Volkswagen do Brasil has announced plans to restructure its operation.
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According to Hans-Christian Maergner, president of the local unit, the company will soon start negotiations with trade unions over the changes.
“We want to increase our competitivity and profitability,” said Maergner.
Volkswagen said it “believes” that a reduction in production capacity and the axing of thousands of jobs are inevitable. The trade union said that cuts could affect up to 6,000 workers – VW has about 22,000 employees here.
In a speech, Maergner said, in a “drastic hypothesis”, the automaker could close one car plant – it currently has three car factories plus one making engines in Brazil.
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By GlobalDataSince 2003, Volkswagen has tried significantly to reduce the number of workers it employs in Brazil but has so far failed. The automaker has an agreement preventing it firing employees in the Anchieta plant – with 12,000 workers it is the largest and oldest factory.
That agreement ends on November this year.
The automaker said it has improved its position in Brazilian market in the last years, but added that the current rising worth of the Brazilian currency against the US dollar justifies the restructuring plan because it is hitting export profits.
This week, $US1 is worth $R2.07, the highest exchange rate in five years.
VW Brazil ships cars to other South American states and also to Europe, which takes the Polo sedan and Fox.
The company has already reduced its export targets for this year due to the currency issue. At the end of last year, VW expected to ship about 250,000 vehicles abroad in 2006, the same as in 2005.
Now it has chopped the target to 175,000 units, including a reduction in Fox exports to Europe.
If the Brazilian currency remains at the current value over the next few years, Volkswagen foresees more export cuts, down to 155,000 units in 2008.
The company has installed capacity for 730,000 vehicles in Brazil, but with exports around 150,000 units and with strong competition in the Brazilian home market, VW predicts production of only 515,000 units in 2008. Last year, the company made 646,000 vehicles.
Besides its car and engine factories, Volkswagen also has a trucks and buses plant in Brazil, but the restructuring plans won’t affect this factory which reports directly to the Volkswagen commercial vehicles supervisory board in Germany.
Rogério Louro
