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THE AUTOMOTIVE AND CONSTRUCTION

EQUIPMENT INDUSTRY Brazil

Swedish Trade Council Brazil


2006
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Brazilian Construction Equipment Industry

 Recommendations

 References

2
AUTOMOTIVE IS ONE OF THE LARGEST
MANUFACTURING INDUSTRIES IN BRAZIL

5 largest manufacturing • The total turnover of the Brazilian


manufacturing industry is approx. USD
industries in Brazil USD billion 489 billion
in 2005
• The manufacture industry employs
Food 78.7
approximately 6.1 million people.
• Automotive and auto parts has
Chemistry 69.5 approx. 107 and 195 thousand of
Electrical and Electronics 39.7 employees respective.

Automotive 28.9
• Automotive industry has a strong
Siderurgy 20.6 presence in the market.

• The average wage for an industrial


worker in Brazil is approx. USD 500
dollars/per month.

The automotive industry amounts to 6% of the total manufacturing industry


3
BGE - Brazilian Institute of Geography and Statistics
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Passenger Cars

 Commercial Vehicles

 Suppliers

 Brazilian Construction Equipment Industry

 Recommendations

 References

4
INFORMATION AND STATISTICS ARE MANY
TIMES NOT AVAILABLE IN BRAZIL

 Organizations and companies are not legally obliged to


disclose information to the Brazilian market.
 Statistics and databases are often not available or
organized as in other countries.
 There is little transparency of statistics on the market.
 The trend is moving towards greater transparency.
 After establishing a personal relation with a foreign
company, a Brazilian company opens up.

5
THE TURNOVER Of THE CAR AND COMMERCIAL
VEHICLE SECTOR TOTALS USD 28.9 BILLION
- the industry grew 26% over the last 3 years

Production car and commercial vehicle industry in Brazil

USD Billion
35.0 Domestic Export

28.0
7.0
Information about
21.0
turnover per type of
vehicle is not
14.0
available
7.0
21.9

0.0
2000 2001 2002 2003 2004 2005

year

Exports has increased significantly over


6
the last 3 years
urce: Anfavea
2.5 million vehicles are produced in Brazil

VEHICLE MANUFACTURERS

Commercial Vehicle (518,806 vehicles )


PASSENGER CARS
(2,009,494 vehicles)
Light Commercial TRUCKS BUSSES  9 manufacturers
(365,648 vehicles) (117,892 vehicles) (35,266 vehicles)  VW
 Audi, Seat
 9 manufacturers  10 Manufacturers  6 manufacturers  GM
 DaimlerChrysler  Agrale  Agrale  Fiat
 Dodge, Jeep  Bramont  Alfa Romeu
 Fiat
 DaimlerChrysle
 Daimler Chrysler r  Ford
 Ford  Mercedes- Benz
 Land Rover  Mercedes-  Karmann-Ghia
 Fiat Benz  Honda
 Iveco
 Ford  Iveco  Toyota
 Mitsubishi
 Iveco  Scania  Lexus
 Nissan
 Renault
 Peugeot Citroën  VW
 Renault
 Scania  Peugeot/ Citroën
 Troller  Volvo
 VW  VW  DaimlerChrysler
 Volvo  Mercedes-Benz,
Chrysler

7
ce: Automotive Business
A MAJORITY OF THE AUTOMOTIVE COMPANIES MAKE
THEIR PURCHASE DECISIONS LOCALLY 1(2)

Vehicles manufactured in
Brazil
Manufacture Employee Business Purchase decisions
r s
Honda 1284 Cars Does not disclose information
Karmann-Ghia 542 Cars Mainly local

Toyota 2124 Cars HQ, Japan


Agrale 1164 Commercial Mainly locally
International 26 Commercial HQ, USA
Iveco 650 Commercial Mainly locally, sometimes approved by HQ in
Italy
Mitsubishi 1135 Commercial Locally
Nissan * Commercial Does not disclose information
Scania 2258 Commercial HQ in Sweden or Lower orders locally
Volvo 1811 Commercial Does not disclose information
8
rce: STC interviews *Working posts included in Renault's total
A MAJORITY OF THE AUTOMOTIVE COMPANIES MAKE
THEIR PURCHASE DECISIONS LOCALLY 2(2)

