On the same day Ford announced a new $US1bn investment in Brazil for the 2007-2011 period, it confirmed a full take-over of the tiny, locally-owned offroader maker Troller.

Rumors had spread about the pending buy during the São Paulo Auto Show last October.

Founded in 1997, Troller produces a Jeep look-alike vehicle called the T4 sport utility and its Pantanal pickup truck derivative, both diesel with four-wheel drive, at a rate of just over 1,000 units a year.

Ford did not reveal the amount of the transaction but the speculation is about $US90m, which would top Troller’s debt.

It was big deal for the American company because it inherited the last of hefty fiscal incentives offered by both federal and state governments in the mid-1990s. The purchase decision has strong strategic significance because the main Ford plant is located in the state of Bahia and Troller is in the Ceará state, both in the northeast region, the country’s poorest, and host only to a single full-size vehicle manufacturing plant.

The incentives for Ford’s industrial unit were due to end two years from now, but now it has three more years to spare. This will give financial breathing space to enlarge the Bahia plant which is working at its limit on three shifts and, if nothing was done about expansion, would certainly mean losing market share. The deal includes keeping almost 600 jobs in Horizonte, Ceará’s capital.

Fernando Calmon