Mercedes-Benz Plans 2,000 More Layoffs in São Paulo Plant

By Jay Forte, Contributing Reporter

SÃO PAULO, BRAZIL – After a difficult year in Brazil’s automotive industry, Mercedes-Benz announced another volunteer layoff plan for their plant in São Bernardo do Campo, a municipality located 27 kilometers south of São Paulo city. According to the company, the measure is a further attempt to “manage the surplus of 2,000 employees” that exists at the location.

According to O Globo, the factory currently employs about 10,000 people, with 7,000 in production. Earlier this month, the automaker tried to approve a program to reduce the working day by twenty percent and reduce employee salaries by ten percent, but the proposal was rejected by the employees.

The new voluntary dismissal plan (plano de demissão voluntária, or PDV), offers up to R$65,000 depending on the employee’s seniority. The program started on Tuesday (July 14th) and will last until August 14th. Already in May, Mercedes-Benz laid off 500 employees, with a total of 700 let go since July last year.

According to Ângelo Máximo Pinho, general coordinator of the Mercedes-Benz factory, employees were informed by a bulletin circulated this week at the factory. “It was a unilateral decision. It was not discussed with the workers. There is a climate of uncertainty within the factory,” Pinho told O Globo.

According to Pinho the company will evaluate the performance of the layoffs before deciding to participate in the new federal Programa de Proteção ao Emprego (Program to Protect Employment), which allows companies in dire financial situations in designated sectors to reduce salaries by up to thirty percent. Brazil’s President Dilma Rousseff has signed a temporary measure earlier this month allowing companies to reduce working hours and employees’ salaries in order to avoid layoffs.

In 2010 Mercedes-Benz in Brazil received a considerable boost by the Brazilian government, which approved a US$700 million credit through state owned Banco Nacional do Desenvolvimento (BNDES) in order to expand their plant in Brazil. At the time the plan was to allow the company to increase production capacity 23 percent from 55,000 to 67,000 vehicles a year, opening along the way over 1,900 new jobs.

Yet now automotive production in Brazil fell by 25.6 percent in May 2015 in comparison to the same month the previous year and by 3.4 percent in relation to April of 2015, with the accumulated contraction from January to May at 19.1 percent. The decline in production is a result of the weak auto sales results for the first five months of the year, which were 20.9 percent lower than during the same period last year.

The segments most affected were trucks, down by 51.4 percent in the five month comparison, and buses, with a decline of 31.6 percent in production. Yet while automotive sales within Brazil are gloomy, exports registered a growth of 16.4 percent in May 2015 in comparison to the same period last year, and an increase of 41.7 percent in comparison to April of 2015.