Brazil auto workers march on highway to protest layoffs

More than 1,000 job cuts confirmed

SAO PAULO (Reuters) — Thousands of metalworkers in Brazil marched on a highway outside of Sao Paulo on Monday to protest layoffs by carmakers, adding to a mounting crisis in a politically sensitive industry.

State police said about 7,000 workers from Volkswagen AG , Ford Motor Co and the Mercedes-Benz truck unit of Germany's Daimler AG occupied a lane of the highway linking Brazil's biggest city and biggest port.

Last week Volkswagen and Mercedes-Benz confirmed more than 1,000 job cuts, accelerating a drop in auto industry payrolls that dwindled nearly 9 per cent last year.

VW and Mercedes workers have already responded with strikes and the participation of Ford employees underscored that labour leaders plan an industrywide resistance to more layoffs.

Auto industry groups in Brazil are forecasting little or no recovery from a sharp downturn in 2014, as rising interest rates and expiring tax breaks contribute to weak consumer confidence. Carmakers have responded by cutting costs, ending an agreement with Brazil's government to avoid layoffs.

The labour standoff is testing the mettle of President Dilma Rousseff's new economic team, which took charge this month promising to end the cheap credit and tax incentives that have propped up key industries but wrecked government accounts.

Representatives of the metalworkers union organizing the protest outside Sao Paulo did not respond to requests for comment.

A Mercedes-Benz representative confirmed its workers were involved in the demonstration, adding that the company recognized their right to protest. She said production at its local truck factory was stopped.

Volkswagen reiterated a recent statement that the company urgently needs to reduce costs at its local factory, known as Anchieta. Workers there have halted production since Tuesday.

Ford representatives did not comment on the protest.

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