July 25, 2018 / 8:48 PM / 10 months ago

Brazil judge denies bid to protect Embraer jobs

SAO PAULO, July 25 (Reuters) - A Brazilian labor judge has rejected a call to make Boeing Co’s proposed takeover of most of planemaker Embraer’s commercial jet unit dependent on a pledge to preserve all local jobs at the company.

The proposed takeover has set off concerns among unions and political allies that Boeing would slash Embraer’s local workforce once it assumed control of the venture. Boeing, Embraer and the Brazilian government have so far declined to provide any assurances about jobs.

A representative for Embraer declined to comment on the judge’s decision on Tuesday to deny a request for a court injunction, which would have forced Boeing to safeguard all current Brazilian jobs at Embraer. Boeing also declined comment.

The injunction request was filed by Brazil’s labor prosecutors, a special group that investigates potential violations of the country’s strict labor laws. They responded to the judge’s rejection by announcing plans for a civil lawsuit against the government.

Prosecutors said they initially sent the proposal to protect Brazilian jobs to Boeing and Embraer, but the companies had said they did not intend to give such a guarantee. Embraer had 16,000 employees in Brazil as of the end of 2016.

The request for an injunction was filed against the Brazilian government because, while Embraer is a private company, the government holds a special stock that grants it veto power over major business decisions.

In their lawsuit, the prosecutors said they plan to argue that U.S. President Donald Trump could force the venture to “produce only in the United States.” Trump has been implementing measures aimed at making imports and the offshoring of jobs more expensive.

The labor prosecutors also said the Brazilian government had poured more than $25 billion into Embraer over the years, but that the company would only regain $3.8 billion from its sale to Boeing.

The proposed deal with Boeing would not include Embraer’s defense and executive jets business, where the Brazilian government would maintain veto power. But analysts and government advocates have raised concerns about the profitability of those divisions in the absence of the commercial jets division, which has been the company’s cash cow. (Reporting by Marcelo Rochabrun Editing by Tom Brown)

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