GM Plans $2.8 Billion Investment for Brazil Production

Aug 15, 2014 03:11 PM EDT | Jordan Ecarma

General Motors has big plans for Brazil.

The automaker will invest 6.5 billion reais, or $2.8 billion, in the South American country during the next three years, Reuters reported.

GM CEO Mary Barra met with President Dilma Rousseff on Friday and afterward told reporters that the $2.8 billion will go toward investing in existing factories and developing new products and technology, according to Reuters.

The auto industry in Brazil has been on the decline along with the rest of the country's economy, car production falling about 16 percent in the first seven months of this year.

A metalworkers union has been battling GM to hold the automaker to its promise of investing in the Sao Jose dos Campos plant, where GM plans to put some workers on paid leave. According to the union, 1,000 workers' jobs are under threat due to the plans.

Because of falling demand for new cars, other automakers have minimized their staff as well. In May, Volkswagen put 900 workers in Brazil on paid leave, while PSA Peugeot Citroen began encouraging workers to find other employment through a voluntary leave program in Rio de Janeiro state.

The auto industry in Brazil accounts for one-fifth of the country's manufacturing output.

Barra did not address friction because of labor issues at the Friday press conference, Reuters reported. 

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