Ford to cut products, jobs in shakeup of South America operations

Ford Motor Co. said it will end production of a number of vehicles at its Sao Bernardo do Campo plant in Brazil and cut a “significant” amount of workers there as it attempts to save its floundering South American operations.

The automaker said Tuesday it will exit the commercial heavy-duty truck business in South America after it stops building its heavy-duty Cargo lineup at the Brazil plant this year. It will also end production and sales of the F-4000 and F-350 pickups and Fiesta subcompact sedan in that region.

The actions will result in a $460 million charge that will mostly be recorded in 2019, according to a filing with the Securities and Exchange Commission. About $360 million of that will be for “separation and termination payments for employees, dealers, and suppliers,” according to the filing.

A spokesman said that there will be “a significant impact to jobs” but declined to elaborate. The Brazil plant employs nearly 2,800 workers.

It’s unclear if the facility will close or receive new products.

“Ford is committed to the South American region by building a sustainable and profitable business with strengthened product offerings, outstanding customer experience, and a leaner more agile business model,” Ford of South America President Lyle Watters said in a statement.

The automaker said it considered selling its heavy-duty truck business as well as partnering to help reduce losses, but ultimately decided that there was no way to make money.

“We know this action will have a major impact on our employees in Sao Bernardo, and we will be working closely with all our stakeholders on the next steps,” Watters said. “Working closely with our dealers and suppliers, Ford will continue to provide support for our customers with warranty, parts and service.”

The automaker has been reviewing its South America business for months under CEO Jim Hackett’s broad, $11 billion reorganization of the company. Ford lost $678 million in South America last year.

In recent months, Ford said, it has reduced salaried and administrative costs in South America by more than 20 percent.

It is also sharing product development costs as part of a partnership with Volkswagen Group to build medium-duty pickups in South America and other regions.