Brazil to produce American version of Fiesta engine
Valor Econômico
It is time the Brazilian knowledge in the development of small cars help the Americans that are now forced to decrease the size of their cars. The engine of the Fiesta model that will start being sold in the United States in the middle of this year will be produced at the Ford plant in Taubaté, in the interior of São Paulo. The strength of the contract to export to the international headquarters justifies a great part of the recent investment of the maker in Taubaté to, starting in two years, increase the capacity from 280 thousand to 500 thousand engines a year.
Last year, Ford announced the R$ 600 million (US$ 348.8 million) investment in the plant of engines and transmissions of Taubaté for the development of a new family of cutting-edge products that takes the name Sigma. Part of the resources was supported by the program of the Government of São Paulo that allows reverting credits into ICMS (State Sales and Services Tax) of the exports in investments in the State. The engine that will be used in the car sold to the Americans is the 1.6 liter engine. "We don't have this type of engine in the United States", explained yesterday Mark Fields, the President of Ford Americas, during the presentation of Detroit Auto Show.
The decision to import from Brazil the engine of the Fiesta that will be sold in the American market is a way Ford has to cut steps in the race of the American industry in the development of smaller car models. Besides, the company will take advantage of the tax exemption provided for in the interchange commercial agreement between Brazil and Mexico. The Fiesta made for the Americans will be produced at the Mexico plant. This way, the engines will be sent from Brazil to Mexico and the cars, from Mexico to the United States and Canada. The management of Ford does not reveal the volumes foreseen in this export. But it can be said that a great part of the decision of doubling the capacity of the Taubaté plant is due to this contract. The rest of the capacity will be used to continue serving the plants Ford has in Brazil and Argentina.
The option of the international headquarters of importing the product made in Taubaté will help Ford do Brasil to make a radical change in its export program. As is happened throughout the car industry, the earnings of the maker with exports began falling with the crisis in the neighbor countries together with the appreciation of the Real. The earnings with Ford's external sales went from US$ 825 million in 2008 to US$ 464 million last year.
The increase in the price of the Real will not be an obstacle for the export agreement with the headquarters, said Fields. According to the Executive, it is a strategic decision. "In our business we have to assess where are located the facilities that will be used to supply a new line, and also the expertise of each region", he said. "The 24 consecutive quarters of profit of the Brazilian subsidiary stimulate us to continue investing in the country", added the Executive, recalling Ford's investment program in Brazil, of R$ 4 billion (US$ 2.3 billion), announced at the end of the year.