A battle between Brazil’s powerful metalworkers union and German car maker Volkswagen, which is trying to lay off 4,000 workers here, took a turn for the worse on Tuesday, according to Dow Jones Newswires.

The news agency said union leaders reacted with anger to news that Volkswagen’s top executive Bernd Pischetsrieder told reporters in Germany that Brazilian workers would be fired if they went on strike.

“He said workers in Brazil would be dismissed if they went illegally on strike,” Dirk Grosse-Lleege, head of communications at Volkswagen’s headquarters in Wolfsburg, told Dow Jones Newswires.

Reaction from the union was immediate, Dow Jones noted.

“The company needs to know that workers will use any means within their reach to fight attacks on their (labour) agreements and threats from Germany won’t make them back down,” Jose Lopez Feijoo, the head of the metalworkers union for the industrial area outside Sao Paulo where Volkswagen operates its Taubate and Sao Bernardo do Campo plants, told the news agency.

Dow Jones said that the angry exchange is just the latest in an ongoing fight between labour leaders and Volkswagen, whose Brazilian plants are operating at about half capacity after a long-running slump in car sales worsened this year.

VW announced in August plans to trim local payrolls by 16% by moving 3,933 workers into what amounts to a training programme meant to help them find work somewhere else, the report noted.

Dow Jones said the workers, who are guaranteed jobs until next February at Taubate and late 2006 at Sao Bernardo do Campo, are fiercely resisting the plan and protests forced VW to postpone moving employees out of their jobs one September 1; the transfer is now set to take place next Wednesday though there could be trouble between now and then.

“We still hope to achieve a breakthrough, but it looks as if the unions will not accept this model,” Grosse-Lleege told Dow Jones Newswires.

The report said that outside observers also expect labour leaders to keep fighting the layoffs, even as Volkswagen tries to ease the pain by using the training programme to ‘transition’ workers out of their jobs.

“The metalworkers unions are very strong, and they won’t allow any kind of massive layoff,” Simone Escudero, of the Austin Asis consultancy in Sao Paulo, told Dow Jones Newswires.

According to the report, union leaders, for their part, said they would never have signed an accord prohibiting strikes and lambasted German executives for suggesting such an action might be illegal. “The statement is a serious misrepresentation,” Lopez Feijoo reportedly said, stopping short of threatening a walkout.

Dow Jones noted that other car makers in Brazil, like General Motors, have opened voluntary layoff programmes to try to trim payrolls more slowly – such programmes offer fat severance packages to workers surrendering their jobs.

A VW spokesman told the news agency the company last week offered to open the biggest voluntary layoff programme so far in Brazil, but the union rejected the offer.

Brazil’s economy, while believed to be on the mend, is expected to grow less than 1% this year, and unemployment is at its highest level in at least two years, Dow Jones Newswires noted.