GM postpones layoffs, avoid strike

General Motors' Brazilian unit at the weekend avoiding a looming strike by delaying the layoff of up 750 workers until the end of the year and promising to spend about BRL500m (US$246m) at its Sao Jose dos Campos facility.

On Sunday, it announced it would add a third shift at its Gravataí Industrial Complex, creating 1,450 new jobs at the assembly plant and another 1,000 at supplier plants located at the facility.

The Sao Jose dos Campos accord, reached late on Saturday with leaders of the metalworkers union, delayed GM's politically sensitive efforts to shut down what it called an uncompetitive assembly line in that city, Reuters reported.

The Sindimetal-SJC union said on its website the workers are members of the production line for the Classic model.

Since last year, GM has faced pressure from President Dilma Rousseff to retain workers in exchange for tax breaks that helped lift sales in the world's fourth-largest car market to a record high last year.

But auto production in Brazil's auto industry fell for the first time in a decade and productivity plunged to a six-year low, as rising wages, transportation bottlenecks and rigid labour laws eroded the competitiveness of local factories.

A tight job market has forced companies to concede steep wage increases. Unemployment has fallen to record lows despite two years of disappointing economic growth.

GM's complex in Sao Jose dos Campos, near the city of Sao Paulo, produces the Chevrolet Classic at the assembly line in question plus the Blazer, S10 pickup, engines and transmissions on other lines, employing over 7,000 workers.