Ford’s departure from Brazil could leave thousands jobless

Ford has announced that it will stop all activities in Brazil, two factories with 3700 workers will close immediately, a third will remain in operation until the 4th quarter of 2021

January 13, 2021 by Peoples Dispatch
Ford had already suspended activities in the country due to the pandemic. Photo: Sergio Figueiredo

One and a half years after stopping activities in the São Bernardo do Campo, the US multinational Ford announced on Monday January 11 that it will not produce anymore vehicles in Brazil.

The factories of Camaçari, in the state of Bahia, with around 3,000 workers, and Taubaté, in the state of São Paulo, with 700 workers, will be closed immediately. The Horizon location in the Ceará state will remain open until the fourth quarter of 2021.

The Ford Motor Company, which had already suspended part of its operations in Brazil due to the pandemic, said that it will work in collaboration with unions to “minimize the impacts of the closures.”

Brasil de Fato contacted the Metalworkers Union of the Taubaté Region (Sindmetau) for comment. According to their press office, the organization was surprised by the news and called an emergency meeting with workers. Only after this meeting will official information be released to the press.

“We know that these are very difficult, but necessary actions, needed to maintain a healthy and sustainable business,” said Jim Farley, Ford’s president and CEO, in a press release.

In 2020, Ford recorded a 39.2% drop in sales, almost 11 percentage points above the overall decline experienced in the auto industry. Even so, the company announced an investment plan of about US $ 580 million in Argentina by 2023, to produce the new Ranger pick-up truck.

The closure of factories in Brazil seems to be a trend in the sector. Less than a month ago, Mercedes Benz announced the closure of a factory where 370 workers were employed in the state of São Paulo. The rise of the dollar, which makes importing parts for the assembly of automobiles more expensive, was considered a decisive element that led to the end of production activities.

Impact on Bahia

The end of Ford’s vehicle production in Brazil will worsen the unemployment rate in Bahia, which is 19.8%, according to the Brazilian Institute of Geography and Statistics (IBGE). In the state’s Camaçari region, which houses one of the Ford units that shuttered its doors, an estimated 12,000 direct jobs will be impacted – a number three times greater than that of Ford workers in the state.

The projection is being made by the Metalworkers Union of Camaçari, which foresees the loss of 60,000 jobs directly and indirectly, in about 30 companies.

The Union recalls that the company had recently signed an agreement for the development of new products over the next four years. In other words, workers in the entire production chain were taken by surprise.

Today, Ford represents 5% of the entire manufacturing industry in the state of Bahia, generating 4.1% of all industrial jobs in the state. Governor Rui Costa proposed negotiations with industry federations on Tuesday January 12th, to discuss the future of the sector, signaling that he will try to seek Chinese investments to make up for losses, fill job openings, and keep the region’s economy afloat.

“Costs in Brazil”

Less than 24 hours after Ford’s announcement, entities such as the National Industrial Confederation (CNI) and the Federation of Industries in the State of São Paulo (Fiesp), warned of the “costs in Brazil” and called for further reforms to “improve the country’s business environment.”

In contrast, industry analyst Ana Georgina says that the main reason for the company’s departure is not the “Brazil cost”, but the country’s political and economic instability.

“It’s not a question of legal uncertainty, because there are a series of exemptions, and we’ve done labor reform in the past, which was very tough and made things very precarious for workers. Thus, there is no lack of reforms, and labor in Brazil is not expensive,” she analyzes.

“The problem is our economic policy, which offers no way out of stagnation. We do not have an industrial policy, encouraging domestic and foreign investment, and the company took advantage of the drop in sales during the pandemic to further its global strategy,” she added.

According to Ford, the rise in the dollar was a major factor in the decision.