Number of closed industries in Sao Paulo is largest in a decade

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The State of São Paulo, the largest industrial center in the country, recorded the closing of 2,325 manufacturing and mining industries in the first five months of the year. The number is the highest for the period in the last decade and 12% higher than last year, according to the Board of Trade.

The data indicates that the weak recovery of the Brazilian economy after the recession from 2014 to 2016 continues to shrink the productive sector, leaving a trail of disabled and unemployed factories.

Between 2014 and 2018, the Brazilian Gross Domestic Product (GDP) accumulated a drop of 4.2%, while the manufacturing industry nationwide fell 14.4%. “It means that production fell a lot and obviously had an impact on companies, with factories closing and layoffs,” says economist José Roberto Mendonça de Barros, MB Associates.

In parallel, 4,491 industries were opened from January to May in São Paulo. For Mendonça de Barros, regardless of the number of new industries, the fall in industrial GDP shows that there was a shrinkage of production and probably large and medium-sized companies were closed and smaller units were opened.

The president of Jaú Footwear Industry Union, Caetano Bianco Neto, says that in recent years, several companies considered large for the activity, with 300 to 400 employees, have closed down. “When a large one closes, three or four other micro and small manufacturers often appear, some even opened by former employees, but with little manpower,” says Bianco Neto.

Jaú’s footwear hub, a national reference in women’s footwear production, already employed 12,000 workers in the mid-2000s. Today it has 5,000 employees, says Bianco Neto. Recently, he and leaders of the shoe industry in neighboring Franca and Birigui handed Governor João Doria (PSDB) a recovery plan for the sector.

In the group that closed down, there are national and multinational industries. Some transferred branches to other units of the same company to cut costs and others ended production, leaving a contingent of unemployed, some of them without pay and compensation.

The Indebrás auto parts industry in west São Paulo stopped operating in April and put 150 employees on the street. Without back pay and no severance pay, they camped in front of the factory for 48 days. After agreement in the Labor Court, the company proposed to make the payment in 18 monthly installments.

“The fear is that the company will pay the first installments and then suspend the payment, as happened in previous agreements closed by other companies,” says the director of the Metallurgists Union of São Paulo, Érlon Souza.

Difficult conjuncture

The situation of São Paulo industry is repeated throughout the country. In addition to the closure of the activities of small companies, large groups have closed units considered less productive and concentrated production in more modern ones, almost always without taking the labor force.

Tire manufacturer Pirelli announced in May the closure of the Gravataí (RS) unit and the dismissal of 900 employees. The production of motorcycle tires will be unified with that of car tires in Campinas (SP) where 300 vacancies will be generated over three years. The company claims the need for restructuring “given the difficult economic scenario in the country.”

Companies that have closed factories this year include PepsiCo / Quaker (RS), PepsiCo / Mabel (MS), Kimberly-Clark (RS), Nestlé (RS), Malwee (SC), Britannia (BA) and Paquetá (BA). At ABC São Paulo, Dura auto parts said in January that it would close the factory in May and lay off 250 employees. After a strike and negotiations involving the Rio Grande da Serra City Hall and the ABC Metalworkers Union, the measure was postponed.

Júlio P Silva

Olá! I'm a proud Brazilian living in Sao Paulo who begun Urgence News with the intention of reporting on what's happening in Brazil in clear and concise English. Please do not hesitate to reach out if you have feedback or would like to know anything about Urgence News.

Mailing address: Rua do Cisne 1059, Campo Limpo Paulista, São Paulo 13234-432
Phone number: (11) 3953-7297
Email: julio@urgence.tv

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    About Júlio P Silva

    Olá! I'm a proud Brazilian living in Sao Paulo who begun Urgence News with the intention of reporting on what's happening in Brazil in clear and concise English. Please do not hesitate to reach out if you have feedback or would like to know anything about Urgence News. Mailing address: Rua do Cisne 1059, Campo Limpo Paulista, São Paulo 13234-432 Phone number: (11) 3953-7297 Email: julio@urgence.tv