Vehicles manufactured in
Brazil
Manufactu Employe Business Purchase decisions
rer es
DaimlerChrysl 13014 Commercial and Mainly locally approved by HQ in Germany
er Cars
Fiat 8187 Commercial and Locally
Cars
Ford 9156 Commercial and Worldwide agreements and regional
Cars decisions
General 19193 Commercial and HQ in Sao Bernardo dos Campos or by
Motors Cars worldwide agreements.
Peugeot 2145 Commercial and Does not disclose information
Citroën Cars
Renault 2676 Commercial and Does not disclose information
Cars
VW 24582 Commercial and Worldwide agreements and regional
Cars decisions
9
rce: STC interviews
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Passenger Cars

 Commercial Vehicles

 Suppliers

 Brazilian Construction Equipment Industry

 Recommendations

 References

10
THE CAR PRODUCTION IS GROWING IN BRAZIL

Car Production in Brazil Development in the last 5 years


 Since 2003, the car production has
increased more than 33%
 A stable economy over the past 5
Thousand years, with lower interest rates and
2,500
units easier financing has increased the
demand for cars.
4%
2,009
2,000
3 3
1,756
.  The VAT on a car is based on the
1,501 1,520 1,505 engine volume and hence the
1,500
segment of cars in the 1 liter range is
the greatest.
1,000
 Sales of Flex Fuel versions represent
more than 75% of the total.
500
 Car export has increased year on
year 19 % over the last 5 years.
0
01 02 03 04 05
 Peugeot/Citroën have started local
production and Ford has opened a
Year
factory in the state of Bahia

11
Source: Anfavea
SOUTH AND SOUTHEAST REGIONS ARE THE MAIN
AUTOMOTIVE INDUSTRIAL CENTER OF PASSENGER
CARS

Map of Brazil

SAO BERNARDO DO CAMPO, SAO PAULO


CAMAÇARÍ, BAHIA
SAO CAETANO DO SUL, SAO PAULO
SAO JOSÉ DOS CAMPOS, SAO PAULO
GRAVATAI, RIO GRANDE DO SUL
BETIM, MINAS GERAIS
North
Northeas
t SUMARÉ, SAO PAULO
Central
SoutheaE JUIZ DE FOR A, MINAS GERAIS
a
s
South ts
t INDAIATUBA, SAO PAULO PORTO REAL, RIO DE JANEIRO
SAO BERNARDO DOS CAMPOS, SAO PAULO

TAUBATÉ, SAO PAULO


COTIA, SAO PAULO SÃO JOSÉ DOS PINHAIS, PARANÁ

DUQUE DE CAXIAS, RIO DE JANEIRO SÃO JOSÉ DOS PINHAIS, PARANÁ 12


e: Automotive Business/ Anfavea
THE BRAZILIAN CAR ASSEMBLY PLANTS

Manufacturer Plant Production Volume


DaimlerChrysler Juiz de Fora, MG 3400
Fiat Betim, MG 503105
Ford São Bernardo do Campo, SP 150000
Camaçari, BA 250000
General Motors/ São Caetano do Sul, SP N/A*
Chevorelt São Jose dos Campos, SP N/A*
Passenger Cars

Gravataí, RS 120
GM Total 475000
Honda Sumará, SP 65000
PSA PegeotCitroën Porto Real, RJ 93500
Renault São Jose dos Pinhais, PR 75306
Toyota Indaiatuba, SP 57000
Volkswagen São Bernardo do Campo, SP N/A*
Taubaté, SP N/A*
São José dos Pinhais, PR N/A*
VWTotal 725888

* The company provides only the total production volume

13
rce: STC interviews
FLEXFUEL ENGINES AND SMALL CARS ARE THE MOST
IMPORTANT TRENDS IN THE BRAZILIAN CAR INDUSTRY

Trends in the Brazilian car industry


 Flex Fuel is the trend
 Flexfuel engine production has surpassed that of both gasoline and ethanol
 The market has discovered the advantages of mixing gas & ethanol to achieve an efficient cost benefit
Alternativ
e Fuel

 Increased competition and continued price reductions within the small car segment
 The segment “small cars” has experienced greatest growth
 The margins on domestic produced vehicles has dropped
Competitio  Brazilian cars manufacturers remain competitive. A majority of the exports are made to emerging markets

n and
price
reductions

 The Brazilian cars have been exported mainly to emergent countries


 Small cars (1.0L) have considerable market in those countries due to the lower prices

