General Motors has said it would spend US$2.7bn at two Brazilian factories over the next five years, sparing them from closure.
According to Reuters, Sao Paulo state governor Joao Doria told a joint news conference with GM executives the plants in Sao Caetano do Sul and Sao Jose dos Campos had been slated for closure last December, and said he convinced GM to reverse the decision, saving jobs.
Go deeper with GlobalData
Last November, GM said it would slash thousands of jobs around the world and would close two unspecified plants outside of North America by the end of 2019, Reuters noted.
The company declined to say whether its restructuring plans had referred to the two Brazilian factories, and declined to comment on whether the two plants had been slated for closure as Doria claimed.
Sitting next to Doria at the news conference, GM's CEO for South America, Carlos Zarlenga, also did not directly address Doria's recounting of the negotiations with GM, Reuters said.
Doria, a former businessman and reality TV show host, took office in January and became a vocal advocate for the state's auto industry. Earlier this year, he said he would find a buyer for a Ford plant that is slated to close after the automaker said it had tried and failed to find one.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAt the news conference, Doria said GM told him in a call days before his inauguration that it planned to close the plants.
"I thought it was going to be good news," Doria said. "But to my surprise I was told that the next day GM CEO Mary Barra would announce the closing of two factories in Sao Paulo. I fell off my chair."
He said he dispatched his future state finance minister to fix the situation and landed a meeting in Miami with GM executives. He said 65,000 workers employed directly and indirectly by GM would have lost their jobs without his intervention.
According to Reuters. Doria earlier in March announced an incentive plan granting automakers a 25% reduction in value added taxes if they created at least 400 jobs and invested at least one billion reais. At the news conference, GM announced it was creating 400 new jobs.
Zarlenga said the future of its Sao Paulo factories had presented GM "a really serious problem" but did not confirm that the automaker had considered closing them down.
GM, despite being the sales leader in Brazil, had warned local employees it was dealing with heavy losses and "sacrifices" would be necessary.
The news agency noted the plan, as announced, was less than GM's most recent investment plan in Brazil in 2014 which totaled $4bn. But the announcement did not include potential future investments in the GM plants elsewhere in the country.
