June 5, 2012 / 10:12 PM / 5 years ago

Union asks Brazil's Embraer to avoid layoffs

* Embraer dismisses rumors of mass layoffs

* Aircraft maker’s order pipeline hit five-year low in March

* Brazil’s slumping industry and productivity spur unease

SAO PAULO, June 5 (Reuters) - Brazil’s Embraer dismissed speculation on Tuesday of possible mass layoffs after the aircraft manufacturer’s biggest union raised concerns about such a move as a fragile global economy weighs on demand for its jets.

“You ask every worker coming off a shift change if they’ve heard rumors of layoffs, and they’ll tell you they have,” said Herbert Claros, vice president of the Metalworkers Union of Sao Jose dos Campos, in a telephone interview. “We just want Embraer to clear the air.”

Claros said concerns began a month ago with talk of a management shakeup to be followed by wider layoffs. Anticipation mounted last week when two top executives left the company.

A human resources executive denied the rumors last week, Claros said, but the union has sent the company a letter asking for a public statement from management.

An Embraer press officer told Reuters there is no substance to the talk of mass layoffs.

Factory workers across Brazil are on edge as flagging industrial output has failed to keep pace with rising wages.

While unemployment remains near record lows, some economists have expressed fears that layoffs may be around the corner if slipping productivity keeps eroding the foundations of Brazil’s labor market.

Embraer, the world’s largest maker of regional jets, has also felt the drag of the global economic crisis.

Cancelled orders for private jets and slower demand for regional jets eroded Embraer’s order backlog to $14.7 billion in March, the lowest since 2006, representing less than three years of revenue. The slowing orders led some analysts to suggest Embraer could throttle back production.

Chief Executive Frederico Curado said in an interview with Reuters last week that regional jet orders should rebound from a weak first quarter. He said the company is counting on a recovery in the United States to offset a declining market in Europe and keep Embraer’s backlog stable this year.  Claros said union members have heard talk of layoffs on the scale of 1,000 to 1,300 workers, well short of the 4,273 workers cut in February 2009, at the height of the global credit crisis. (Reporting by Brad Haynes; Editing by Carol Bishopric and Jan Paschal)

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