General Motors Co plans to cut 800 jobs in Brazil, after announcing less than a month ago that it is to invest another US$1.9 billion in the South American nation.
The automaker reached an agreement with a union at a plant near Sao Paulo to put the reductions on hold, after a two-week strike. The 800 workers are to be on paid leave for five months, with GM and the government each paying half of their wages, company spokesman Nelson Silveria said. They are likely to be released after that period because of weak demand, he said.
Car sales in Brazil tumbled 20 percent this year through last month, including a 26 percent slide for GM, according to data compiled by Bloomberg. Yet GM on July 28 said it would double its spending in the country to US$3.8 billion for last year through 2019 to develop new Chevrolet vehicles.
Brazil is in the midst of its deepest economic and political crisis in a generation. Opposition lawmakers and some in the public are calling for the resignation of Brazilian President Dilma Rousseff. Unemployment is at a five-year high and Moody’s Investors Service has said its economy is likely to contract by 2 percent this year.
Reuters on Monday reported GM’s agreement at the Brazilian plant. Other vehicle manufacturers are also scaling back.
Daimler AG said on Monday that it is eliminating 1,500 jobs at a Brazilian truck plant after industry-wide sales of those vehicles fell 44 percent in this year’s first half.
Ford Motor Co has been cutting production and temporarily closing factories in Brazil this month as demand dries up.
Ford said it closed a truck plant for nine days and a car plant for three days in Sao Bernardo do Campo last week. The automaker employs 8,256 workers at that complex, according to its website. Earlier this month, Ford halted production for less than a week at its car and engine plant in Camacari, where it has 8,753 workers.
Both shutdowns were “to adjust production levels to meet current market demand,” Ford spokesman Karl Henkel said.
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