Ford ends manufacturing in Brazil, expects $ 4.1 billion in fees
Engine assembly line for Ford KA 1.0 3 cylinders at the Ford Engines plant in Kamacari, Brazil.
Paulo Friedman | Corbis News | Getty Images
Ford Motor is ending car production in Brazil as it restructures its South American operations. The measures, including the shutdown of three factories, are expected to result in $ 4.1 billion in pre-tax fees, Ford said Monday.
The automaker said it will record about $ 2.5 billion in cash fees, mainly in 2021, for employee firing, termination, settlement and other payments. In addition, it will record approximately $ 1.6 billion in non-cash write-offs of accelerated tax receivables, depreciation and amortization.
Ford has been operating in Brazil for over a century, however, the area and operations have been unstable in recent years.
Ford is actively evaluating and restructuring its global operations, including those in South America, as it attempts to implement a $ 11 billion transformation plan. Ford hopes to boost profitability by achieving an adjusted profit margin of 8% and generating free and strong cash flow consistently.
Ford said production will stop immediately at the Camacari and Taubate plants in Brazil, however some parts will continue to be produced for a few months to support aftermarket sales inventories. Another plant in Horizonte, Brazil, will continue operating through the fourth quarter. Around 5,000 employees are expected to be affected.
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