The move is part of a $US11 billion ($A14.3b) global restructuring by Ford designed to improve its financial performance and seek an eight per cent global operating margin.
It comes after research firm IHS Markit published that global car sales dropped about 15 per cent in 2020 and, in Brazil, Ford said its sales dropped 26 per cent and had no signs of recovery for at least two years.
Ford said the pandemic aggravated the closure which it said had come on top of the poor sales and resulting large financial losses. Brazil has the world’s second-highest COVID death toll.
The closure will make 5000 people jobless. Vehicles for the Brazilian market will now be sourced from Ford plants in Uruguay, Argentina and other centres.
Ford chief executive Jim Farley said in a statement: “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.”
“We are moving to a lean, asset-light business model by ceasing production in Brazil,” he added.
Ford South America president and the head of the company’s International Markets Group, Lyle Watters, said: “I want to emphasize that we are committed to the region for the long term and will continue to offer customers full sales, service and warranty support.”
Ford had announced plans before COVID to reduce operations in countries including Brazil, the UK, France, Germany and Russia.
The Brazil plants to close immediately are at Camaçari and Taubaté although some production of parts will continue for a few months to support inventories.
The Taubaté factory, which opened in 1974 near São Paulo, made engines and Camcari, which opened in 2001, built cars including the Ka hatch.
The Troller plant in Horizonte, in the north-eastern state of Ceará, which makes off-road vehicles, is due to shut in the fourth quarter of 2021.
As a result of the plant closures, Ford will end sales in South America of EcoSport SUV, the Ka hatch and T4 SUV.
Ford said it expected the wind-down to cost $US4.1 billion ($A5.3b), including employee payments, and was now finding buyers for the plants.
Ford’s reduction of factories follows its “The Way Forward” plan first announced in 2005.
This led to 14 plant closures and the sale of Jaguar Land Rover (2008), Aston Martin (2007), Mazda (diluting its shareholding to 13.4 per cent from 33.4 per cent in 2008) and closing the Mercury brand in 2010.
Factories that were closed had a long tenure with the company. These includes plants in St Louis (closed in 2009 after 61 years); Atlanta (2006, 59 years); Windsor, Canada’s casting plant (2007, 73 years); Wixom, Michigan (2007, 50 years); Twin Cities assembly plant in Minnesota (86 years); and Norfolk assembly complex in Virginia (82 years).
In 2016, Ford closed its Australian production facilities after 91 years in operation. More recently, Ford in 2019 closed six car plants in Europe and one engine plant in Michigan.
Last month it called off a planned joint venture with India’s Mahindra and Mahindra Ltd.
Ford is not alone. GM in 2019 also closed five factories in North America – Canada and plants in the US states of Michigan, Illinois, Ohio and Maryland – and two in Europe. It had already closed production in Australia, South Africa and South Korea.
By Neil Dowling