Farewell to the Factory: Ford Motor Company’s trajectory in São Bernardo do Campo (SP)

Publication Type:

Conference Paper

Source:

Gerpisa colloquium, Paris (2021)

Keywords:

Ford Motors; Corporative Performance; Global value chains; São Bernardo do Campo

Abstract:

This paper aims to analyse the recent trajectory of Ford Motor Company in São Bernardo do Campo (SP) until the closure of its plant in October 2019. Since it is considered “the most global of global companies” (Beynon, 1995), Ford represents inumerous transformations in comporative strategies in the sector throughout the last thirty years, and the cessation of production ended up displaying itself as a rehearsal of its decision to close its production in Brazil, what, in the end, happened a bit more than a year after it, with the closure of other units of the company. Among them, the modern plant of Camaçari, in the state of Bahia.
The proposal outlined here aims to analyse the closing process of the São Bernardo do Campo’s factory in the light of the tendecy of divestment in the ongoing sector in Brazil. There is an attempt to understand wether the cessation of production happened duo to unilateral motivations and corporative estrategies, or duo to factors often previously defined as classical in locational decision processes, such as: the cost of labour; the intense union activism; and the little elasticity of tax breaks.
In Brazil, the relationship between the sector’s companies and Brazilian public institutions was always awfully close, and many works (e.g., Arbix, 2002, Shapiro, 1997, among others) bring strong evidence that Brazilian State, historically, acted in a way to create favorable conditions to the automakers, as well as to protect them in moments of bigger fragility in the economy. In other terms, the trajectory of the Brazilian automotive industry has been deeply marked by a strong activism of the State, that combined regulatory and encouraging policies (Dicken, 2010). However, Ford’s choice to close the productive and profitable plant (Ford, 2019), which has been working for decades, points out the rupture of a tacit commitment between the State and multinationals in the sector. Since it is a singular case in the automotive industry in Brazil, this process would have illustrated, thus, a response of Ford itself, as a corporation, to the demands of its body of majority shareholders. Recent researchers (Carmo, 2017 and 2020; Carmo, Sacomano Neto and Donadone, 2019; Cirne, 2019) point to a change in the conceptions of control (Fligstein, 2001) in transnational corporations, with a bigger influence of investment funds, that hold a percentage ever increasingly of the corporations’ shares. This notably happens in the ones of North American origin, where this process has been more relevant.
As a hypothesis, aspects of a more institutional feature, such as the capacity to negotiate in the state spheres, has presented itself as little efficient in avoiding processes like the one that ocurred with Ford, that closed a productive unit instead of relocating the production set to a greenfield (Martin; Veiga, 2000). Besides that, this decision would also be related to a redefinition process of the portfolio of products from the automaker, represented by the introduction in the national marked of the Ford Territory, the sport utility released with the intent to position itself in the competitive market of the Sport Utility Vehicles (SUVs), which already has automakers like Volkswagen, Toyota and Nissan.
To guide the investigation, we present the institutional context of the Brazilian automotive matrix of the last years, shining light over the governamental programms for the sector. Data about the ABC Paulista is also inserted, as a parameter, since it is the densest industrial region in Brazil, where the Ford plant São Bernardo works, with the intent to measure possible effects of the regional deseconomy. The same procedure is conducted with national data. To control some spurious variables of the case analysis, besides the trejectory reconstruction of the sector in the screen and of the analysed region, we test some possible justifications mobilized for the closure of Ford in the ABC.
This article is a case study of qualitative methodology. We use as sources the interviews made with the leaders of the Metalurgic Syndicate in São Bernardo do Campo, the former employees of Ford and consultants of the automotive industry. In addition to the interviews, this article resort to oficial data of the Labour Department in the Ministry of Economy, through the Annual List of Social Indicators (Rais / MTE) and the Brazilian Institute of Geography and Statistics (IBGE), and to the public documents analysis of Ford, like de Annual Report of 2019, which already made explicit the strategy of closing the plant and the preparation to do so.
The results of this research end up demonstrating that the decision to close the plant in São Bernardo do Campo, that used to produce lorries and buses, is part of a process of strategic reconversion of Ford. The hypothesis is that the closure of plants makes Brazil the experiment of a new model of business based exclusivelly on the comercialization of vehicles made in productive borders, like Mexico and China. Ford walks in the direction of the separation between productive knots and commercialization knots, assuming at this point a multiple configuration that allows itself to keep a essencially productive dimension, focussed on the extraction of labour value in certain contexts, and to assume a typical configuration of service provider in other institutional enviroments. In the Brazilian case, the company tried to consolidate a inovative profile of a importer and distributor of automotive products when advancing in a divestment strategy.
The analysis of the route change of Ford in Brazil has an immense potential to add to the sociological research about the performance of corporation in diverse institutional enviroments, and to discuss problems with the homogenizer effect of globalization as well as ongoing phenomena, such as the deglobalization of global chains of value. Besides that, it draws attention to the institutional fragilty of Brazilian State, that resulted in the incapacity to prevent that an apparently punctual decision became a bigger and definite movement. Lastly, the listed information in this work confirms the hypothesis about the change in the company’s governance, motivated by the transformation in its matrix, according to the creation of new events, and of a change in its global operation, in which Brazil was one of the first countries to be hit.

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