With sales down by 8% since the beginning of this year, VW has announced that it will be laying off more than 900 workers at its plants in Sao Bernardo do Campo (outside of Sao Paulo) and Sao Jose dos Pinhais (in the country’s southern state of Parana) beginning May 5th. However,the company stated that it has not altered its plans to invest $10 billion in Brazil over the next four years.
"Like other carmakers in the country we are using the flexibility tools established in the contracts between the company and unions to adjust to the markets actual demand," Volkswagen's Brazil unit stated yesterday.
With the largest economy in South America, Brazil remains Volkswagen’s 4th largest market behind China, Germany and the US. The move to furlough workers at San Bernardo do Campo, however, comes on the heels of Daimler's Mercedes-Benz move to reduce staff at its own plant there in an attempt to trim the workforce by 2,000. According to Brazil's Metalworkers' Union, standard contracts allow automakers to lay workers off for up to 5 months, but must pay part of their salaries during that time. The rest is supplemented by payments from the county’s unemployment insurance program.
In the meantime, VW has outfitted its Bratislava plant in Slovakia with its biggest metal press in as part of its plans to increase its production of SUVs (including the Lamborghini Urus) there by 2017. The move will enable the plant to produce steel and reinforced aluminum bodies aimed at reducing the consumption of fuel by the vehicles by making them lighter. Bodies for Urus will be manufactured in Bratislava together with those for Cayenne, VW Touareg, Audi Q7 and a new Bentley SUV.