The work stoppages came after the failure of talks between the car manufacturers and the ABC Metalworkers union, which organizes the workers in auto. ABC rejected the companies’ initial offer of a 15.7 percent wage raise, stating that the increase barely makes up for inflation, which stood at 15.1 percent in September.

“Workers are fighting for a real increase in wages,” said a letter signed by Valter Sanches for the Metalworkers union. As in other countries in Latin America, workers in Brazil face deteriorating economic conditions due to a worldwide capitalist crisis. Inflation has been eating up the purchasing power of wages. Between March 2002 and March of this year, real wages declined by nearly 8 percent. Unemployment is now up to 13 percent. The actions by the auto workers were preceded by warning strikes by thousands of office workers at four plants protesting the bosses’ proposal for lower wage increases for some of the better paid employees.

The conflict is the sharpest at Volkswagen, the largest private company in Latin America’s biggest country, with five plants employing 26,800 workers. In December 2001, after a week-long strike, auto workers at VW in Brazil accepted company demands to cut wages and working hours by 15 percent supposedly to prevent 3,000 workers from losing their jobs. After the concessions, VW officials said “job security” would be tied to overall sales. Volkswagen is now in the process of eliminating 4,000 jobs in the country.

Workers at the four companies together produce some 1,700 vehicles and 200 engines a day, one third of the country’s auto production.

About 95,000 unionized metalworkers in the São Bernardo do Campo area in São Paolo state are seeking new contracts. Workers at General Motors have threatened to join the strike if the company does not meet their demands, according to Reuters.

At the request of the auto bosses a Brazilian judge ordered the union back to the negotiating table October 30, threatening to issue his own decision if an agreement is not reached by November 4. After a day on strike, auto workers at Scania, a Swedish truck manufacturer, returned to work when the company agreed to an 18 percent wage increase.

ABC union officials announced November 1 that they had reached a tentative agreement with Ford and DaimlerChrysler. The two have reportedly offered an 18.1 percent wage raise. It is not clear, however, whether this increase would go to all workers. The bosses’ earlier offers limited the increases to employees with wages below 1,050 reales ($362) per week and proposed a fixed raise of 165 reales per week for anyone over that, which the union opposed.

An agreement with VW had not been reached as this issue went to press. “Volkswagen is the most intransigent of the companies,” said Jose Lopez Feijoo of the Metalworkers union.

The strike is the biggest since President Luiz Inácio Lula da Silva took office in January. In an economy that remains mired in crisis, working people are the hardest hit. In addition to the drop in the purchasing power of workers’ wages caused by inflation, unemployment has risen to almost 13 percent. Nearly 50 million people, or 30 percent of the population, live under the official poverty level or in extreme poverty, defined by the government as making less than a dollar a day.

In an attempt to attract foreign investors and stimulate the economy, the da Silva government has granted tax breaks to auto companies and lowered the country’s lending rates. The New York Times reported car sales in September were 25 percent higher than in August.Big-business analysts have noted the timing of the strike is a “well-chosen” one. “Earlier this year, a strike would have been welcomed by the manufacturers,” said Marcus Stricker, of A.T. Kearney in São Paolo. “People would have stayed home and they wouldn’t have to be paid.”

Despite the conjunctural uptick in sales, the auto industry in Brazil cannot escape the pressures of the industry’s chronic overcapacity and the sharp competition among the auto bosses worldwide. A campaign to cut labor costs has been at the center of the bosses’ offensive to shore up profit rates.

The auto giants have also been looking more and more towards China to invest and expand their markets.

Beijing Hyundai Auto Co., a joint venture between a Chinese enterprise and south Korea’s largest auto maker, would boost its production capacity to 600,000 units per year by 2008 from 50,000 units currently being produced.

The Chinese People’s Daily on line reported that auto makers in China produced some 167,000 cars in April, up 84 percent over the same period last year.

Toyota, Honda, Ford, and DaimlerChrysler are among those setting up shop in China.  
 
 
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