Brazil unions warn of industry decline amid higher low-cost tire imports

Camacari, Brazil – Brazilian trade unions have warned that imports of low-cost tires, particularly from Asia, are seriously impacting the local tire industry, with job and production cuts planned across many manufacturers.

During a public hearing held in  Brazil's 'chamber of deputies' on 10 Sept, president and director of the national confederation of chemical workers Josue Pereira linked the layoffs to an “invasion of tires from abroad, especially from Asia.”

According to Pereira, recent negotiations with Continental prevented the loss of 60 jobs at the company’s factory in Camacari, in the northeastern province of Bahia, but as many as 40 roles are still at risk.

“The problem is that this is not an isolated case. Recently, 600 workers were laid off from the Bridgestone plant in Sao Paulo,” the unions' statement quoted Pereira as saying.

The cuts, said the union leader, are “all due to the high stocks of tires in the factories, which are not sold due to unfair competition with the Chinese market.”

Josue, who is also on the board of the national federation of rubber industry workers, voiced his support for a proposal to increase the tax rate from 16% to 35% on imported tires.

Production, Josue warned, is being increasingly reduced, affecting 500,000 direct and indirect jobs in the sector.

“The proposal to increase the tax on tires from abroad is being analysed by the foreign trade chamber, but the scenario demands quick responses,” he pointed out.

In a separate report, trade union Sind Borracha, reported that tire volumes manufactured by the country had dropped 25%, without giving a reference year.

Utilisation rates at factories, said union VP Samuel Alves have "reached up to 30% of the production capacity."

According to Alves, there are 1,800 employees on temporary layoff programmes, with temporary suspension of contracts at Bridgestone in Santo Andre, Sao Paulo.

The employees, he explained, have been divided to "four groups for a period of five months each - a measure that expires in December."

Citing Pereira's address on 10 Sept, the trade union report said that 21 tire factories operating in Brazil have rented 11 additional warehouses to store their unsold products.

According to the industry official, production cuts are not exclusive to Bridgestone and Continental, with other manufacturers such as Goodyear, Pirelli and Prometeon also reducing volumes.

ERJ has contacted Bridgestone and Continental for comment.