Ford to Exit Heavy-Truck Business in South America – The Wall Street Journal

New Ford trucks in a parking lot at the company’s factory in São Bernardo do Campo, Brazil, in 2016. Production at the assembly plant will end this year.
New Ford trucks in a parking lot at the company’s factory in São Bernardo do Campo, Brazil, in 2016. Production at the assembly plant will end this year. Photo: Paulo Whitaker/Reuters/Zuma Press

Ford Motor Co. F 3.40% intends to stop making heavy trucks in South America and focus there on the more popular midsize pickup trucks and sport-utility vehicles, the company said Tuesday.

Michigan-based Ford is under pressure to improve its international operations after incurring losses at all of those units in 2018, including $678 million in South America.

On Tuesday, Ford said it would end production this year at Brazil’s São Bernardo do Campo assembly plant, ending sales in South America of F-4000 and F-350 trucks once inventories are cleared.

Sales of the Fiesta small car in South America also will end, according to Ford. It previously said it plans to end U.S. sales of the Fiesta and Focus compact car, amid weaker demand for smaller vehicles.

Ford had said it was exploring alternatives for the São Bernardo do Campo plant, including a possible sale, but said Tuesday the business “would have required significant capital investments to meet market needs and increasing regulatory costs with no viable path to profitability.”

It estimated it would book about $460 million in charges before taxes, with roughly $360 million going to workers, dealers and suppliers.

Ford declined to say how many workers would lose their jobs as it ends production at the Brazilian plant. According to Ford’s website, the plant, which opened in 1967, employs more than 2,000 workers.

The company plans to continue to do business in the region, but “we’re going to play to our strengths in South America,” Ford Global Markets President Jim Farley has said.

The auto maker, which is also winding down sales of the Focus in Argentina, has been cutting costs in South America, including reducing employee ranks by more than 20% over the past few months, the company said.

The South American market also has weighed on General Motors Co. , which has said it is taking steps to improve results in the region. GM, based in Detroit, continues to be unprofitable in South America despite years of restructuring, and is in discussions with its unions, government officials and dealers on a turnaround effort, the company has said.

“The business climate there remains a challenge, particularly in Brazil and Argentina, our largest markets in the region,” GM Chief Executive Mary Barra said during an investor presentation last month. “This is driving unacceptable losses that need to be addressed.”

Shares in Ford closed at $8.83 on Tuesday, up 3.4% for the day and 15% so far this year, outperforming the market.

Write to Maria Armental at maria.armental@wsj.com

Source: https://www.wsj.com/articles/ford-to-exit-heavy-truck-business-in-latin-america-11550605239

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