Ford announced last week the closure of the São Bernardo do Campo (SP) factory, a unit in which the trucks and the Fiesta are produced. The factory, bought by Willys-Overland in 1967, gives work directly to almost 3 thousand people and to another 1.5 thousand if considered the tertiary production.

The decision, which came after many assessments and negotiations with public bodies (São Paulo State and São Bernardo municipality), is considered irreversible and has already been communicated to international investors. João Doria, the newly elected governor of the State of São Paulo, said that it was a legitimate business decision, denying the possibility of granting further tax relief to avoid closing the factory.

The factory is currently operating at less than 20% of its production capacity and is the only one of the Ford group, at the South American level, to produce trucks. The fate of the Fiesta is not yet known: the car is in sales crisis (even for the competition of the “sister” Ford Ka, produced in Camaçari) and whose production generates a loss of almost 3 thousand reais per unit.

Ford has two other factories in Brazil: Camaçari (BA) manufactures motor vehicles and engines and Taubaté (SP) manufactures engines and transmissions. According to the company, these two factories will continue to operate normally, while according to the unions there is the risk of a concentration of activities in Camaçari, with the consequent closure of the Taubaté factory.

 

The truck market in Brazil

The market (which includes light trucks to heavy vehicles) suffered a fierce crisis in the period 2015-2017, a consequence of the recession triggered during the Dilma government.

truck market

In 2018, thanks to the timid recovery of the economy, registrations grew by 46% and production by 27%. Another factor that determined the growth of the market was the decision of many companies to create their own fleet of trucks, to avoid the high costs imposed by the new price tables, a consequence of the truckers’ strike that paralyzed Brazil in May 2017.

Despite the good performance in 2018, the numbers of the truck market are still far from the peak of registrations in 2011 (almost 175 thousand).

In this context, Ford reached a market share of 12.2% (equal to 9306 trucks, 4th place in the ranking) in 2018, too little for a factory with a production capacity of 89 thousand trucks / year.

The leader of the segment is Mercedes Benz (29%), followed by Volkswagen (25%) and Volvo (14%).

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General Motors itself threatened to close its factories in São Caetano (SP) and São José dos Campos (SP) in January this year. Faced with the prospect of closure, workers, suppliers, dealerships and local government have negotiated new conditions and the GM is back on its feet, promising new investments for a total of about 3 billion dollars.