Exports

14
Source: STC
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Passenger Cars

 Commercial Vehicles

 Suppliers

 Brazilian Construction Equipment Industry

 Recommendations

 References

15
THE COMMERCIAL VEHICLE PRODUCTION IS A
HUGE MARKET AND HAS INCREASED OVER THE
LAST YEARS
Commercial Vehicle Production
in Brazil Development the last 5 years

 Since 2003, the commercial vehicle


production has increased more than
560Thousand
60%
units  Bus and truck production reached
480
.8 %
400 60 an all time high in 2005
 After a significant production
320
decrease during 2001 and 2002,
240
the commercial vehicle production
160 has recovered.
80  Argentina and Mexico are the
0 main destinations of Brazilian
01 02 03 04 05 commercial vehicle exports
LIGHT COMMERCIALS TRUCKS BUSES  Brazil has the second biggest bus
Year
production in the world

Growth mainly a result of exports 16


Source: Anfavea
COMMERCIAL VEHICLES PLANTS ARE SPREAD
OVER THE COUNTRY

Automotive Industry map – commercial vehicles by State


Map of Brazil
CATOLÉ HORIZONTE, CEARÁ

SETE LAGOAS, MINAS GERAIS

MANAUS, AMAZONAS CATALAO, GOIÁS


RESENDE, RIO DE JANEIRO
North
Northeas
t SÃO JOSÉ DOS PINHAIS, PARANÁ
Central SAO BERNARDO DO CAMPO, SAO PAUL
SoutheaE
a
s
South ts
t CURITIBA, PARANÁ

SAO BERNARDO DO CAMPO, SAO PAUL


SAO BERNARDO DO CAMPO, SAO PAULO
PORTO REAL, RIO DE JANEIRO

CAXIAS DO SUL, RIO GRANDE DO SUL


SÃO JOSÉ DOS PINHAIS, PARANÁ 17
e: Automotive Business/ Anfavea
THE BRAZILIAN COMMERCIAL VEHICLES
ASSEMBLY
Manufacturer PLANTS
Plant Production Volume
Agrale Caxias do Sul, RS 5191
Bramont Manaus, AM N/A
DaimlerChrysler São Bernardo dos Campos, SP 53072
Fiat Betim, MG 79442
Commercial

Ford São Bernardo dos Campos, SP 144987


vehicles

General Motors São Jose dos Campos, SP 89808


International Caxias do Sul, RS 1016
Iveco Sete Lagoas, MG 4631
Land Rover São Bernardo dos Campos, SP 591
Mitsubishi Catalão, GO 21353
Nissan São José dos Pinhais, PR 10306
PSA PeugeotCitroën Porto Real, RJ 5290
Renault São Jose dos Pinhais, Paraná 3776
Scania São Bernardo dos Campos, SP 14371
Troller Catolé Horizonte, CE 1300
VW São Bernardo dos Campos, SP 74050
Volvo Curitiba, PR 12122

18
rce: STC interviews
BRAZIL IS ONE OF THE BIGGEST EXPORTS OF
COMMERCIAL VEHICLE IN THE WORLD
Trends within the Brazilian commercial


vehicle industry
Commercial vehicles production increases in all segments: light commercial vehicles, buses and trucks
Export volumes of commercial vehicles is booming
 VW and DaimlerChrysler are the biggest players in the truck and bus production respectively

Market

 Increased competition and continued prices reductions


 The profit margin for domestic produced vehicles is declining
Competitio  Brazilian commercial vehicles remain competitive
n and
price
reductions


The demand for commercial vehicle is on the rise due to:

