"Industrial Clusters, Value Chains And HRM In The Brazilian Automotive Industry"

Abstract

Local industrial clusters in the Brazilian automotive industry have facilitated just-in-time production, functional flexibility, and improvements in labour standards since the 1980s. However, this model has been threatened by global over-capacity and the rise of low cost suppliers in South Korea and China. This paper explores the nature and dynamics of the localization process, the role of institutions in sustaining supply networks, and the implications of localized networks for HR practices down supply chains. The findings indicate that automotive majors have shifted costs onto their suppliers, disrupting established relationships. Where exchange relations become less predictable, there will be movement towards arms’ length and abstract contracting with workers and beyond the firm; while remote supply networks may cut costs, it may lead to declining labour standards and quality shortfalls.