Carmaker, Ford said Monday it would close its three factories in Brazil this year as the coronavirus epidemic exacerbated already slow sales in South America.

The measure will affect some 5,000 workers, according to Bloomberg, and Ford said the closures would incur one-off charges of about $4.1 billion.

“Ford Brazil will cease production at Camacari, Taubate and Troller plants during 2021, as the Covid-19 pandemic amplifies persistent industry idle capacity and slow sales that have resulted in years of significant losses,” the company said in a statement.

“With more than a century in South America and Brazil, we know these are very difficult, but necessary, actions to create a healthy and sustainable business,” added Jim Farley, Ford president and CEO.

He said the company was moving to a “lean, asset-light business model”.

New vehicle sales in Brazil retreated by more than 26 percent in 2020 due to the health crisis, the Fenabrave automotive federation said last week.

Car sales dropped 28.57 percent and that of buses by 33 percent.

Ford’s South America head Lyle Watters said progress was made in phasing out unprofitable products, reducing costs and launching new products.

However, “the sustained unfavorable economic environment and the additional burden of the pandemic made it clear that much more was necessary to create a sustainable and profitable future.”

Ford would continue serving South America with cars sourced from Argentina, Uruguay, and other markets, it said.

The company would maintain its product development center in Bahia, as well as its proving ground and regional headquarters in Sao Paulo.

Production at Camacari and Taubate would cease immediately, with some parts production continuing for a few months.

The Troller plant in Horizonte will operate until the fourth quarter, a statement said.

“As a result, the company will end sales of EcoSport, Ka and T4 once inventories are sold.”

The company said it would work with unions to develop an “equitable and balanced plan” to mitigate the impact of the closures on workers.

AFP