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  HOME | Brazil (Click here for more)

Sao Paulo Industrial Belt Reinvents Itself amid Global Auto Industry Change

SAO PAULO – Amid the recent announcement of the closure of a Ford factory, the metropolitan Sao Paulo industrial belt has been reinventing itself for over a decade and remains a jewel of the Brazilian economy.

Known collectively as the Grand ABC Paulista, the manufacturing hubs outside Brazil’s largest city produce more than the entire nation of Argentina.

The region’s golden age was in the 1970s, when it gave birth to a vibrant labor movement that proved to be a springboard to national prominence for a lathe operator and union organizer named Luiz Inacio Lula da Silva, who went on to be Brazil’s president from 2003-2011.

But the ABC auto sector has managed to survive globalization better than other places.

Noting that people long spoke of the area as “the next Detroit,” the president of the ABC Metalworkers Union, Wagner Santana, pointed out to EFE that so far, the ABC Paulista has avoided the fate of the center of the US auto industry, which has been in free-fall since the 1990s.

Last Tuesday, Ford Motor Co. announced that it would be closing its plant in Sao Bernardo do Campo (the “B” in ABC) as part of a retrenchment in South America involving the elimination of 4,500 jobs by November.

The US automaker attributed the closure to a strategic decision to halt production and sale of Ford pick-up trucks in South America.

But Wagner said that Ford’s withdrawal is an isolated case.

“We are a base that still has 70,000 metal workers,” he said, adding that the ABC Paulista accounts for up to 30 percent of Brazilian car production, half of the country’s truck output and 90 percent of all buses made in Brazil.

Large foreign automakers, including Ford and Volkswagen, established plants in the area in the 1960s, when a lack of competition in Brazil made it possible for the multinationals to reap “astronomical” profits, according to Santana.

In that environment, he said, employers were determined to keep the factories humming and unions were able to bargain for high wages and labor rights.

Thanks to favorable contracts and seniority, the median wage for an assembly worker at an auto plant in Sao Bernardo do Campo climbed to 6,300 reais (about $1,680) a month.

The 1990s saw other Brazilian states offering tax incentives to lure manufacturing plants away from Sao Paulo, a practice that remains the chief threat to the ABC Paulista, Santana said.

In the face of a challenging scenario, the ABC has tried to make itself a specialized center of auto-parts production while also diversifying into other areas.

“There are already factories here that produce radar or equipment for oil prospecting,” the union leader said.

Ford’s announcement last week was a blow to the region and its workers, but the union is hoping to reverse the decision to close the plant.

Though they are not officially on strike, Ford employees in Sao Bernardo do Campo have not reported for work since last Tuesday.

The workers plan to return to the factory on Tuesday for an assembly to decide what their next steps will be.

Besides the 2,800 Ford employees, the plant is staffed by 1,700 contractors doing cleaning and maintenance, and the union estimates that the shutdown will affect 27,000 people in all, taking into account the numerous local businesses that depend on the factory and the spending by employees.

 

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