Automakers Close Plants in Brazil and Place 50,000 on Collective Holiday

RIO DE JANEIRO, BRAZIL – Vehicle manufacturers have already announced that they will shut down their plants at the end of the month and have no idea when they will restart their operations, as this will depend on the situation in the country in relation to the epidemic of the novel coronavirus and market demand.

The three automakers which have already confirmed collective holidays together employ nearly 50,000 employees.

In addition to halting production at its five Brazilian plants (in São Paulo, Rio Grande do Sul and Santa Catarina) for an indefinite time, General Motors has suspended the investment of R$10 (US$2) billion planned for the period between 2020 and 2024. According to the company, cash must be set aside for the current crisis caused by the spread of the Covid-19.

GM’s subsidiary in Argentina will also be shut down. Together with the plants in Brazil, where collective holidays will start on March 30th, they employ some 19,000 workers. The company claims that the stoppage will occur due to market demand, but the Metalworkers Union of São Caetano do Sul, where the group’s longest-established plant is located, says the main reason is the coronavirus.

Mercedes-Benz will also suspend its operations in the São Paulo and Minas Gerais plants and the distribution and logistics center in Campinas (SP). The shutdown is initially scheduled to occur between March 25th and April 20th and affects approximately 10,000 people.

The company claims the need to prevent the coronavirus from spreading and says that returning to work will depend on the country’s situation. On Monday, Volkswagen also announced its plan to shut down operations at its four plants in São Paulo and Paraná, from March 31st, but initially for only ten days. The German make employs approximately 15,000 people in Brazil.

Dismissals of employees

In the next few days, other automakers should announce shutdowns. The Caoa Chery Group, on the other hand, closed down engine production and dismissed 59 employees from its Jacareí (SP) plant yesterday, a number that represents ten percent of the local labor force.

According to the director of the Metalworkers Union of São José dos Campos, Guirá Borba, the company claims a reduction in production, from 65 vehicles per day to 40. “At a time like this, of the coronavirus spreading, there is no justification. The company must protect the workers who, jobless, will lose their medical insurance”, criticizes the unionist. The company has not commented.

Incentive

The R$10 billion investment that GM froze was the result of a lengthy negotiation last year with employees, concessionaires, suppliers and dealers after the company’s president in South America, Carlos Zarlenga, stated that the group could shut down plants if it failed to reduce costs and return to profitability.

The case led the São Paulo government to implement a program that reduces taxes specifically for companies that invest in the state.

According to GM, the investment would be mainly directed to new products and the modernization of plants and would be reassessed, albeit at an undefined time.

The announcement occurred on the same day that the company officially launched the Tracker, the brand’s first SUV produced in Brazil and which is already on sale at prices ranging from R$82,000 to R$112,000.

During the introduction of the model, made through streaming to avoid the crowding of guests (press, dealers and workers), Zarlenga said he intended to lead the model to the top sales of the small SUV segment.

Although the company justifies the holidays as an adjustment to market demand, the president of the Metalworkers Union of São Caetano, Aparecido Inácio da Silva, believes that the shutdown of plants is related to the chaos caused by the spread of coronavirus throughout the country.

According to him, the employees of the ABC Paulista plant, for instance, will need to work overtime on the next two Saturdays to produce the Tracker. Silva further reports that the information provided by the company to workers is that the shutdown should occur until April 12th, “but the measure may be revoked or extended” according to the situation.

Source: O Estado de S. Paulo