Volkswagen is laying off around 900 jobs at its Sao Bernardo do Campo site outside of Sao Paulo and its Sao Jose dos Pinhais plant in Parana as the carmaker faces slumping demand in Brazil. The layoffs will commence on May 5, according to Brazil's Metalworkers' Union.
Volkswagen's Brazilian unit said in a statement that they are using the flexibility tools set in the contracts between the company and unions to adjust to the markets actual demand.
In March, carmakers posted a 15-percent year-on-year drop in auto sales in Brazil to just 240,800 vehicles, according to Brazilian automakers association, Anfavea. Vehicle output also dropped 8 percent in the first three months of 2014 to 789,900 units.
Despite the layoffs, Volkswagen has not made any changes to its $10-billion investment plan in Brazil, which covers years until 2018. Another German carmaker, Mercedes-Benz, commenced earlier this month a voluntary layoff scheme at its Sao Bernardo do Campo site in Brazil as part of its bid to trim its workforce by 2,000 people.
Under standard Brazilian auto industry labor contracts, carmakers are able to lay off workers for up to five months. The laid off workers will be sent homes with their salaries paid in part by the employer and the balance from a Brazil's unemployment-insurance system.
Anfavea president Luiz Moran recently urged the government and unions to accept a layoff that lasts beyond five months. [source: Reuters]