Volkswagen Reopens Brazil Labor Talks

SAO PAULO September 30, 2003; Andrea Welsh writing for Dow Jones reported that in the wake of a public relations gaffe by CEO Bernd Pischetsrieder, Volkswagen AG is reopening talks with Brazilian labor leaders Tuesday as the company tries to cut some 4,000 jobs.

And now, with the proposed cuts just a day away, Brazil's government is getting involved.

Pischetsrieder said in Germany last week that Volkswagen was prepared to fire Brazilian workers if they went on strike, raising hackles among Brazilian labor leaders and justice officials alike. As a result, regional prosecutor Oksana Boldo asked the two sides to come downtown Monday, and Volkswagen's local executives had some furious backpedaling to do.

"Workers rights are very clear to us," said Ricardo Carvalho, one of three Volkswagen representatives who came to the table in response to the prosecutor's call. "The right to strike is a constitutional right."

Volkswagen executives also invited labor leaders back to the negotiating table to discuss the company's plan to dissolve some 2,000 jobs Wednesday and place the workers in a transition program. The job cuts were already postponed from Sept. 1 owing to resistance from the powerful metalworkers union that represents employees at Volkswagen's Taubate and Sao Bernardo do Campo plants outside Sao Paulo.

The German carmaker, one of the top three in Brazil's $20-billion-a-year auto sector, announced in August that it would trim local payrolls by 16% by moving 3,933 workers into a transition program. The decision came after a long-running slump in car sales worsened this year, leaving Volkswagen plants operating at little more than half capacity.

Technically, the laid-off employees will stay on the VW payroll at least until their current labor contracts expire. Jobs are guaranteed until next February at Taubate and until late 2006 at Sao Bernardo do Campo.

Union leaders, though, insist that the contracts grant workers the right to stay exactly where they are. Falling interest rates are expected to stimulate Brazil's economy toward the end of the year, and carmakers and metalworkers alike are hoping that auto sales will soon begin to rise.

Pischetsrieder's gaffe appears to have complicated Volkswagen's efforts to cut jobs. Labor leaders who came downtown to meet with prosecutors Monday tried to appeal to the sentiment of local VW executives put in an awkward position by the CEO's words.

"I have the impression it's not only the workers that are victims of the confusion in Germany but the executives here, too," said Jose Lopez Feijoo, who heads the metalworkers union that represents workers at Sao Bernardo do Campo and Taubate.

Feijoo expects to receive an alternative proposal from Volkswagen when he sits down at the negotiating table Tuesday and hopes to present that new proposal to workers Wednesday ahead of a Friday vote.

The prosecutor's role, meantime, is strictly unofficial for now. "We're just opening a space for Volkswagen and for the union to talk," said Boldo.