February 19, 2013

Labor Issues Heating Up at Brazilian Ports

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

We are approaching that time of year when labor groups at the various Brazilian ports conduct their "annual" work stoppages. In past years, any labor actions taken at Brazilian ports were usually resolved within a few days. Antagonistic attitudes at the negotiation table are generally not the normal procedure in Brazil, but things may be changing.

The Brazilian economy has slowed down (the Central Bank reported a 1% growth in 2012) and President Rousseff has embarked on a very ambitious program to privatize much of the infrastructure in Brazil as a way to stimulate the economy and to reduce the cost of doing business in Brazil. This privation plan includes nearly 100 grain terminals at Brazilian ports and that is the concern of the unionized work force at the ports.

They fear that once the terminals are put in private hands that their wages and benefits will be cut, jobs will be eliminated, and working conditions will deteriorate. They want these issues resolved before the public grain terminals are leased to private companies. The problem is that President Rousseff has stated repeatedly that her plans for privatization will not be detoured by worker's concerns and she has proven to be a very hardline negotiator in the past.

At the Port of Paranagua, labor costs account for more than 50% of the cost of doing business at the port, but port operators feel that there are excesses and inefficiencies in the system. At the port, labor accounts for 90% of the cost of moving automobiles, 75% of the cost of moving sugar and fertilizers, and 50% of the cost of moving containers. The Syndicate of Port Operators in Parana (Sindop), which represents private companies doing business at the ports, has indicated that they feel the workforce could be reduced significantly without any loss in efficiency. In fact, they feel a smaller workforce and improved technology would actually improve port operations, and that is exactly why the unions are concerned.

Short term work stoppages (6 hours) have already occurred at some of the ports and various labor unions are meeting this week to decide on their negotiation strategy. Protestors at the Port of Santos occupied a Chinese ship early Monday morning that was carrying cranes destined for private terminals at the port. These cranes are part of the port modernization program that will eliminate jobs and that is why there are protesting. There will certainly be work stoppages at numerous Brazilian ports and it is unlikely that they will be resolved as easily as they have been in the past. With a much larger crop to be exported out of Brazil in 2013, any prolonged work stoppages could make a bad situation even worse.