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With a market capitalization of nearly $36 billion, Ford is up 0.11% over the past year. The company has jumped 5.80% in its year-to-date record.
Ford Motor Company (NYSE: F) is ending vehicle manufacturing in Brazil as the company undergoes restructuring to reduce costs while increasing efficiency. The American multinational automaker announced the latest development on the 11th of January. F stock was up 3.33% up yesterday. And at press time, the company’s stock is up 0.11% to $9.31 in pre-market.
According to the announcement, ending vehicle production in Brazil means the closure of three of the company’s plants. Effective immediately, Ford is closing two plants with plans to close the third plant later in the year. Specifically, the productions will end immediately in Ford’s Camacari and Taubate plants in Brazil. Before the end of 2021, Ford expects its Horizonte plant to also cease operations.
The company’s spokesman T.R. Reid revealed to reporters that about 5,000 workers would be affected as the plants stop operations. Speaking further, the spokesman said that the closure is part of the company’s long-term restructuring plan. The restructuring plan worth about $11 billion started with former CEO Jim Hackett.
Now Ford is poised to lose hundreds of millions as vehicle productions come to an end in Brazil. Additionally, other markets like Argentina and Uruguay will provide vehicles to Ford’s customers in Brazil.
Ford CEO Jim Farley noted that it was difficult to arrive at the decision but necessary “to create a healthy and sustainable business.” Noting that Ford has operated in South America and Brazil for over a century, Farley commented on the company’s decision to end production in Brazil. He noted in a statement:
“We are moving to a lean, asset-light business model by ceasing production in Brazil and serving customers with some of the best and most exciting vehicles in our global portfolio. We will also accelerate bringing our customers the benefits of connectivity, electrification and autonomous technologies to efficiently address the need for cleaner and safer vehicles well into the future.”
Ford as Brazil Operations End
The company also revealed that the closure of the three plants is expected to lead to pretax charges worth $4.1 billion. According to CNBC, the company expects to record about $2.5 billion in cash charges in 2021. According to Ford, the funds should be used to settle employee separation, termination, and other payments.
However, the company said it would immediately begin to work with its unions and stakeholders to counter the adverse effects of the plants’ closure.
Towards the end of 2020, Ford’s Mustang Mach-E hit showrooms pulling in a 3% increase to the company’s stock. Now, a group of auto journalists has awarded the company’s Mustang Mach-E the North American Utility Vehicle of the year. Also, Ford’s F-150 won truck honors.
With a market capitalization of nearly $36 billion, Ford is up 0.11% over the past year. The company has jumped 5.80% in its year-to-date record. In the last three months, F has also grown by 19.85%. In addition to the constant gains, the automaker surged 1.64% over the past month and 7.51% in the last few days.