A stable economy and inflation under control

Lower interest rates and hence cheaper financing of vehicles

Demand
Growth

19
Source: STC
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Passenger Cars

 Commercial Vehicles

 Suppliers

 Brazilian Construction Equipment Industry

 Recommendations

 References

20
THERE ARE ABOUT 500 AUTOMOTIVE
SUPPLIERS IN BRAZIL
Brazilian automotive suppliers

 There are around 500 suppliers (Systems


suppliers, T1 and T2) installed in Brazil

 The 10 largest are foreign subsidiaries

 There is a very high concentration of


automotive suppliers in the south and
southeast of Brazil

 Many companies are small with few


employees and are usually family owned

 Traditionally strong segments are


companies that supply chassis, engines
and steering systems

21
MANY OF THE MAJOR T1 INTERNATIONAL
PLAYERS ARE PRESENT IN BRAZIL 1(2)
THE MAIN T1 / SYSTEM SUPPLIERS

Chassis Engine Steering Transmission

 Dana Albarus  Cummins Brasil  DHB Componentes Auto  Eaton


motivos  ZF do Brasil
 Delphi ( Ss)  Magnetti Marelli (Ss)
 TRW Automotive  Dana
 Magnetti Marelli  MVW Internacional  Visteon  ArvinMeritor
Industria de Motores
 Thyssenkrupp  ZF Sistemas de Direção
 Tritec (Ss)
 ArvinMeritor
 AAM American Axle
Manufacturing
 Benteler
 Suspensys

Ss - System Suppl

22
Source: SINDIPEÇAS
MANY OF THE MAJOR T1 INTERNATIONAL
PLAYERS ARE PRESENT IN BRAZIL 2(2)
THE MAIN T1 / SYSTEM SUPPLIERS

Tires Glass Heating Panel

 Goodyear  Benteler  Behr Brasil  Magnetti Marelli


 Pirelli Componentes  Valeo (Ss)
 Michellin Automotivos ( Ss)  Denso do Brasil  Siemens VDO
 Bridgestone  Pilkington Brasil  Valeo
Firestone  Visteon  Lear
 Rinaldi
 Tortuga Câmaras
de Ar
 Pneus Levorir

23
Source: SINDIPEÇAS
MANY OF THE MAJOR T2 INTERNATIONAL
PLAYERS ARE PRESENT IN BRAZIL 1(2)
THE MAIN T2 SUPPLIERS

Chassis Engine Steering Transmission

Affina Automotiva Kostal Eletromecanica SKF


 Allevard Molas 

Ceramica e Velas de Ignição NGK do Brasil


Takata Petri


Timkem do Brasil
Dana Industriais de Motores

Associated Spring Delphi INA / FAG



 
Gates do Brasil  
Mahle Metal Leve 
ZF 
Eaton

Borlen S/A
INA / FAG Proema ZF
 
SKF
 


DHB
Litens
 GKN do Brasil 

Kostal

 Industriais Mangotex
 Bosch
 Parker Hannnfin
 Schaeffler Brasil
 Sifco
 SKF
 Takata Petri
 Thyssenkrupp Metalurgica
 Timken do Brasil
 Valeo
 Cofap – Magneti Marelli

24
Source: SINDIPEÇAS
MANY OF THE MAJOR T2 INTERNATIONAL
PLAYERS ARE PRESENT IN BRAZIL 2(2)
THE MAIN T2 SUPPLIERS

Filters Electronic Finishing

 Mann Hummel Brasil  Parker Bosch  Parker Bosch


 Filtros Fram  Siemens VDO  Siemens VDO
 Tecfil  Magneti Marelli  Visteon
 Logan  Bosch  Lear Corporation
 Enertec

25
Source: SINDIPEÇAS
THE BRAZILIAN AUTOMOTIVE SUPPLIER
ASSEMBLY
Manufacturer PLANTS Business
Employees Location

Dana Albarus 4,200 Automotive systems and Gravataí (RS), Campo Largo (PR), Diadema, São
chassis components Bernardo do Campo, São Paulo, Sorocaba and
Taubaté (SP).
Main T1 and T2

Delphi 8,000 Electronic, transportation Itabirito (MG), Paraisopolis (MG), Espirito Santo
Suppliers

components and systems do Pinhal (SP), Piracicaba ( SP), Jambeiro (SP),


technology Jaguariuna (SP), Cotia (SP), Sao Jose do Pinhasi
(PR), Porto Alegre (RS) and Gravataí (RS)
Cummuns Brasil 1,214 Engine components Guarulhos (SP)
Magnetti Marelli 660 Auto parts for engines São Paulo (SP), Mauá (SP), Hortolandia (SP),
Amparo (SP), Betim (MG)
DHB Componentes 600 Steering, pumps and hoses Porto Alegre (RS) and Sao Paulo (SP)
Automotivos
TRW Automotive 4,300 Automotive systems , auto Limeira (SP), Diadema (SP), Santo André (SP),
part for Steering Três Corações (MG), Lavras (MG) and Taubaté
(SP)
ZF Sistemas de Direção 4,000 Electronic/electrical controls, 2 Sorocaba (SP), Americana (SP), São Bernardo
manifolds, fuel modules (SP) and Belo Horizonte (SP)

