The Brazil unit of General Motors announced on Wednesday a voluntary layoff program at its Sao Jose dos Campos plant in an effort to match current production volume to employment levels. The news comes on the heels of declining auto sales in the country, as Brazilian auto sales continued to slide in May due to tight auto credit in light of the weak global economy.
The voluntary layoff program, which runs through June 15, comes in the face of the factory adding a shift shift to produce the Chevy S10 truck, known as the Colorado in other global markets. Instead of hiring new employees, the automaker will transfer workers from other shifts to fill the third shift.
GM didn’t say how many employees it expects to lay off as part of the program but said in a statement to the media that its decision to initiate the layoff program was “based on the intense competitiveness of the Brazilian vehicle market, in addition to growing costs of labor, raw materials and supplies in general. GM believes that, with this measure, it will be able to reach the structural adjustment that is adequate to its current production program.”
Last month, the government of Brazil cut the tax on auto sales and decreased the reserve requirements banks are required to carry on car loans. However, when the country’s finance minister Guido Mantega announced the measures, he said that the country’s auto makers agreed to not lay off employees until the tax stimulus is over at the end of August. According to a note from GM’s press office, however, the automaker doesn’t consider its layoff program to be in violation of the agreement due to its voluntary nature.
For a round of good news, analysts in Brazil predict that employment levels across the industry will level off as the automotive recovery is seen coming in June. The General sold 45,826 cars and 8,959 trucks in May in Brazil, marking a slight improvement over April but still coming in lower than the sales levels in May 2011.
Comments
Simple solution: Although a temporary one – build U.S.-bound Colorados in Brazil. This keeps employment levels high and levels costs. Every single day that the Colorado is not for sale in America, GM is losing money to EcoBoost Ford truck sales and buyers of Toyota Tacomas. Eventually, of course, they’ll be built here – but they still could blend delivery from Brazil in to meet needs.
Brazil runs it autos on biofuel, correct? So this means the Brazilian S-10 must be FlexFuel or engineered completely to run off biogas. Heck, does this mean USA Colorado/S-10/?s will be FlexFuel. Hopefully so.
Also: check out the bed configuration of the truck in the photo. Total retro. You’ll see those rolled-rail bed, outside tie-down setups on old Toyota and Datsun pickups from the 60’s and 70’s. What do you guys think of that configuration – would you buy that? It does look like with that number of rope hooks, you could tie down just about anything…
Tip for GM:
Offer the Brazillian 2.8 L Turbodiesel here. One thing GM marketing heads do not understand: The old baseball adage – “Hit ’em where they aint!”
GM has this annoying tendencie to react – They reacted to Prius, they reacted to Ford’s hybrids, they reacted to Mustang, and they seem to wait for others to move before they innovate. I could go on, but the list of examples is as long as your arm.
Wouldn’t it be great for a change if GM would stick a product in our market that nobody else has an answer for? The diesel in a mid-size pickup would fit that bill nicely.
Can GM meet Ford’s stride with new engines? Take for example the European Ford 3 cylinder, direct-injected turbo without balance shafts found in the Focus. Testers at Motor Trend recently drove it and said it should be sold here – across the pond. Ford says it’ll be in Fiestas for 2013. GM has a 3 cylinder mill in it’s inventory. This is the engine I hope they’ll use for the 2nd generation Volt’s power generator. It’s less weight and only makes sense. GM lead engineers admitted the current 4 cyl Ecotec was a stopgap and a cost decision.
@ James there is a 25% tariffs on imported trucks that’s why they’re all built in the US or NAFTA countries. It’s the chicken tax. Back in the 60s Europe imposed a tax on chicken imported from the USA. We retaliated with the tariffs on imported trucks.
@ Main Wayne:
I’m aware of the Chicken Tax and have written about it here. You’re right – I HATE THE CHICKEN TAX! What would have to be done is the trucks assembled in Brazil, then partially disassembled,shipped to the USA and reassembled using American labor.
It’s really stupid with a capital S, but that’s how other manufacturers ( Ford Transit Connect, Mercedes-Freightliner Sprinter ) get around the Chicken Tax.
* and that would only be for two years while GM readies it’s Colorado/S-10 line in Missouri.