao Paulo; Editing by Jonathan Oatis and Matthew Lewis)