Eaton 1,900 Exhaust manifolds, HQ, Brantford, Ontario


powertrain components
Siemens VDO 1,200 Electronic systems Guarulhos (SP), Salto (SP), Gravataí (RS),
Resende (RJ), Manas (AM) 26
rce: STC interviews
THE T1 AND T2 SUPPLIERS ARE LOCATED CLOSE
TO THEIR CUSTOMERS

Cars Commercial vehicles


Map of Brazil

North
Northeas
t
Central
SoutheaE
a
s
South ts
t

Purchasing decisions
are made locally, but
strategic purchasing
decisions must be
approved by HQ outside 27
THE BRAZILIAN AUTOMOTIVE SUPPLIER INDUSTRY IS
A STRONG AND VERY COMPETITIVE MARKET

Trends within the Brazilian Automotive


supplier industry
 The Brazilian automotive supplier industry is a consolidated market
The main international players have sales and/ or production in Brazil

Emerging markets are an opportunity for the already consolidated Brazilian suppliers

Consolidation

 Increased competition and continued prices reductions


Competition  The profit margin are declining
and price  The valuation of the Real against the USD & Euro have made imports cheaper,
reductions especially those from Asia (China)

 Close to, or in the OEM´s industrial plants


R&D-  OEMs demand parts assembled to a greater extent before delivery
displacement/  OEMs are continuously demanding higher quality in: the products, time of delivery and support
Logistic

28
nterviews and analysis, Anfavea, SindiPeças -Association of Vehicle Component Manufacturers
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Brazilian Construction Equipment Industry

 Manufacturers

 Suppliers

 Recommendations

 References

29
THE TURNOVER OF CONSTRUCTION AND MINING
MACHINES VARIES OVER THE YEARS

Estimated Internal Market Size


900 USD million

800
.3 %
70
700

600

500

400

300

200

100

0
01 02 03 04 05*

Year

After a dip in 2003 the industry has recovered


30
THE PRODUCTION OF CONSTRUCTION AND MINING
MACHINERIES HAS ALMOST DOUBLED IN THE LAST
THREE YEARS

Estimated Internal Market Size

Compactors
5% Crawler Dozers
15%
Moto Grader
unit 20%
20000
17,786 Backhoeoaders
16000 19%

12000 Off highway


Trucks
8000 4%

4000
Hydraulic
Wheeled
0 Excavators
Loaders
12%
01 02 03 04 05 25%

Year

Wheeled loader is the biggest single segment


31
MANY OF THE INTERNATIONAL CONSTRUCTION
EQUIPMENT MANUFACTURES ARE PRESENT IN
BRAZIL CONSTRUCTION EQUIPMENTS (17,786 units)

Crawlers Backhoe Wheel Loader Hydraulic Off high way TruckMotor grade Compactors
(2,681) (3,421) (4,527) (2,060) (715) (3,579) (803)

 6  5  5  3  5  3
 3
manufacturer manufacturers manufacturer manufacturers manufacturer manufacturer manufacturer
 AGCO  Caterpillar
s s s s s
 Caterpillar  Case
 Caterpillar  Caterpillar  Caterpillar  Caterpillar  Caterpillar
 Case  New Holland
 New  Case  Random  Case  Ingersoll*
 New Holland  Komatsu
Holland  New  Volvo  New  Dynapac
 Random  Volvo
 Komatsu Holland Holland  Ciber
 JCB  Bobcat* * Imported Brands
 Komatsu  Komatsu
 Volvo  Volvo

