the ford case

Photo by Ciro Saurius. Fordlandia.


The time to account

We are in a serious moment of attack on knowledge and reason fueled by the discourse of stupidity, which is made up of vociferations (which are not speeches or the expression of ideas, but the emission of a cry marked by hatred, “whose foundation is the refusal to of the possibility of dialogue, preventing the person to whom the words are addressed from being heard", as explained by Mauro Mendes Dias[1]) and which also uses bravado and the mass dissemination of “fake news” on social networks, which has even generated a great reaction from dominant sectors and the mainstream media, in defense of rationality, science and democracy, notably in aspects related to coping with the pandemic.

However, as I have been insisting, when it comes to labor relations, the mass production of “fake news” and the multiplication of “flat-Earth” views come exactly from those who call themselves heralds of science and democracy.

Incidentally, it is long past time for the mainstream media to admit that the labor “reform” in Brazil was based on fake news and to recognize its clumsy role in this process of disinformation in the country.

Let's see, for example, the fact related to the announcement, made on January 11 of this year, of the closure of Ford factories in Brazil.

The mainstream press and its “commentators” (with rare exceptions) came forward to defend Ford and attack Brazil, or, more properly, the so-called “Brazil cost” and, of course, the federal government.

Before, in 2016, they said that if the modernizing “reform” of labor rights was not carried out, companies would leave the country, as they could no longer bear the cost of labor. The “reform” would even lead the country to the advanced stage of world capitalism, with a favorable environment for business and, consequently, the generation of more than 2.000 million jobs.

In alliance with the disregard of constitutionally established democratic precepts, the “reform” was carried out, which, in fact, was an enormous reduction of workers’ rights to favor the increase in the profit rates of large companies ( which, in fact, came to fruition).

But, as we know, no jobs were created and the country's economy only got worse.

So they started to say that the problem was social security rights. Only a social security “reform” would put the country on track.
Overriding several constitutional precepts and disregarding the history of deviations from the Social Security budget, the “reform” was carried out.

It happens that, with an even more forceful destruction of the bases of Social Law, since this anecdote of “Brazil cost” comes from afar and has already given rise to the creation of several labor legal institutes to make life easier for companies and reduce the cost of production , such as, for example, the FGTS instead of stability, in 1967, temporary work, in 1974, the intermediation of labor in surveillance, in 1983, outsourcing, in 1994, the work cooperative, in 1994 , the hour bank, in 1998, the part-time contract, in 1978, the “lay off”, in 2001, the First Job law, in 2003, the judicial recovery law, in 2005, the increase of conditions for acquisition of benefits (MPs 664 and 665), in 2014, in addition, of course, to the most recent ones, labor “reform” and MPs 927 and 936 – and these are just a few examples, which have, as an effect, easily verifiable when over all these years, is the reinforcement of a process of accumulation of wealth in the hands of a few and the general withering away of the economy, with a downgrading of the labor market, reduction of consumption and increase of misery and suffering.

Without an effective commitment to the bases of the Welfare State, responsible for retaining a portion of the surplus value that is realized in the productive process, with a view to implementing a minimum project of society based on solidary inclusion and the formalization of public services essential to the effectiveness of Human Rights, things only got worse, socially, humanly and economically.

Faced with these countless historical lessons, only a flat-Earther view of the world or moved by a grotesque opportunistic cynicism is capable of fostering an assessment of the fact in which Ford appears as a victim of the so-called “Brazil cost”, identified, this time, in the tax issue, pretending to not knowing that the automobile sector has been one of the main beneficiaries of the state tax exemption policy since the 90s.
As expressed in the title of Pedro Kutney, in a text published on 05/12/11, “Government is the biggest financier of car multinationals in Brazil”.

As Kutney reports:

“Ford demanded a high price to be the first automaker to set up shop in the Brazilian Northeast, a region with no industrial tradition and no infrastructure formed for this at the end of the 1990s. (RS) — precisely because of the lack of an agreement with the Olívio Dutra (PT) government, which did not want to honor the incentives offered by the previous government -, Ford began negotiating generous benefits with Bahia to contribute to the investment of US$ 1999 billion in the state. First, with the support of then-senator Antônio Carlos Magalhães (PFL/DEM), former governor of Bahia, he managed to reopen the automotive regime through the approval of Law 1,2, of August 9.826, which gave the company a three and a half year term. to start producing and enjoy the tax benefits. The law guaranteed a 1999% discount on the IPI for cars assembled in the region until the end of 35. In addition, Ford received a 2010% reduction on the ICMS until 65 and the BNDES granted financing of R$ 2013 billion.

