BRAZIL: 37-day strike causes severe losses at Volkswagen

One of the longest strikes ever faced by VW Group worldwide lasted 37 days and led to severe losses at the automaker. The São José dos Pinhais plant, in the Brazilian state of Paraná, lost 28 days of production.

Some 22,000 cars were not made, reflected in part empty dealer showrooms and in the automaker’s market share so far this June.

The plant is VW’s most modern, opened in January 1999 to produce the ‘Mark IV’ Golf and Audi A3. Currently it makes the Fox and CrossFox as well as the Golf. The European version of the Fox also comes from this factory but production ends soon.

The deal to end the strike apparently favoured the workers. The dispute arose over the results participation programme (PPR in Portuguese) annual programme. VW didn’t want to pay the BRL$12,000 (US$7,500) demanded by the union but ended up agreeing to only a R$500 ($310) reduction.

To compensate for the days of production lost during the strike, workers will give up two days’ pay per month to the end of June 2012.

The current contract was renewed early, instead of in September as scheduled, with a 2.5% rise over inflation and an R$4,200 ($2,600) bonus.

VW will probably rethink its production increase plans in Paraná, Brazil’s third largest auto industry hub. It planned to shift the SpaceFox wagon model from the General Pacheco plant in the Greater Buenos Aires area to São José dos Pinhais.

Labour costs are still lower there than in the traditional São Bernardo do Campo region in the Greater São Paulo region but the labour negotiation methods are quite different.

In São Paulo, unions and automakers have a far more mature relationship, the Paraná union still makes full use of old strategies and permanent confrontation.

Volvo and Renault had to immediately capitulate to the union demands because production could not be interrupted due to lack of inventories (Volvo) or the start of Duster pre-production at Renault.

Volvo agreed to pay R$15,000 ($9,400) and Renault, R$12,000 (R$7,500) with practically no discussion.

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