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SÂO PAULO, BRAZIL—The prospering Brazilian automobile industry is driving two major fuel tank blow molders — Soplast Pl sticos Soprados SA and Kautex do Brasil Ltda.—to expand their activities in the Mercosul region.

By 1999, Soplast plans to begin operating at least two new fuel tank plants in Brazil, said commercial director André Luiz GuimarÃŒes. He said Soplast leads the plastic fuel tank market in Brazil, with a 57 percent share.

Soplast claims to be the first company to manufacture plastic fuel tanks in South America, in 1987. The family-owned firm has a 196,000-square-foot facility in SÌo Bernardo do Campo, in SÂo Paulo's metropolitan region.

With three Bekum BAT 1000 machines, the firm blow molds 400,000 monolayer tanks a year, which are still accepted by the Brazilian air-quality legislation.

The unit is equipped with another 16 blow molding machines to produce air ducts and filler necks, to supply plastic fuel tank systems to the local GM, Ford, Volkswagen and Fiat plants. The plant also produces water reservoirs, spoilers and other plastic components.

Last month, Soplast signed a technological and commercial agreement with Paris-based Cie. Plastic Omnium SA.

``We are now responsible for manufacturing the blow molded parts of Omnium's fuel tank systems, for all global automotive projects in the Mercosul region,'' Guimarães said.

Now, the two processors are discussing the possibility of Omnium taking part in some of Soplast's future investments. Expecting changes in the Brazilian legislation, the new projects are focused on producing multilayer blow molded tanks with barrier capabilities. Soplast already has opted to use Kautex machines and produce additional fuel system parts at its new plants.

The firm's second plant in Brazil is scheduled to start up by early 1998. It will be located in Betim, a recently formed industrial complex in the southeastern state of Minas Gerais, which will supply Fiat. The US$8 million, 54,300-square-foot plant will blow mold 180,000 tanks per year for the Tempra production line, among other cars.

The company's other project is to build a unit to produce 150,000 fuel tank systems per year in Gravataí, in the southern state of Rio Grande do Sul. The expected investment is for US$8 million. The 43,500-square-foot facility will start operating in 1999 and will supply GM's new plant. In March, GM picked the firm to be the exclusive fuel tank system supplier for GM's Gravataí unit.

Soplast's third project, which is still being defined, refers to the expansion of the firm's production capacity in SÂo Paulo state.

``It's not yet decided whether to build a new plant or expand the SÃŒo Bernardo facility,'' Guimarães said.

In any case, two new Krupp Kautex machines will be used to blow another 360,000 tanks per year by mid-1998, as part of a US$12 million investment. The project involves introducing plastic fuel tanks in GM's Corsa production line, in SÃŒo José dos Campos, Brazil.

Soplast is also present in Argentina. In 1995, it became a pioneering firm in that market by installing a plant in Buenos Aires, through a 50-50 venture with the local auto-part maker Lodigiani y Leali SAIC.

Soplast Argentina SA has a Kautex KBS-2-240 that can produce 180,000 monolayer tanks a year. It also has two machines making filler necks, among other components. It supplies Renault, Mercedes-Benz and Ford.

Kautex do Brasil Ltda. also has plans to increase its capacity. In March 1998, a new Kautex blow molder will begin operating at its plant in Guararema, 30 miles from SÃŒo Paulo. It will make as many as 220,000 six-layer tanks per year, and a Kautex multilayer filler neck machine will produce as many as 400,000 parts annually.

According to the general director Luis Tort, the firm is investing about US$10 million to buy the machines and auxiliary equipment, and to double the size of the 65,000-square-foot plant.

The building was completed in June, and features a tall ceiling with no pillars in the center for sheltering large-sized equipment and to promote air circulation.

The unit's current capacity is for 240,000 tanks per year, utilizing a Kautex monolayer blow molding machine, which can be easily modified to multilayer, Tort said.

``The multilayer option represents the future of fuel tanks in Mercosul. It is the system that best complies with the rigorous international fuel emission standards and that best adapts to fuels with high alcohol levels, such as the ones used in Brazil,'' he said.

The Guararema plant also has three other Kautex machines for filler necks, air ducts, water reservoirs and other blow molded items. Each one of these machines can produce 400,000 parts per year. Total investment in the Brazilian facility was about US$15 million.

The firm has begun supplying the fuel tank system for the new Ford Fiesta pickup. As of June 1998, the company has a contract to supply 170,000 fuel tank systems annually for the Golf, Vento and Audi A-3 models, which will be assembled at VW's new plant in SÂo José dos Pinhais, in the southern state of Paran .

Kautex's plant in Guararema makes filler necks for all Ford models and, at the end of the year, will begin supplying them for the GM Corsa model that will be assembled at the automaker's plant in Rosario, Argentina.

In March, the company inaugurated the Kautex Argentina SA fuel tank unit in Pacheco, a city near Buenos Aires. The 26,000-square-foot plant is near the Ford and VW plants. With an annual capacity to produce 200,000 fuel tank systems, the unit is equipped with a Kautex monolayer blow molding machine, which also can be modified to multilayer, and is capable of making filler necks and other components.

The US$5 million plant operates as a Kautex do Brasil subsidiary. By May, annual production of fuel tank systems is scheduled to reach the 60,000 level and will supply the Polo Classic model, produced at VW's Pacheco-based facility. By the end of the year, the company will begin supplying another 60,000 fuel tank systems for the VW Gol line, also assembled in Pacheco.

According to Tort, Kautex is competing for all contracts of global car projects currently being developed by automakers in Mercosul and is working towards the possibility of increasing its production capacity in both countries, in tune with the market's evolution.

``We are convinced the region will post the highest growth worldwide in terms of cars produced per year during the next five years,'' he said.