SAO PAULO, BRAZIL — A chance encounter at a German trade show in 1995 ultimately gave Pennsylvania thermoformer McClarin Plastics Inc. a low-cost entry into Brazil's booming auto market.
It began innocuously enough: A Volkswagen AG official ran across McClarin representatives at the 1995 K show in Dusseldorf and saw their single-piece pickup-truck bedliner. VW's suppliers in Brazil had been laying down bedliners in strips, but the company wanted to streamline that.
"They asked about our capability in South America — we didn't have any," said Todd Kennedy, president of Hanover, Pa.-based McClarin.
So VW put McClarin in touch with one of its Brazilian suppliers, Autometal Industria e Comercio Ltda.
After a lengthy negotiation, McClarin licensed the technology to Autometal and began training Autometal's technicians. Now the Brazilian firm makes 80,000 bedliners a year on a pair of three-stage vacuum forming machines at its plant in Diadema, in an industrial section of Sao Paulo. Diadema is home to plants for VW, Ford Motor Co., General Motors Corp. and Mercedes-Benz AG.
"Honestly, we were lucky," said Kennedy. "We were dealing with really honorable people, good people. ... Neither of us have ever looked at the contract after it was signed."
Autometal, too, said it is pleased with the partnership. Both Kennedy and Amable Martinez-Conde Barrasa, Autometal's director of extrusion, metallurgy and auto liner businesses, said they are looking at other ways the two companies can pool resources.
Bedliners are only a small part of Autometal's business, which includes injection, trim extrusion, vacuum forming, metallurgy and mold making at a sprawling, 320,000-square-foot factory. Its partnership with McClarin is only a small part of an overall plan to enter the global marketplace.
Autometal sold 50 percent of itself to a Spanish auto supplier, Egana Corp., in late 2000 to get a global platform and compete more effectively, Barrasa said. It is part of a wave of Spanish investment in Brazil — in 2000, Spain supplanted the United States as the largest single source of foreign capital in Brazil, although some observers said much of that was one-time investments in banking.
Autometal has more than enough business now but sold out to a global manufacturer because it was worried about the future, he said.
"GM and Ford and Volkswagen have world cars," said Barrasa, who spoke through a translator during a March 7 interview at the Diadema plant. "We would have a lot of difficulty in the future [without a global partner]."
Autometal is using some of the new capital to open a $10 million plant with 20 injection molding presses and three extrusion lines at the Ford supplier park in Bahia, Brazil. The factory will employ 120 and is slated to open next year.
Barrasa, who is part of the family that owns Autometal, did not disclose the terms of Egana's investment. He said Autometal does about $50 million in annual sales and employs 700. It has 55 injection presses from 65-1,200 tons, and 16 extrusion lines.
The company also recently put its first full-time employee in Detroit, in a Ford office where it can work more closely on product design.
The firm has come a long way since 1964, when Barrasa's father started with eight people making metal trim for the VW Beetle. His father, Amable Barrasa Sr., had been an auto engineer in Spain before coming to Brazil.
Brazil's auto industry is generally strong, but there are some signs of trouble.
The auto industry projected earlier this year it would make 1.85 million cars in 2001, up almost 11 percent. Last year production rose 23 percent to 1.67 million cars. But it is still below 1997's record of 2.07 million cars.
DaimlerChrysler AG closed a plant earlier this year, and the head of the country's largest carmaker, VW's Brazilian division, was quoted in local newspapers warning that more plant closings could be coming.
Other auto industry officials, however, have been much more optimistic. Barrasa said he believes problems are concentrated among makers of more-expensive cars.
Among the cheaper, or "popular" cars, the market remains strong, and the country continues to recover from its economic downturn suffered when its currency, the real, was devalued more than 30 percent in 1999, Barrasa said. Autometal does not sell parts to makers of expensive cars such as DaimlerChrysler or Mercedes, he said.
"The volume of cars produced here will increase but [among] the popular cars, not the expensive cars," he said. "We think in the future Brazil will produce small cars for all of the world."
He said some producers overestimated local demand. Brazil is a huge market by virtue of its population, but it has only about one car per nine people, compared with one car for about every four people in Argentina and Chile, he said.