DaimlerChrysler AG said today it is closing a 190-worker plant in southern Brazil that Chrysler built under a government subsidy program. The Campo Largo plant, built less than five years ago under a Brazilian government drive to attract carmakers to the region with tax breaks and help with infrastructure costs, produces the Dakota light truck for both the Brazillian and export markets.
The initial decision to suspend production at the plant was made in January as part of the company’s $4 billion turnaround plan, which included 26,000 job cuts worldwide. It stopped production at the plant in April, but continued to pay salaries of the idle workers, according to Reuters.
Claudio Gramm, secretary general of the metal workers union in the Parana state capital of Curitiba, which represents DaimlerChrysler Campo Largo workers, said they had produced 13,500 Dakotas before production was halted, significantly less than it had planned to make when it took advantage of the fiscal incentives to set up shop.
"In the beginning of 1999 they were already reducing work hours and salaries," Gramm said. He was getting in touch with local officials to confirm the DaimlerChrysler decision and work out what steps the union would make, he added.
Gramm said he did not expect the other automotive companies operating in the area to follow suit. Renault SA and Volkswagen/Audi manufacture autos there, and it is also home to a Volvo truck factory.
DaimlerChrysler Brazilian operations also builds Mercedes Benz trucks and buses in the industrial heartland of Sao Paulo and Mercedes A class in the central state of Minas Gerais.