GM to invest $2.7 bn in Brazil plants over next 5 years

General Motors , which earlier this year told employees at two Brazilian plants that it faced a critical situation due to declining sales, said Tuesday it will invest 10 billion reais (around $2.67 billion) in those factories through 2024.

The decision by the United States’ No. 1 automaker came after the government of the southeastern state of Sao Paulo announced tax breaks for automakers that invest more than 1 billion reais in that state.

Automakers meeting the investment requirements are eligible for discounts of up to 25 percent in their value-added tax bill.

GM’s chief executive officer for South America, Carlos Zarlenga, who gave a press conference alongside Sao Paulo state Gov. Joao Doria, confirmed the company’s decision.

He said GM will invest 10 billion reais in the company’s Sao Jose and Sao Caetano plants, which are to be springboards for launching “new products and technology.”

“Today is a day I thought would never arrive,” Zarlenga said after explaining that a solution had been found to a difficult situation through discussions with employees, unions, suppliers and the state government.

Zarlenga praised the plants’ employees, saying that “without them we wouldn’t be who we are.” He also credited the “mature” and “intelligent” attitude shown by the unions during the process.

Sao Paulo’s finance secretary, Henrique Mireilles, referred at the same press conference to the tax breaks and said they had not been offered with a view to waging “fiscal war” on other Brazilian states.

“We’re going to create and preserve jobs in Sao Paulo, without a fiscal war, without harming other states. We’re not waging fiscal war and we won’t do so,” said Mireilles, who previously served in the position of finance minister in former President Michel Temer’s Cabinet.

Gov. Doria said for his part that GM’s investment commitments mean that 15,000 employees will keep their jobs.

In January, GM told employees at its Sao Paulo plants that the company’s situation was “critical” and began negotiations with workers and unions on reductions in salaries and benefits.

The automaker also entered into simultaneous talks with local authorities and suppliers, a process that led to GM’s decision to reverse course.

The company said last year it expected to lay off 15 percent of its workforce in 2019 and shutter seven factories: one in Canada, four in the US and two in other parts of the world.