32
urce: DEEE/ ABIMAQ
MOST OF THE COMPANIES PURCHASE DECISION ARE
MADE LOCALLY

Manufacturer Employees Production Vol Purchase decisions

AGCO 21821158 Locally

Agrale 11641053 Locally

Caterpillar 4000Does not disclose Mainly locally


information

Case/New Holland 23007649 HQ and locally

Ciber 500~ 13,000 HQ in Germany or locally

Dynapec 100500 Locally

JCB Does not discloseDoes not disclose Locally


informationinformation

Komatsu 4722000 Locally or ,approved by HQ in Japan

Randon 6000Does not disclose Locally


information

Volvo 1589Does not disclose HQ in Sweden or lower orders locally


information

33
rce: STC interviews
SOUTHEAST REGION IS THE MAIN CONSTRUCTION
EQUIPMENT CENTER

Map of Brazil

PIRACICABA, SAO PAULO


* SOROCABA, SAO
PAULO
SUZANO, SAO PAULO

SOROCABA, SAO PAULO PEDERNEIRAS, SAO PAULO


North
Northeas
t
Central
SoutheaE
a
s
South ts CURITIBA, PARANA CAXIAS DO SUL, RIO GRANDE DO SUL
t PIRACICABA, SAO PAULO
CONTAGEM, MINAS GERAIS

3 CAXIAS DO SUL, RIO GRANDE DO SUL


MANAUS, Amazonas*
CANOAS, RIO GRANDE DO SUL
SANTA ROSA, RIO GRANDE DO SUL
MOGI DAS CRUZES, SAO PAULO PORTO ALEGRE, RIO GRANDE DO SUL
34
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Brazilian Construction Equipment Industry

 Manufacturers

 Suppliers

 Recommendations

 References

35
CONSTRUCTION EQUIPMENT SUPPLIERS
- many of the international suppliers are present
in Brazil
THE MAIN CONSTRUCTION EQUIPMENT SUPPLIERS

Propulsion
Electrical Steel
and running Hydraulics Accessories
systems construction
gear
Cables, sensors, Power train, engines, Undercarriage and All kind of Other components
semi conductors, exhaust systems, axlesbody hydraulic  ThyssenKrupp
control units  Johnson Controls
 ZF cylinders  Pilkington
 Kabel  Lear
 Getrag  ThyssenKrupp
 Webasto
 Quantiun  Behru
 LuK  Parker
 SiemensVDO  SiemensVDO
 Bosch  Webasto
 Bosch
 Bosch
 Viscont  Visteon  Hidrover
 Delphi
 Deutz  Soprano

36
SINDIPEÇAS -Association of Vehicle Component Manufacturers
THE BRAZILIAN CONSTRUCTION EQUIPMENT
SUPPLIER ASSEMBLY PLANTS
Manufactur Employees Business Location
er
Siemens VDO 1,200 Electronic systems Guarulhos (SP), Salto (SP), Gravataí
(RS), Resende (RJ), Manas (AM)
Bosh 11,000 Machined components and modules 2 Campinas (SP), Barueri (SP),
Main Construction and

for engines, transmissions and chassis Curitiba (PR) and Aratú (BA)
Equipment Suppliers

Delphi 8,000 Electronic, transportation Itabirito (MG), Paraisopolis (MG),


components and systems technology Espirito Santo do Pinhal (SP),
Piracicaba ( SP), Jambeiro (SP),
Jaguariuna (SP), Cotia (SP), Sao Jose
do Pinhasi (PR), Porto Alegre (RS) and
Gravataí (RS)
ZF Sistemas de 4,000 Electronic/electrical controls, 2 Sorocaba (SP), Americana (SP), São
Direção manifolds, fuel modules Bernardo (SP) and Belo Horizonte (SP)

Visteon 2,061 Climatization, audio and electronics Camaçari (BA), Manaus (AM),
components Guarulhos (SP)
ThyssenKrupp 3,200 Body & Chassis and powertrain Campo Limpo Paulista (SP) and Santa
components Luzia (MG)

Pilkington Does not disclose Glass components Caçapava ( SP)


information 37
MOST OF SUPPLIERS ARE LOCATED CLOSE TO THEIR
CUSTOMERS

Map of Brazil

North
Northeas
t
Central
SoutheaE
a
s
South ts
t Purchasing decisions
are made locally, but
strategic purchasing
decisions must be
approved by foreign HQ

38
THE BRAZILIAN CONSTRUCTION EQUIPMENT
INDUSTRY IS A HUGE MARKET

Trends within the Brazilian construction


equipment industry
The Construction equipment industry is consolidated

Suppliers tend to increase their portfolio of products

Demand is met by local producers.

