春凤 袁
春凤 袁
Aeronautical
General
06 Dec 2018

Why are Ford Venezuela factories offered buyout plans?

Why are Ford Venezuela factories offered buyout plans?

Just before Ford announced its plan, people familiar with the matter said that in order to restructure its loss-making South American business, Ford would offer buyout plans to Venezuelan factory employees, thereby reducing the number of on-the-job employees.

Union leaders who refused to reveal their identities revealed that Ford's Valencia plant did not receive orders for 2019, and that the plant currently provides subsidies equivalent to $150 a year to all 915 employees. Ford did not confirm the accuracy of the report, but stressed that Venezuelan factory production will continue. Venezuela is currently experiencing vicious inflation and its economy is in a state of collapse.

"Ford is working hard to adapt to local conditions and will continue to provide products and services to consumers," Ford said in a speech on December 5. Ford has been operating in Venezuela for 56 years and has no plans to leave the country. It is reported that in the past two months, Venezuelan factories have assembled 93 models of explorers and carnivals.

Trade union officials said the plant's total output this year was about 220 vehicles, less than half of its output by 2017, due to reduced demand and difficulties in purchasing spare parts. Before Venezuela's economy entered a five-year recession, the plant could produce 17,000 vehicles a year. Venezuela's inflation rate is expected to reach 1,000,000% in 2018.

As part of its strategy to invest in automobiles and electric vehicles, Ford restructured its business in Latin America, Europe and China, where it has been underperforming this year. Bob Shanks, Ford's chief financial officer, said in July that Ford's investment in South America since 2004 had not yielded a proper return, and the company was committed to innovation in the region. General Motors withdrew from Venezuela in 2017, and a small number of multinational companies chose to stay by reducing production and product types, but the decline in demand could lead to most companies leaving in 2019.

Be the first one to reply

Share this content on your social channels -

Only logged in users can reply.