Daimler Cutting 1,500 Brazil Truck Jobs as Demand Plunges

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Bloomberg / August 24, 2015

Daimler AG is eliminating 1,500 jobs at its Brazilian truckmaking division as demand for commercial vehicles in the country shows no sign of recovery. Workers at one of the plants affected went on strike in response, and the German company’s stock fell the most in almost four years.

Cutting about 13 percent of its workforce in Brazil became inevitable after industrywide truck sales in South America’s largest economy plunged 44 percent in the first half of 2015, compounding a drop last year, said Florian Martens, a spokesman at Stuttgart-based Daimler.

Daimler’s reaction to Brazil’s shrinking economy, which is forecast to continue contracting until at least 2016, underscores the concerns sparking a deepening global stock selloff that has spread from emerging markets. Shares in the German manufacturer dropped as much as 7.1 percent in Frankfurt on Monday, the steepest intraday decline since November 2011.

“For many months now there’s simply been a dramatic decline in truck orders,” Martens said. “Unfortunately, we don’t expect a quick recovery of the market.”

Employees at Daimler’s factory in Sao Bernardo do Campo, Brazil, staged a walkout Monday over the planned job cuts, the German company’s main labor representative group said. The reductions are scheduled to start in September after talks with local unions broke down. Labor leaders are calling on the truckmaker to reverse course and resume negotiations.

‘Incomprehensible’ Decision

“In the context of the excellent business situation generally at Daimler, it’s incomprehensible that such a decision has been reached,” said works council head Michael Brecht. Daimler reported record profit in the second quarter.

Tensions are high in Brazil, where Daimler had already reduced its workforce by about 3,000 jobs under a two-year reorganization, primarily through voluntary severance agreements. The company needed to take more steps as a recession, high levels of inflation and rising financing costs are discouraging customers from buying vehicles, Martens said.

While Daimler has been unable to escape Brazil’s woes, the German automaker is faring better in China, where demand is also slowing. The manufacturer of Mercedes-Benz vehicles is “still confident” of reaching a goal of selling more than 300,000 cars in China this year, despite the stock market plunge, Hubertus Troska, head of Daimler’s Chinese division, said at briefing on Monday in Beijing.

The company operates two plants in Brazil that build trucks and buses. Its workforce in the Latin American country totaled about 12,000 employees at the end of last year. Daimler is setting up a factory in Brazil to start making passenger cars in 2016.

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Daimler Reverses Brazil Truck Job Cuts by Reducing Hours Instead

Transport Topics / September 1, 2015

Daimler AG reversed course on the 1,500 job cuts announced last week at its Brazilian truck-making division, saying it will scale back hours by 20% instead as demand shows no sign of improving.

The agreement with local unions guarantees jobs until August 2016, and the Brazilian state will compensate employees for about half their lost pay, the Stuttgart, Germany-based company said in a statement Aug. 31. Workers at Daimler’s factory in Sao Bernardo do Campo went on strike in response to the cuts originally proposed, which would have cost about 13% of the company’s Brazilian workforce their jobs.

“The agreement shows that we can find fair solutions even in difficult times,” Wolfgang Bernhard, head of Daimler’s commercial vehicle unit, said in the statement.

Daimler says demand for trucks and buses in Brazil, South America’s largest economy, plunged 44% in the first half of the year. Brazil’s economic contraction is forecast to continue until at least 2016.

Daimler already has shrunk its Brazilian workforce by about 3,000 jobs under a two-year reorganization, primarily through voluntary severance agreements.

The company operates two truck- and bus-building plants in Brazil and is setting up a factory to start making passenger cars in the country next year. It employed about 12,000 people in the Latin American country at the end of 2014.