by Marcos Lázaro Prado, Barretos School of Health Sciences Dr. Paulo Prata – FACISB

Reviewed by Matheus Lucas Hebling

In Brazil, several studies have been dedicated to discussing the new configurations and the re-spatialization of the automotive industry in recent years[1]. The assumption is that there was a process of deconcentration of production about traditional producing regions[2] from the 1990s on. The reasons why companies in the sector sought these new territories fostered two sets of explanations.

The first reason was related to all sorts of government incentives, at the municipal, state, and federal levels, which created a necessary infrastructure for the installation of the new factories and their production chains. Also, policies to promote consumption and credit facilities were implemented, mainly during the period of the Lula (2003-2010) and Dilma (2011-2016) governments, with special emphasis on “Inovar-auto” 2012[3].

 The second reason was linked to the search by these companies for new territories without working and trade union tradition, to significantly reduce labor costs and facilitate the implementation of more flexible work management.

Company

Location of plants

Inauguration

Audi

São José dos Pinhais (PR)

2016

BMW

Araquari (SC)

2014

CAOA

Anápolis (GO)

2007

FCA – Fiat-Chysler

Betim (MG)

1976

Goiana (PE) – Jeep

2015

Ford

São Bernardo do Campo (SP)

1967

Horizonte (CE)

1997

Camaçari (BA)

2001

General Motors

São Caetano do Sul (SP)

1925

São José dos Campos (SP)

1958

Gravataí (RS)

2000

Honda

Sumaré (SP)

1997

Itirapina (SP)

2019

HPE Mtsubish e Suzuki

Catalão (GO)

1998

Hyundai

Piracicaba (SP)

2012

Jaguar Land Rover

Itatiaia (RJ)

2016

Mercedes-Benz

Iracemápolis (SP)

2016

Nissan

Resende (RJ)

2014

Peugeot – Citroën

Porto Real (RJ)

2001

Renault

São José dos Pinhais (PR)

1998

Toyota

Indaiatuba (SP)

1998

Sorocaba (SP)

2012

Volkswagen

S. Bernardo do Campo (SP)

1957

Taubaté (SP)

1976

São José dos Pinhais (PR)

1999

Table 1. Car factories, location, and year of operation. According to Anfavea (2020)

“In terms of productivity, according to data from Anfavea (2020), it is noted: a continuous increase in productivity in the period ranging from 2006 to 2010, following a fall in 2011; a productivity recovery in the subsequent period, a peak production in 2013 (2,955,788 vehicles); a sharp production decline in the period ranging from 2014 to 2016 and production resumption from then on, although in 2019 the total number of cars produced (2,448,600) was equivalent to what was produced in 2007 (2,481,949).” (MARTINS and PRADO 2020)

The sector’s outlook, however, has been profoundly altered with the advent of the Covid-19 pandemic. The production decrease– which reached almost 90% in March 2020[4] – was followed by a set of uncertainties related to a market downturn, unemployment, and the very continuity of the operations of the companies themselves, despite government efforts – not specific to the sector – such as Provisional Measures 927 and 936. [5]

Although there was a resumption of manufacturing activities, despite the continuous increase in cases of the disease, 2020 ended with a total drop of 31.6% in vehicle production, causing the sector to fall to 2004 levels, which meant technical idleness of almost 3 million units[6] and the closure of traditional factories, among them, Ford.

We believe there is a very specific segment, whose articulation expands the set of a possible explanation of the phenomena described above. We refer to factories developed exclusively for the production of cars of the so-called “premium automotive market” as are the cases of Audi in São José dos Pinhais, Paraná, BMW in Araquari, Santa Catarina, Jaguar Land Rover, Itatiaia, in the State of Rio de Janeiro and Mercedes-Benz in Iracemápolis, in São Paulo state.

The qualitative and exploratory research presented here is still in progress and it was conducted aiming to characterize these companies at the moment immediately preceding the Covid-19 pandemic and their reactions within the context of the deep crisis that still occurs in the country. This research was carried out using the specific literature in addition to automaker official channels, data of ANFAVEA (National Association of Motor Vehicle Manufacturers), and news from several press vehicles, including the specialized ones.

We assume that when producing vehicles for a target audience of high purchasing power[7], these companies have business strategies detached from the common and typical oscillations of the automotive sector itself, even if they benefit from government promotion policies.

So far the research allows the following observations about the factories studied (BMW, Audi, JLR, and MB):

  1. I) those who already worked in the country as importers, and their installation took place within a context of incentive for internal production and increase of import rates carried out by Inovar-Auto,

  2. II) those which built their production according to the concept of CKD (Completely Knock-Down), that is, the assembly parts are produced in the matrix (or imported by it) and exported to the Brazilian plant, even though all of them have announced the technology transfer and investments in the new production sites, including the installation of local parts factories and the preparation of local labor,

III) those which reconciled traditional work management models  (Fordism) with flexible elements, such as work teams, although workers often point to the character of artisanal production,

  1. IV) those which compared to the other segments presented a smaller sales oscillation, to the point that specialized publications pointed to the absence of crisis in the segment, even in the middle of the Covid-19 pandemic[8].

The continuity or not of the industrial plants of these companies in Brazil is therefore purely independent of the crisis character of the pandemic. At the time of writing this note, Audi and Mercedes-Benz ended the production of cars in Brazil.

