Closure of Ford Factories in Brazil: See the Financial Impacts of Ending Production

Written by Roberta Souza

Published on 12/01/2021 at 15:11

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Ford Vehicle Manufacturer Ceased Production in Brazil with the Closure of Three Factories, Causing a Financial Impact of US$ 4.1 Billion

The American multinational Ford announced yesterday the cessation of production in its factories in Brazil. As a result, the financial impact may reach US$ 4.1 billion, including non-recurring expenses, alongside the significant economic impact from the closure of units in Camaçari (BA), Taubaté (SP), and Horizonte (CE). 5,000 employees will be laid off.

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Of the US$ 4.1 billion, approximately US$ 2.5 billion will directly impact the cash flow of the American multinational, primarily related to liquidation, severance, agreements, and other payments. Meanwhile, US$ 1.6 billion comes from the accounting impact of tax credit write-offs, accelerated depreciation, and amortization of fixed assets.

Lyle Watters, President of Ford South America, emphasizes that after reducing the cost of “all aspects of the business” and ceasing unprofitable production, including the end of truck production, which improved results over the last four quarters, the pandemic exacerbated the unfavorable economic environment, and much more would be needed to make operations sustainable and profitable.

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The manufacturer promised to work on “reasonable and possible alternatives” to allow stakeholders to purchase facilities that are about to close.

Ford is closing two factories immediately and a third at the end of the year, affecting around 5,000 Brazilian employees. This is part of an US$ 11 billion long-term restructuring plan that began with former CEO Jim Hackett. Ford states that it has lost hundreds of millions of dollars in Brazilian regions. Vehicles sold in Brazil will continue to come from Argentina, Uruguay, and other markets, the company notes in a press release.

Closure of Ford Factories in Brazil: See the Financial Impacts of Ending Production

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Closure of Ford Factories in Brazil: See the Financial Impacts of Ending Production

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