Volkswagen, Stellantis idle car plants in Brazil, Argentina after floods

SAO PAULO (ICIS)–Volkswagen (VW) idled its three plants in the Brazilian state of Sao Paulo on Monday, as suppliers in the floods-hit state of Rio Grande do Sul are unable to produce any automotive parts, a spokesperson for the German automotive major told ICIS.

At the same time, a spokesperson for Stellantis, another major auto producer, confirmed to ICIS that it had shut down its plant in Ferreyra, in Argentina’s Cordoba province, also due to a lack of input.

Rio Grande do Sul is Brazil’s southernmost state and petrochemicals-intensive automotive parts producers there are major suppliers to the rest of Brazil and Argentina.

However, the state is still reeling from severe flooding on 29 April which has brought around 90% of industrial activity to a standstill, according to local authorities.

VOLKSWAGEN
VW is using a so-called “collective vacation” clause under Brazilian labor laws to send workers at its plants in Anchieta, Taubate, and Sao Carlos home for at least 10 days.

However, a plant operated by VW in Sao Jose dos Pinhais, in the state of Parana, continues to operate normally, VW said.

“Volkswagen do Brasil informs that continues with the same preventive vacation position. The situation of parts supply is being monitored minute by minute,” said the spokesperson.

The workers at the Anchieta and Taubate plants will start a 10-day collective vacation on Monday, and the workers at the Sao Carlos plant will start an 11-day collective vacation on the same day.

‘Collective vacation’ is a measure regularly applied by industrial companies to manage production. Brazil’s labor laws normally grant employees around 30 days/year of annual leave.

In the industrial sector, as work is a “collective” activity, vacation periods can be organized by the employer for a group of employees, hence the name.

STELLANTIS
In the meantime, Stellantis – the result of the merger between Fiat Chrysler and PSA Group – told ICIS that it is analyzing whether its other plants in Argentina and Brazil will also need to be shut down.

In Cordoba, a province in north Argentina and a major trading partner with Rio Grande do Sul, there are fears that its economy – which is already suffering after the country went into recession – could take a further hit.

In Argentina, Stellantis operates another plant in El Palomar, in the Buenos Aires department.

In Brazil, its main facilities are in Betim in the state of Minas Gerais.

“Stellantis is following with dismay and expresses its solidarity with the victims of the floods in Rio Grande do Sul. The unprecedented impact of the catastrophe has directly affected the logistics system for the transportation and supply of industry components.

“The company had to stop production at the Stellantis Automotive Centers in Córdoba, Argentina, and is still analyzing the need for further stoppages at its plants in the region,” said the spokesperson.

Both General Motors (GM) and South Korea’s Hyundai – who also have production facilities in Brazil – had yet to respond to a request for a comment.

A spokesperson for Brazil’s automotive trade group Anfavea did not respond to questions from ICIS about the impact of the floods on the sector’s annual output.

However, it did say that it would make its first estimates at a press conference on 6 June, when it will publish production, sales and export data for May.

Earlier, the trade group said it feared the sector could be hit given Rio Grande do Sul’s importance to Brazil’s auto industry.

INDUSTRY REELS AFTER FLOODS
Companies based in the petrochemicals hub of Triunfo, near Porto Alegre – the biggest city in Rio Grande do Sul – have also shut, mostly as employees are having problems getting to and from work.

Companies including Braskem, Innova, and Arlanxeo all declared force majeure from Triunfo in the first week of May.

Sources said some of them will try to restart operations this week, although that has not been officially confirmed to ICIS.

The automotive industry is a major global consumer of petrochemicals, and chemicals make up more than one-third of the raw material costs for an average vehicle.

The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA), among others.

Front page picture: Volkswagen’s plant in Anchieta, state of Sao Paulo
Source: Volkswagen