The Brazilian unit of German automaker Volkswagen on Wednesday announced that it was scheduled to cut 4,000 to 6,000 jobs through 2008.

The layoff plan, a part of the company's restructuring efforts, is aimed at increasing its profitability and decreasing labor costs.

Volkswagen has five factories in Brazil with about 21,000 workers. The factory in Taubate of Sao Paulo state will be the first one affected by the plan.

The company's directors were expected to explain the plan to local lawmakers on Wednesday, trying to tell lawmakers "that if the current situation continues through 2008, the job cuts will be inevitable," said Flavio Chantre, a Volkswagen spokesman.

Volkswagen is negotiating with the local workers' union over the financial compensation for those to be laid off. The negotiations have been tense with a series of work slowdowns and strikes.

The automaker said it was losing money as the strong appreciation of the local currency, the real, had reduced its car export profit.

The U.S. dollar, which was worth 3.52 reais at the beginning of 2003, had dropped to 2.19 reais recently.

Local exporters from several industries in Brazil, suffering from a reduction of export revenue, are lobbying the government to introduce policies on devaluing the real. Volkswagen is lobbying for an exchange rate of between 2.60 to 2.70.

In 2005, Volkswagen's Brazilian unit produced 684,000 vehicles, of which 257,000 were exported.

With the restructuring plan, the company's annual production capacity is due to decrease to 514,000 in 2008, while its annual exports will be slashed to 100,000.

Source: Xinhua