July 19, 2018 / 6:53 PM / 3 months ago

Volkswagen to furlough 1,000 workers in Brazil as sales slow: union

SAO PAULO (Reuters) - Volkswagen AG (VOWG_p.DE) will furlough about 1,000 workers at its largest factory in Brazil, union representatives said on Thursday, due to weaker economic growth and slumping exports to Argentina.

FILE PHOTO: A Volkswagen logo is pictured during the Volkswagen Group's annual general meeting in Berlin, Germany, May 3, 2018. REUTERS/Axel Schmidt/File Photo

The month-long furlough will start on Aug. 21 at the VW plant in Sao Bernardo do Campo, on the outskirts of Sao Paulo, according to the local metalworkers union.

The factory produces the Jetta, Saveiro and Polo models, along with its Virtus sedan variant, and employs about 8,000 workers.

The news was first reported by newspaper O Estado De S. Paulo on Thursday.

A Volkswagen spokeswoman declined to discuss whether there would be a furlough, but said “tools to add flexibility to production” are a possibility. She added that sales had actually increased this year.

“From January to June 2018, in relation to the same period in 2017, Volkswagen registered a 33 percent growth in sales,” the spokeswoman wrote in an email. She said Volkswagen expected overall car production in Brazil to increase 12 percent in 2018.

A truckers’ strike in late May took the wind out of a gradual economic recovery in Brazil, weighing on domestic demand. Slower sales in Mexico and Argentina also led Brazilian automaker group Anfavea to scrap a forecast for exports to grow this year.

Anfavea this month cut its projection for production this year in Brazil to 3,021,000 vehicles, a growth of 11.9 percent instead of 13.2 percent forecast earlier. Production grew 13.6 percent in the first half of the year to 1,435,000 vehicles.

Furloughs are common as an alternative to costly job cuts in Brazil’s auto industry, allowing carmakers to trim production and payroll more easily when demand softens.

Reporting by Alberto Alerigi Jr, writing by Marcelo Rochabrun; editing by James Dalgleish and Sandra Maler

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