Why Ford is leaving Brazil

IN 1928 HENRY FORD built a factory in the Amazon rainforest. He planned to grow rubber trees, make tyres and teach Brazilians Utopian ideals at a Midwest-style company town called Fordlândia. It lasted 17 years. Pests killed the trees and vice doomed the town. But car culture thrived in Brazil. Ford stayed, its profits fattened by industry-promoting subsidies from the government.

On January 11th Ford Brasil said that it will close its factories, laying off 5,000 workers. Although the decision is partly a result of Ford’s global woes, it also shows the weakness of Brazilian manufacturing. “It’s a blow to Brazil’s notion of being a modern nation,” says Joel Wolfe, the author of “Autos and Progress: The Brazilian Search for Modernity”.

In the 1950s Juscelino Kubitschek, a statist president, built thousands of miles of motorway. Military dictators in the 1970s built roads in the Amazon, filling the jungle with settlers to fend off foreign influence. Luiz Inácio Lula da Silva, who as a child left the poor north-east in the bed of a pickup and later worked in a car factory in São Paulo and led a trade union, became president in 2003. Tax breaks worth billions of dollars in the 2000s brought more carmakers, which supplied a growing middle class. Its members included autoworkers who “put their kids in private school”, says an...

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