Mercedes lays off 10% of Brazil workforce

Posted on May 30, 2012


In a sign of the deep slowdown in Brazil’s auto sector, Mercedes-Benz, the largest manufacturer of commercial vehicles in Latin America, has temporarily laid off more than 10 per cent of its workforce in the country.

Mercedes said the 1,500 workers would receive 300 hours of professional training over five months, during which time they would receive wages consisting of a grant from a state-mandated workers’ support fund topped up by the company.

Mercedes said the measure was designed to “reduce the impact on employees of an excess of labour that was the consequence of a fall in the market for trucks and buses”.

    The move by Mercedes follows concern within the government over the health of Brazil’s auto industry, which is expected to overtake Japan as the world’s third largest after China and the US within five years.

    The downturn in Brazil’s auto industry, which follows a rise in bad loans, is weighing on the country’s manufacturing sector and contributing to a slowdown in its once breakneck economic growth rates.

    Last week, the government introduced a $10bn stimulus package, part of which aimed to prop up the auto industry by cutting an industrial production tax on auto sales.

    Sales in Brazil’s car industry have fallen particularly sharply as rising defaults have prompted banks to restrict credit, pushing inventory up to its highest levels since the onset of the financial crisis in 2008.

    Vehicle sales fell 14.2 per cent in April from March, according to the national automakers’ association Anfavea. Sales in Mercedes’ key bus and truck markets appear to have been among the hardest hit.

    According to Fenebrave, another industry association, truck and bus sales fell 12.5 per cent and 17.35 per cent respectively in the first half of May compared to the same period in April and 30.19 per cent and 16.02 per cent compared with a year earlier.

    “Mercedes-Benz of Brazil has a strong production presence in the country with its three factories and over 14,000 employees so we sought a solution that would … maintain the same level of employment,” said Fernando Garcia Fontes, vice-president of human resources.

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