Understanding the strategies behind the choices of each of the companies in the segment is our next goal.

References

BICEV, Jonas. Políticas tripartites e ação sindical: a experiência de negociação do sindicato dos metalúrgicos do ABC no setor automotivo / Jonas Tomazi Bicev ; orientador Iram Jácome Rodrigues. -São Paulo, 2019. 189 f

LADOSKY, M. H. G. ; BICEV, J. T. ; PRADO, M. L. ; MARTINS, F. R. . O Futuro das Relações de Trabalho e Sindicais na indústria automobilística após a Covid-19. TRABAJO Y SOCIEDAD, v. XXI, p. 147-162, 2020.

LADOSKY, Mario Henrique. Trabalho, Desenvolvimento e Território: potencialidades e desafios do Polo automotivo de Pernambuco. In RAMALHO, José Ricardo; RODRIGUES, Iram Jácome (organizadores). Trabalho e Ação Sindical no Brasil Contemporâneo. São Paulo: Annablume, 2015.

MARTINS, F. R. PRADO, M. L.;. Trabalho e emprego na indústria automotiva: O caso da Mercedes-Benz em Iracemápolis (SP). In: LIMA, Jacob Carlos. (Org.). O trabalho em territórios periféricos: estudos em três setores produtivos.. 1ed.São Paulo: Annablume, 2020, v. , p. 155-200.

NABUCO, M.R.; NEVES, M.A.; CARVALHO NETO, A.M. (orgs.). Indústria Automotiva: a nova geografia do setor produtivo. Rio de Janeiro: DP&A, 2002.

RAMALHO, J.R. Dinâmicas sociopolÍticas em novos territórios produtivos. Caderno CRH, v. 19, n. 46,  p. 9-17, Jan. / Abr. 2006.

RAMALHO, J.R. Indústria e desenvolvimento: efeitos da reinvenção de um território produtivo no Rio de Janeiro. Repocs, v. 12, n. 24, p. 117-142, 2015.

RAMALHO, J.R.; OLIVEIRA, R.V. (Orgs.) Dossiê: Desenvolvimento, territórios produtivos, trabalho e conflito social. Repocs, v.12, n.24, jul/dez. 2015

RAMALHO, J.R.; SANTANA, M.A. (Orgs.). Trabalho e Desenvolvimento Regional: Efeitos sociais da indústria automobilística no Rio de janeiro. Rio de Janeiro: Mauad, 2006.

RODRIGUES, I.J.; RAMALHO, J.R. (Orgs.). Trabalho e sindicato em antigos e novos territórios produtivos: comparações entre o ABC Paulista e o Sul Fluminense. São Paulo: Annablume, 2007.

[1]   Among several papers reported in the open literature, see Nabuco, Neves and Carvalho Neto (orgs.) (2002), Ramalho (org.) (2006), Rodrigues and Ramalho (orgs.) 2007 and Ramalho e Oliveira (orgs) 2015 for an overview.

[2] By traditional regions we understand the “ABC Paulista” in the State of São Paulo, companies settled in the 1950s.

[3]  Law No. 12,715 of 2012, launched the Program to Encourage Technological Innovation and Densification of the Production Chain of Motor Vehicles – “INOVAR-AUTO” – a differentiated tax regime effective until the end of 2017 and that encouraged the arrival of new automakers. For an in-depth analysis of the program see Bicev, J. (2019)

[4] According to ANAFEA. “Covid-19’s advance brings down automotive industry numbers by nearly 90 at the end of March.” Available at  < http://www.anfavea.com.br/docs/Release%20-%20Avan%C3%A7o%20da%20Covid-19%20derruba%20n%C3%BAmeros%20da%20ind%C3%BAstria%20automotiva%20em%20quase%2090%20no%20final%20de%20mar%C3%A7o.pdf > Accessed 19/12/2020.

[5] On the pandemic in the automotive sector, as well as the effects of these provisional measures, see the work of Ladosky, M. H. G.; Bicev, J. T.; Prado, M. L.; Martins, F. R . (2020).

[6] According to ANAFEA. “Production falls 31.6% in 2020 and falls 16 years because of the pandemic. ANFAVEA projects 25% recovery in 2021”. Available in < http://www.anfavea.com.br/docs/release_coletiva_08_01_2021.pdf > Access on 10/01/202

[7] Cars manufactured by the automakers have a sales value in levels greater than 250,000 reais, something according to the companies themselves. The amount is equivalent to 50,000 dollars, a high value by Brazilian standards. In comparative terms, a popular car costs no more than $10,000

[8] This is the InfoMoney website. Published September 2020. Available in <https://www.infomoney.com.br/colunistas/o-mundo-sobre-muitas-rodas/crise-no-mercado-de-carros-de-luxo-essa-palavra-nao-existe/ > Access on 14/01/2020.

Marcos Lázaro Prado (2021) "Brazilian automotive industry and the Covid-19 pandemic: the case of the premium segment.". Brazilian Research and Studies Blog. ISSN 2701-4924. Vol. 2 Num. 1. available at: https://bras-center.com/brazilian-automotive-industry-and-the-covid-19-pandemic-the-case-of-the-premium-segment/, accessed on: May 16, 2021.