US-Brazil Economic Policies: Enhancing Bilateral Investment Opportunities

 

In Brazil, the automobile industry generates a large number of manufacturing employment, while the aeronautic industry generates little. Although employment in aeronautics has grown rapidly, the number of workers employed remains limited. In both industries, employment patterns have coincided with a significant increase in skill levels.

⦁Employment Trends in the Aeronautics and Automotive Industries

Between 2000 and 2016, the aeronautic and automotive industries in Brazil had significant development in added value, resulting in job growth. Nonetheless, there are differences between the two industries. The limited impact of added value growth on employment in the aeronautic industry is due to Embraer's dominance and reliance on imports in the lack of a national supply network. 

How Brazil's inclusion into aerospace and automotive GSCs affects jobs and skills.

Embraer's reputation as an OEM and global leader in the regional airplane market segment has undoubtedly boosted aeronautical output and employment. However, this development is offset by the company's policy of offshore manufacturing and supply sources, which has a negative impact on employment in Brazil. Furthermore, production centers of significant foreign suppliers who work for Embraer have little impact on employment. In comparison to other industrial industries, aeronautics created relatively few jobs. Between 2007 and 2014, it made up only 0.3% to 0.4% of manufacturing jobs. 

Employees' ability to be digitally connected to workstations placed at various places in a GSC, and so act remotely in production processes, exemplifies the changes that are occurring. Large aviation firms are pioneers in connected object technology, which enables the use of robots in specific assembly activities and predictive maintenance. In contrast, the French car sector lags in terms of production automation. "Industry 4.0" in the automotive industry is still in its early stages, and such techniques are not widely used. The prospective factory is still in the early stages.

Information technology will shape the working circumstances of the "agile worker" and may call into question wage earner status, which remains the dominant mode of labour mobilization. Most workers in the aeronautic or automotive industries do not appear to be eligible for independent status, but emerging technologies, particularly the digitization of GSCs, may open up new opportunities for select personnel. Could digitization reverse the movement of activities to poor or rising countries? Could it halt the trend of outsourcing operations, which is causing changes in GSCs? Clear answers to these questions have yet to emerge. Some repercussions of disruptive breakthroughs are already obvious, while others are only forecasted. The scope and trajectory of these consequences will be determined by how social partners and governments respond to transitions. Recent collective bargaining agreements at Renault and PSA allude to the inclusion of new topics in social discussion. French labor organizations prioritize keeping production and jobs in France, although they are unwilling to accept.

The effect of disruptive developments on employment.

All big disruptive inventions have been followed by significant shifts in labour relations. If the idea of "Industry 4.0" is taken seriously, there may be sweeping

Transformations in labour relations. After all, the first industrial revolution coincided with the prevalence of wage labour; the second, and even more so, with the new model of mass consumption and a profound shift in employer-labor relations with the Fordist model of mass production. The majority of macroeconomic projections generated by think tanks or economists believe that the fourth industrial revolution, which is connected to information technology, will put many jobs at danger. According to the ILO, the present wave of creative destruction may result in employment destruction on an unprecedented magnitude. It may also have an impact on other aspects of employment (work quality, job polarization, new skills, etc.) in either favorable or negative ways, as demonstrated by our examples from the aeronautic and automotive industries.

In Brazil, unions prioritize workers' purchasing power in the automotive industry, and recent collective bargaining focused on pay rather than jobs. Work conditions in the Brazilian automobile industry are often better than those in other manufacturing industries, and pay are typically higher. This is owing to the prominence of multinational corporations, which often pay higher wages than national corporations. However, two big measures implemented in 2017 have the potential to make jobs a major worry for unions and a central topic in collective bargaining. First, subcontracting has been liberalized. Second, labor law has been altered with the implementation of measures supporting flexible employment and work hours, which may jeopardize job security.

Conclusion

Our final remarks do not summarize the key findings of our research. Instead, we provide several alternative interpretations. Four points are so established.

Reinterpreting the GSC concept.

Our findings confirm that the concept of GSC has been inextricably linked to the analysis of multinational organizations' strategies. As a result, it appears that the concept of an industry's GSC (for example, aeronautics) has become overly broad. Similarly, it makes little sense to refer to a French "automotive GSC" that includes the two competing businesses, PSA and Renault. Although their records and the technological-productive features of their GSCs are similar, the two businesses chose different foreign strategies in the 2000s, resulting in differing outcomes for the national production system.

Our comparison of Airbus and Embraer also reveals that there is no true aeronautic industry GSC. The Brazilian firm is a world leader in a market niche (regional transport), which is under threat from advancements in the global air travel sector. Furthermore, Embraer established its GSC with Tier 1 suppliers who are all not Brazilian. This renders the GSC susceptible because the Brazilian aeronautic industry lacks a dense network of entrepreneurial know-how, such as that found in France. Such a network, as shown in France's Greater Southwest region, fosters the types of interactions required for creativity.

GSCs and Upgrades

Our comparison of Brazil's automotive and aeronautic industries offers insight on Baldwin's questions about "building or joining" a GSC (Chapter 1). Indeed, Embraer formed its own GSC, whereas Brazilian automakers joined GSCs established by foreign OEMs. What effect do these two distinct techniques have on upgrading?