GM postpones Brazil layoffs decision until November

SAO JOSE DOS CAMPOS, Brazil (Reuters) - General Motors Co and a Brazilian union have agreed to postpone until November a politically sensitive decision to eliminate as many as 1,840 jobs at a factory near São Paulo.

The decision, following tense talks and heated reminders by Brazil's government that current tax cuts enjoyed by the carmaker go hand in hand with a pledge to preserve jobs, gives GM an additional three months to decide about layoffs on an assembly line it says it no longer needs.

After nine hours of talks with the union on Saturday, Luiz Moan, GM's head of institutional relations in Brazil, said the carmaker would proceed with negotiations on the workers' labor agreement in the coming months. Union members, meanwhile, will vote on the agreement at an assembly on Tuesday.

The accord relieves mounting political pressure in recent weeks as the carmaker considered shuttering the assembly line, one of eight at the complex in São José dos Campos.

The government has warned GM against cutting jobs, especially because sales, which had slowed due to a sluggish Brazilian economy, in recent months have rebounded with government tax breaks.

"We give fiscal incentives and we want something in return: stable employment," President Dilma Rousseff said last week. Tax breaks for carmakers are among a host of incentives for industry the government has unveiled as Brazil's once-booming economy stagnated over the past year.

Of the workers at risk of losing their jobs, GM will keep 900 on the assembly line, the company said. The rest will continue receiving their salaries as they undergo training for other jobs.

The decision to maintain some production on the line, Moan said, is a "sacrifice by GM for the community."

Since 2008, GM has directed its investments in new models to other factories in Brazil, citing high salaries and rigid labor agreements at the São Jose complex. The high costs, GM says, make it the least competitive plant in Brazil.

After GM halted production of the decade-old models made on the line in recent weeks, workers began protesting anticipated layoffs.

Antonio Ferreira, president of the metalworkers union representing the workers, told reporters the pressure of the federal and state government was key to maintaining the workforce at the plant. He said the union would keep negotiating with GM to bring new investments to the factory.

Moan said GM currently has no models that could be competitively produced at the complex, but the company committed to 60 days of talks with the union to achieve a more flexible labor agreement.

The automaker will also open a voluntary buyout program to the roughly 7,500 workers throughout the complex.

(Editing by Dale Hudson)

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