Market

 Increased competition and continued prices reductions


 The margins for domestic CE products are declining
 The valuation of the Real against the USD & Euro have made imports cheaper, especially those from Asia (China)
Cost and
Price

 Close to, or in the OEM´s industrial plants


Logistic/  Just in time delivery and new technologies
Technolog  IT utilizations for new projects and management systems (Customization of
equipment)
y

s and analysis, National Society of Entrepreneurs for the


39
struction Industry
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Brazilian Construction Equipment Industry

 Recommendations

 References

40
STC IS THE RIGHT PARTNER FOR SWEDISH
COMPANIES TO DO BUSINESS WITH THE BRAZILIAN
AUTOMOTIVE INDUSTRY
Country
specific
Do a thorough analysis of the market - how to enter and work on it, plus costs and legal issues. Find the right partners.

1.

Establish a close relation with the customers, a local presence, by


2.
finding a strong partner or establishing a proper local business unit

Focus on doing business development and avoid spending too


3.
much time on administration – let other do the bureaucracy

Industry
specific Make sure you reach your most important customers – be close to where they are located. The country is big
and the OEM plants are spread out
1.

All OEM´s strive for as much local content as possible: If possible produce some part of the product in
2. Brazil

Develop a strategic plan for establishing a proper local company to reduce import costs, reduce costs and to be
3. close to the customers

41
Source: STC
CONTENT

 Overview Brazilian Manufacturing Industry

 Brazilian Automotive Industry

 Brazilian Construction Equipment Industry

 Recommendations

 References

42
HOW CAN STC IN BRAZIL SUPPORT COMPANIES
TO DO BUSINESS IN BRAZIL

Country
specific
Market STC performs research that can be smaller market check up to big market analyses. Examples are identifying market size, find potential
Market customers, how to enter the market, competitor analyses and legal and cost issues
Research

Partner STC searches, identifies and evaluates potential partners for example: Distributors, Representatives, Suppliers and Contracts Manufactures. The
Project normally starts with market check
search

Visiting STC sets up visiting programs with companies, institutes, authorities, supports with languages,
Program cultural understanding and advises the company on business issues

Pre
STC analyses and scans potential acquisition targets from smaller company analyses to complete due diligence
Acquisition
analysis

Business Support Office (BSO), where STC Brazil provides a variety of services for Swedish companies to support business activities. Examples are
company registration, administration of the subsidiary, infrastructure such as office space, and consultancy
BSO

STC provides referral to reputable law firms or experienced lawyers with expertise on the subject matter, when needed. Among examples are assistance with contracts/agreements, trademarks, patents, and incorporation.

Legal

43
STC HAS HELPED NUMEROUS SWEDISH COMPANIES
TO DO BUSINESS WITH THE BRAZILIAN
AUTOMOTIVE INDUSTRY
- some of them are:
COMPANY PROFILE

Bunks for large trucks

High strength steel sheets

IT solution for public


transport sector
Load carriers for cars, roof
racks, rooftop boxes and
bike carriers
Automotive components
and systems

Brake systems, hydraulic


systems, traction systems

44
STC OPENED UP SUBSIDIARY AND PRODUCTION
FACILITIES FOR THULE IN BRAZIL

Goal
Thule had sales in Brazil through a distributor but wanted to increase
market of rooftop boxes in Latin America.

STC role and contribution


• Opening up of the subsidiary and support for the start up of the
production of rooftop boxes.
• Business Support Office during start up phase.
• Recruitment of sales manager Latin America
• Reorganization of the Brazilian activities merging the
importing/exporting, distribution and production.

Results
• Production on Brazil of rooftop boxes and increase sales volume in
Latin America of these products.

45
STC PARTICIPATED IN ALL THE STEP REGARDING
THE ESTABLISHMENT IN BRAZIL OF

Goal Outline of project


The main objective of the project was to
support SSAB during the establishment in Step 1: Market analysis
Brazil
STC role and contribution

• Give SSAB a complete picture of the Step 2: Logistics study


Brazilian market and how to operate in
Brazil
* Basis for decision on how to enter the Step 3 : Study on cost
market and legal issues

• Establishment of subsidiary in São Paulo


and branch office in Curitiba Step 4: Establishment
• Business Support office during start up of subsidiary
phase including start up of imports and
sales and recruitment of local sales
Results
Step 5: BSO
manager.
• Sales offices for SSAB Hardox and Tunnplåt
are up and running.
• Subsidiary established importing and Step 6 : Recruitment
selling products locally. 46