Ford Exits Heavy Truck Business in South America -- 4th Update
20 February 2019 - 10:02AM
Dow Jones News
By Maria Armental
Ford Motor Co. 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 the
global business 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,
Ford said.
Ford previously said it plans to end U.S. sales of the Fiesta
and Focus, amid weaker demand for smaller cars.
Ford had said it was exploring alternatives for the São Bernardo
do Campo plant, including a possible sale, but Tuesday said 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 about $360 million going to workers, dealers and
suppliers.
Ford didn't specify how many workers would lose their jobs as it
ends production at the Brazilian plant. But according to Ford's
website, the plant, which opened in 1967, employs more than 2,000
workers.
Ford executives have said the company would 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 has also said it plans to end production
of the Focus compact car 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.
--Stephen Nakrosis and
Mike Colias
contributed to this article.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
February 19, 2019 17:47 ET (22:47 GMT)
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