The trade union at DaimlerChrysler’s Juiz de Fora plant is not pleased with the company decision to restart assembly of the Mercedes C-class from CKD kits.
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Last week, DaimlerChrysler’s board decided that a plant in Bremen would build a new Mercedes SUV instead of the Brazilian factory.
“Assembling vehicles from kits does not resolve the future of the Juiz de Fora plant, it only postpones the problem. DC submitted to strong pressure to produce more vehicles in Germany. We got the leftovers,” said union president Geraldo Werneck.
Rather than closing its $US820 million plant, DC will, by the end of the year, restart assembly of C-class sedans for the United States, resurrecting an operation in place between 2001 and 2004.
The factory has been in danger since the beginning of April, when DC cancelled the Smart Formore SUV project that would have been made in Brazil and announced the end of Brazilian production of the previous generation A-Class. The Smart SUV had been seen as the vehicle line that would keep the plant open.
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By GlobalDataDC has not revealed the number of C-class sedans that will be assembled a year at Juiz de Fora, but said the project will maintain employment there.
The plant employs 1,160 and can make 70,000 vehicles a year, but the company will build only 3,655 units in 2005 before halting A-class production.
The trade union thinks the assembly deal is being used by DC to gain time until the expiry of an agreement preventing it firing the plant employees. That agreement ends on 29 February next year.
“We know that a CKD operation doesn’t need a thousand workers to run. We know that a plant built to produce 70,000 vehicles per year will never be profitable assembling kits,” said Werneck.
He cited as an example DC’s largest CKD plant, in Cairo, Egypt, which assembles about 20,000 vehicles a year using only 370 workers.
The union added that the CKD operation not will help workers at suppliers such as Magna/Decoma and Thyssen Krupp which will start to lay off employees this month as A-class build winds down.
“We are asking the government to help us to find a real solution for the future of the Juiz de Fora plant,” Werneck said.
As previously, C-class models sold in Brazil will continue to be imported fully-assembled from Germany.
This is due to Brazilian tariff regulations applicable to vehicle components imported from overseas for local assembly. If a vehicle is solely for export, its components can be imported into the country temporarily free of industrial product tax.
The plant previously assembled 7,000 C-class per year from German CKD kits and the finished cars were exported to the United States and Canada. Assembly ceased at the beginning of 2004, when the contract ended.
Rogério Louro
