VW Brazil May Cut 6000 Workers

SAO PAULO, Brazil, July 12, 2006; Reuters reported that Volkswagen AG's Brazilian unit said on Wednesday it may lay off between 4,000 and 6,000 workers until 2008 to staunch losses caused by an unfavorable foreign exchange rate.

Automakers like Volkswagen and General Motors Corp. have said they would have to resort to layoffs because of falling exports after the Brazilian currency's sharp appreciation versus the dollar in the past two years.

Volkswagen employs 21,000 in Latin America's largest country.

Nilton Junior, a Volkswagen labor-issues manager, said first job cuts could begin as early as next week at the Taubate plant in the wealthy, industrial Sao Paulo state.

A spokesman for the workers' union in Taubate said, however, that the union and the company had worked out a proposal that, if accepted by employees, should avert the planned firings at the plant.

"This week the union has negotiated with the company a proposal aimed at guaranteeing investment in the plant and avoiding 681 layoffs here. It will be voted by the workers this week," the spokesman said. He could not say what were the conditions of the agreement.

Officials at the Metal Workers' Union said there were no immediate plans to go on strike or stage protests while they awaited the outcome of the Taubate deal.

On the last day of May, Volkswagen employees downed tools, paralyzing three passenger car plants in a 24-hour warning strike over layoffs planned by the company. The strike resulted in about 2,500 vehicles not being produced.

Volkswagen has said the company may forgo exporting 100,000 vehicles until 2008 because of the exchange rate. Exports account for 40 percent of Volkswagen's Brazilian output.

Brazil's currency, the real, is trading around five-year highs against the dollar.