Cleveland, Ohio – Ford is shutting down its three factories in Brazil and scaling back operations in that country as it seeks to stem its economic bleeding in South America.
While President and CEO Jim Farley blamed COVID-19 for the plant closures, Ford has been losing money in South America for several years. Brazil is the continent’s largest country by geography and population. Ford lost $753 million in South America in 2017, $678 million in 2018, about $800 million in 2019, and $600 million through the first three quarters of 2020. When Q4 numbers for 2020 come in, Ford’s four-year losses will likely top $3 billion.
“Ford has been present in South America and Brazil for more than a century and we know that these are very difficult, but necessary, actions to create a healthy and sustainable business,” Farley said. “We are moving to an agile and lean business model by ending production in Brazil, serving our consumers with some of the most exciting products in our global portfolio.”
The automaker plans to continue serving Brazil’s sales markets with vehicles from plants in Uruguay and Argentina as well as with U.S.-built products such as the Bronco SUV and Mustang Mach-1 sports car. The company said it will also maintain its product development center in Brazil.
For nearly 20 years, international companies have had high hopes for Brazil’s growth potential. So-called BRIC countries (Brazil, Russian, India, and China) were supposed to outgrow developed economies in the U.S. and Europe. While that growth has taken place in China and to a lesser degree India, Brazil and Russia badly failed to live up to that potential, according to data from the International Monetary Fund (IMF).
After peaking in 2010 at about 7% gross domestic product (GDP) growth, Brazil’s growth sank from 2011 through 2014, and its economy shrank in 2015 and 2016 with GDP at about -4%. For the past three years, its economy has stagnated at about 1% growth.
Ford officials said that COVID-19-related sales declines have exacerbated that struggling economy, creating far too much underutilized factory capacity.
About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and Today's eMobility and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 19 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.