Ford agrees sale of older Brazil plant to CAOA

By Graeme Roberts | 4 September 2019

Ford will focus Brazil production at its newer Camcari plant

Ford will focus Brazil production at its newer Camcari plant

The Brazilian automaker CAOA has agreed to buy Ford's assembly plant in Sao Bernardo do Campo, the companies said, but the plant workers union claimed CAOA would slash 1,300 jobs.

A Reuters report said Ford had announced back in February it would shut down the plant, its oldest in Brazil, which employs some 3,000 workers, as part of a global restructuring and a push to exit the heavy truck business.

According to GlobalData's PLDB, the plant has no product allocated after 2019. Production of the Fiesta there ended last July.

CAOA, which builds the Hyundai Tucson at a plant in Anapolis, and Ford have been negotiating the purchase since late February, Reuters reported at the time, when Sao Paulo state Governor Joao Doria rushed to find a buyer for the plant in a bid to keep jobs in the city.

Wagner Santana, president of the Ford workers union, told Reuters that, in conversations with CAOA, the Brazilian automaker said it would initially retain only some 800 workers and that 1,300 would be let go, with the remainder being kept by Ford.

State governor Doria has defended Sao Paulo as a manufacturing hub at a time when the auto industry turned to other Brazilian states that were offering aggressive tax incentives. He has introduced a tax incentive of his own.

At a news conference, Doria said a decision on how many jobs will be kept could only be made once Ford and CAOA close the sale which is set to go through a 45-day due diligence process.

"Preserve all jobs, that's the fundamental condition for a contribution from the state," Doria said, in reference to potential tax benefits.

Santana said CAOA plans to pay those it recruits up to 80% of their current Ford salaries, noting that is still much more than salaries paid in other states.

A CAOA spokesperson declined to comment to Reuters.

"The objective is to make the factory profitable and productive, so it generates employment and riches," said Carlos Alberto Oliveira Andrade, CAOA's president and founder, whose initials make up the company name.

Reuters noted CAOA is the rare carmaker that is actually Brazilian owned.

As well as building SUVs for Hyundai, it co-owns the Chery operation in Brazil where the Chinese designed cars are branded CAOA Chery.

Ford opened the plant in 1967, and it is the automaker's oldest in the country.

It was primarily used to make heavy trucks, as well as the compact Fiesta which does not sell well.

Ford is undergoing a global restructuring and has said it would focus on its much newer Camcari plant in the north eastern state of Bahia