Automaker General Motors Co. (NYSE: GM) has confirmed its layoff of more than 1,000 employees at its Brazilian operations in Sao Jose dos Campos in Sao Paulo state. The layoff has been in the works for most of the past year and the company has already taken charges of $103 million through September 2013 for the winding down of one assembly line.
Following an agreement reached last March with the Brazilian union, the company shut down the assembly line in August and paid the workers through the end of December. Some employees accepted a voluntary buyout, and a total of 1,053 have been fired from about 1,800 who worked on the line. GM laid off nearly 600 Brazilian workers in March.
In its third quarter report, the company said it holds a 17.1% share of the Brazilian market, good for third place behind Fiat SpA and Volkswagen AG and about 10% better than fourth-place Ford Motor Co. (NYSE: F). Combined, the four carmakers have about 70% of the country’s new car market. Ford’s Fiesta reached number 2 in sales for the month of December, the car’s highest-ever level. The VW Gol is the best-selling car in Brazil.
But sales have been slowing in the world’s fourth largest automobile market. New car registrations totaled nearly 3.6 million in 2013, down about 2% from the previous year.
The government imposed a 30% tax on imported cars last year in an effort to reduce imports which accounted for about 25% of all light vehicles sold in Brazil. The country’s manufacturing plants lack modern automation and are old and expensive to operate, driving margins way down. GM is modernizing some of its operations in Brazil, but new automated plants require fewer workers. And so it goes.