Shippers beware -- Just when you thought it was safe to book your World Cup travel arrangements, Brazil continues to experience internal struggles with unions.
While Brazil is busy planning for two huge world events - World Cup (2014) and the Summer Olympics (2016), the Brazilian dockworkers are ready to provide another lesson in solidarity.
Negotiations have broken down, and the second showdown is scheduled for March 19 with a proposed 24 hour strike. The first strike demonstration on February 22 was six hours and wreaked havoc for Brazil’s Santos port in the middle of the soybean harvest with crops eagerly awaiting export.
Agriculture is an important part of the Brazilian economy and Brazil is biting at the heels of the U.S. for soybean and corn exports, but needs to provide a better export process to take the lead. Delays and rumors of strikes have already produced higher profits for U.S. growers. The proposed strike against Brazil’s quest of port modernization is timed for the grain harvest. There is little doubt improvements are needed and the government asserts the changes are critical to increase efficiency for Brazil’s export commerce.
This union struggle has been brewing for twenty years when Brazil opened the door to private investment in its terminals. Until recently, all terminals - private and public were still required to hire dockworkers through the OGMO, a Brazilian centralized agency. OGMO sources all work to union members, but along came Embraport, privately owned and one of the first private terminals in Brazil not required to hire workers through the OGMO. Embraport agreed to terms settling the first dispute quickly, but this union vs. non-union right to work conflict is far from over.
How this ongoing conflict will affect relocation and international business interests in Brazil is yet to be determined.
Protests stem from the government’s infrastructure development plan to change control of private terminals for lots of money… over $27 billion! The union contends this will adversely affect workers with job losses, lower wages and deteriorating work conditions. The government is walking a tightrope of stimulating the economy and improving port management while keeping peace at the ports. The need for infrastructure improvement for Brazil is no news, but the end result of the government’s decision to continue with their plans to privatize ports relinquishing control of the work force will not be known for some time.
Brazil is still an inviting place for international investors, but port management is a growing concern and providing basic infrastructure is needed as noted in Lexicon’s recent white paper, “Brazil: Five Factors to Consider as you Grow your Global Mobility Program.” A successful global mobility program to Brazil hinges on understanding the country's evolving immigration structure. The article will help you quickly learn how to navigate Brazil's changing requirements for international assignments.
Household goods and relocation-related shipments are not immune; while bulk agricultural shipments face the greatest peril, all ships accessing Brazilian ports could be delayed. It is not just exporters that will suffer, companies relying on imports for their business are going to suffer.
Port delays are not the only consequence of another strike; Brazil needs investment dollars to help create an infrastructure that invites foreign business. The government plan includes building new ports and privatize terminals is alarming unions who fear the new owners will use non-union workers. Brazilian dockworkers have enjoyed job security and want to prevent new owners from going around OGMO to hire non-union workers.
The United States understands the devastating affect a port strike recently experiencing an eight-day strike in December 2012 shutting down the LA Coast port. The strike cost billions of dollars in lost trade crippling businesses that count on the shipping trade for more than a week. We also narrowly avoided one with longshoremen on the East Coast in February. The list of strikes and rumors of strikes at the ports on America’s shores creates quite a playbook for Brazil.