Initially, the negotiated incentives amounted to BRL 700 million per year — but the then President of the Republic, Fernando Henrique Cardoso (PSDB), considered the figure exaggerated and lowered it to BRL 180 million / year, according to press reports at the time. But Ford didn't give up on snapping up more incentives and, during 2006, articulated another plan to increase earnings. On January 2, 2007, the company announced the purchase of the small Troller factory in Ceará, but not before, a few days before, on December 28, 2006, the government had approved Law 11.434, which in its Article 8 provides for the transfer tax incentives for purchasers of acquired companies.
Thus, Ford inherited from Troller the benefits of Law 9.440, of 1997, with an even greater cut in the IPI for all its production in the Northeast, equivalent to twice the value of the due contributions of PIS and Cofins. At the end of 2009, in another political maneuver, with the promise of investing BRL 4,5 billion in its Brazilian operations, Ford managed to extend for another five years the tax incentives it receives in Bahia, after intense articulations by the Bahian governor Jaques Wagner (PT) together with then President Luiz Inácio Lula da Silva (PT), who approved the extension on a decreasing scale. Considering only the cheapest EcoSport manufactured in Camaçari, sold in Brazil for around R$54, Ford pays close to R$16 in taxes, but accumulates R$15,6 in IPI and ICMS tax credits — or that is, in practice, it pays almost no taxes on the cars it produces in Bahia, but charges as if it had no benefits, which significantly increases its profitability. As this year alone, Ford has already sold close to 35 thousand EcoSports, it would have accumulated R$ 548 million in tax credits if it had sold only the cheapest version of the model.

In ten years of operation in Camaçari, completed this year, the automaker has produced around 2 million vehicles at the unit in Bahia. With that, he certainly accumulated much more tax credits than he made investments there. This may explain how the company has managed to finance its investments in the country with its own resources, without needing the parent company.

Ford claims that it needs this differential to compensate for the competitive disadvantages it has in the Northeast, but no one knows for sure what the exact size of these disadvantages would be, nor if Camaçari would continue to be the most productive unit in the company's world if it did not receive so many incentives. It is a fact that there has been economic progress in the region, with the generation of 8.000 direct jobs and 80 indirect ones, according to Ford – but it is not known how much this cost.”[2]

Adds the report by Bernardo Caram that the Union's incentives to automakers totaled R$ 69 billion, in the period from 2000 to 2021[3].

And the social and economic return of these benefits has never been demonstrated. In 2014, for example, as highlighted by Washington Luiz Moura Lima, tax exemptions for automakers amounted to R$ 12 billion, and “even so, they laid off 12,4 workers”[4], considering that the year in question was not yet under the economic effects of the 2015 crisis.

The fact is that, as Luiz Nassif explains, in the text, “The unbelievable explanations about the departure of Ford”, “the central point is the drop in production, due to the drop in the domestic market and exports. In January 2012, the accumulated 12 months of production reached 3,4 million vehicles. In October 2013, it hit a record 3,8 million. Since then, it has gone downhill, had a slight recovery in 2018, but far from the performance of previous years and has now collapsed to the range of 2 million vehicles”.[5]

And this reduction of the internal market is directly related to the policies of destruction of the Welfare State and the expected effect is exactly this one that may now be inaugurating itself with the closure of the Ford factories in Brazil, the flight of capital, leaving only the traces of exploitation , decay, misery, chaos and suffering.

As I have been warning for decades, in several sentences dealing with social harm:

“Social Rights, therefore, cannot be reduced to a matter of cost. It is not characteristic of this model of society to merely envisage immediate solutions to reduce the cost of production, as this means breaking the project of society without putting another one in its place. It is the chaos of reasons themselves. After all, it has been known for a long time: the sum of the satisfaction of particular interests is not capable of creating a project for society.

