The strike by auditors with Brazil’s Receita Federal (customs office) has intensified in the past two weeks, as Sindifisco, the customs officers’ union, dialed up pressure on the Temer administration to increase pay, offer a bonus plan, and improve their pension.
The union has increased its “all-day strikes” from one day to three days per week, and as a result, up to 4,000 containers are delayed daily. Some imports are delayed for up to 21 days. Export delays extend up to three days; under normal conditions, exports would be cleared in a few hours.
Furthermore, these actions, in turn, are driving up shipper costs, especially importer costs and those who use the Port of Santos, Brazil’s largest container port. Importers of automobile parts are finding it especially hard now that their stocks have been reduced over the four-month strike, with their supply chains seriously affected, due to the long delays in customs clearance. These delays now average 15 days, according to Sindamar, the ship agents association for Santos and the state of São Paulo.
Brazil is the ninth-largest automobile manufacturer in the world with 2.7 million vehicles built in 2017. Hence, the sector relies on a constant flow of auto parts to and from overseas units of nearly all multinational manufacturers, including Ford, General Motors, Volkswagen, Fiat, Nissan, Toyota, Mercedes-Benz, Renault, Honda, and Hyundai.
Moreover, the strike occurs as Brazil’s container trade is gaining momentum. The Port of Santos, Brazil’s biggest for containers, handled 3.85 million TEU in 2017 and volume growth continued in early 2018, up 11.9 percent during January/February to 643,478 TEU, despite the strike actions.
A series of 'go slows' (Operation Tortoise and No Computer Days) mixed with one-day strike actions has been the norm in Brazil since last November, when talks between Sindifisco and Brasilia broke down, and this has slowly deteriorated both auto sector supply chains and production concentrated in the ABC region (Santo André, São Bernardo do Campo, and São Caetano do Sul), located on the plateau between Santos and São Paulo.
Brazil — a major auto sector stakeholder
Brazil imported $11.8 billion in auto parts in 2016, with the United States the leading source, with $1.66 billion (14.1 percent), followed by Germany, $1.24 billion (10.5 percent), and China, $1.2 billion (0.2 percent).
Brazil exported $6.56 billion in auto parts in 2016, with Argentina the leading destination, $1.8 billion (28 percent), followed by the United States, $1.06 billion (16.1 percent), and Mexico, $617 million (9.4 percent).
The auto-parts sector employs 162,200 in Brazil, and hundreds of companies are now being affected by the strike.
Cláudio Damasceno, national president of Sindifisco, has been in Santos this week to support his members at the Port of Santos, who are staging demonstrations outside the Customs (Alfandega) building in Santos on strike days. Santos accounts for 25 percent of Brazil’s international trade and 33 percent of its container volume.
“For three years, the government has gone sideways on this issue of pay and conditions. Resolving the situation should be the number one concern of the new ministers,” Damasceno said, referring to the recently sworn-in ministers of Finance and Planning, Eduardo Guardia and Esteves Colnago.
One Sindifisco official, based in Santos, told JOC.com that emergency cargo — such as hospital equipment and medicine, hazardous cargo, and most perishables — were exempt, that the strike actions occur three days per week (Tuesday through Thursday), and would continue until July 2016 terms were enacted by the Brazil government.
“In February the judge ruled again that our strike is legal and justified and gave a four-month extension for us to continue on full pay,” the official said. “Our observations show now that the stike is having a deep effect, with an extra 3,000 to 4,000 containers being stopped or cleared slowly and so normal clearances have leapt from a few days to up to 15 days. There is now a huge backlog. One of the main sticking points seems to be performance-based pay.”
He added that customs auditors delay the dispatch of 100 million reias ($28.9 million) to the government’s exchequer “for every day of strike action.”
High Court found union action to be legal
According to the Sindifisco union, which represents all Receita Federal workers, a Brazil High Court has found that the union is acting legally regarding upping the ante for strike action and for this reason all striking customs officials will receive full pay until it is resolved. Some picket or mount demonstrations on strike day; others stay at home on full pay and they have full immunity from wage deductions, according to the High Court ruling.
Many critics in Santos and in Brazil argue this policy is “an incentive for irresponsible strikes” and that “President Temer is only trying to reduce the public deficit and wage bill.”
Jose Roque, executive president of Sindamar, said that his association had lobbied — alongside other bodies such as Fiesp, the powerful shippers federation for the state of São Paulo, Sindipecas, the National Association for Auto Parts, and also Anfavea, the association for Brazilian-based automobile manufacturers — repeatedly for the two sides to come together “for the sake of the country.”
“We have already sent letters to the Ministers of Finance, Planning, and the Casa Civil [Home Affiars] and also to the Secretary of the Receita Federal, all in Brasilia, asking for a solution as soon as possible to the end of the strike,” Roque said, adding that he and his organization have tried everything to broker a peace deal between the two, intransigent sides. “The Ministry of Planning informed us that the definitive regulation for the concession of the benefit that is the Efficiency Bonus was being discussed.”
Santos port users have also had to deal with sporadic strikes by stevedores in recent weeks and with a one-day stoppage causing delays and bottlenecks at various container terminals in the port city. In addition, staff at Codesp, the port authority, also staged a one-day stoppage — over pay and conditions — and may also consider further actions.
Contact Rob Ward at email@example.com.