In our reality, however, there have been several situations of complete disrespect for labor rights and, consequently, for the person of the worker. One might think that this happens involuntarily because of economic difficulties, but this is not the case. Of course, the economic difficulty also exists, but what worries more are the deliberate attitudes of large companies (which do not have economic problems) of failing to fulfill their social role (while advertising themselves to the general public as 'socially responsible' ). Outsourcing, subcontracting, fraudulent bankruptcies, employee weakening tactics (such as lack of registration, transformation of the worker into a legal entity, layoffs without payment of severance pay, fabricated just causes) have imposed on millions of Brazilian citizens an enormous sacrifice in terms of their constitutionally enshrined rights, and this situation has, as seen, enormous repercussions on the social cost (mainly with regard to social security, health and education) and on economic development (reduction of the internal market), thus favoring only the multinational companies, that is, those with foreign capital, which produce abroad, serving monopolistic purposes and thereby bankrupting small and medium-sized national companies, and which will leave when they feel that our society has not worked.”[6]

And we are learning, with enormous suffering, seeing the latest news from Manaus/AM, what is the result of the destruction of public services and the contempt for public policies[7].

Reiterating, now, the practice of disregarding historical learning and using the Ford news only as rhetorical reinforcement for carrying out “tax reform” and “administrative reform”, to put an end to what still remains of State structures and services public, represents eliminating all the chances that one still has to change the course of history. But the time for that is getting shorter and shorter. Eliminating the internal market, destroying the environment and increasing the stage of barbarism fueled by misery, ignorance and discouragement, the so-called “business environment” is not improved and even the stage of unlimited exploitation is not enough to maintain capital , by the way, this is not efficient for anything, not even for a revolutionary process, which essentially requires conscience and utopias.
It is therefore necessary, once and for all, that we strengthen ourselves as a nation, based on the constitutionally established commitment around solidarity, the eradication of poverty, the prevalence of Human Rights and the dictates of social justice.

The way we are going to deal with the Ford case will be the paradigm of this new time: the time of renegotiation around the relevance of the Welfare State. But it could also be, if we do not react with the dignity the theme demands, the time of accelerated and assumed direction towards social chaos.

But there is no possibility of choices in this proposition. There is, of course, only one way out and it can be achieved through assertions, as proposed by the American Association of Jurists – Rama Brasil[8]:

“- Ford is not a victim of Brazil, the government, or the so-called 'Brazil cost';
– during its more than 100 years of installation in the country, since 1919, it was extremely favored by numerous public policies aimed at encouraging production;
– there were years and years of a highly profitable activity, in relation to which the so-called “Brazil cost” was never an obstacle;
– profits, in fact, were boosted by repeated cost reduction measures, both through the retraction of labor rights, represented, for example, by state repression of the right to strike and which was more directly evident in the extinction of stability in employment, in 1967, and in the labor “reform”, in 2017, or by the repeated tax exemptions promoted, above all, from the 90s;
– after so many years of benefits, the abrupt announcement of the closure of activities, causing apprehension and suffering to thousands of Brazilian men and women, which is even more serious due to the pandemic, represents not only a betrayal, but also enormous violence;
– it is not appropriate, therefore, to try to revert the situation through new concessions of tax benefits, which would only lead us closer to the bottom of the social, economic and human well;
– before departing, however, Ford must render accounts to the male and female workers, its “partners” who, with their salaried work, enabled it to extract profits, as well as Brazilian society as a whole, giving the former the necessary reparation for the damage and suffering experienced (viewed, including, all possible injuries to rights that occurred in the recent or even distant past), and, secondly, returning, for the constitution of a public fund, every portion of the public budget that out directed;
– at the very least, taking into account the constitutional legal assumptions of the social function of property, it must be understood that all its assets, located in Brazil, cannot be taken away, and must be reverted to the workers who integrated their production units, to , if you want, develop a production in a self-management model or, simply, auction them”.

The fact is that the announcement made by Ford that it will leave the country is not just another piece of news, the kind that brings us to the end of a cycle. This is an extremely serious fact, which should generate and instigate the production of solutions that preserve the dignity and effectiveness of national institutions. From a legal point of view, the news represents the beginning of a new story, which will still have many challenging chapters to come.

*Jorge Luiz Souto Maior is a professor of labor law at the Faculty of Law at USP. Author, among other books, of Moral damage in employment relationships (Studio editors).


[1]. DIAS, Mauro Mendes. the speech of stupidity. São Paulo: Iluminuras, 2020, p. 21.

[2]. Available in:
[3]. Available in:
[4]. LIMA, Washington Luiz Moura. “2015 starts with measures against workers”. In
[6]. See, p. e.g. Case no. 0001082-13.2012.5.15.0096 RTOrd.
[8]. Available in:




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