SÃO PAULO, BRAZIL (April 7, 9:30 a.m. EDT) — The picture for machinery companies in Brazil is quite mixed — some are doing well, while others have scaled back.
Both injection press maker MIR SpA of Brescia, Italy, and Japanese blow molding machine maker Nissei ASB Machine Co. of Nagano, Japan, have suspended plans to build factories in Brazil: “The last two years — not good, really not good” in Brazil, according to one Nissei official.
But others exhibiting at Brasilplast 2003 in SÃ£o Paulo were more bullish.
Injection press maker Negri Bossi SpA of Cologno Monzese, Italy, announced during the show that it plans to start building equipment in Brazil, some local plastics equipment firms have invested in new operations and some foreign firms, like Bekum do Brasil, said their Brazilian operations figure prominently in their worldwide plans.
One of the more optimistic was blow molding equipment supplier SIG Beverages.
Last year was the company's best year in Brazil since it established its operations in 1996, with new business up 40 percent, said Frank Neuhaus, director general of SIG Tecnologia para Plasticos (Brasil) Ltda. in Jundiaí.
The company's core PET bottle market only grew 4-5 percent, but the company was very aggressive, he said.
The firm plans to consolidate all its Brazilian divisions, which include operations for other packaging equipment like filling lines, into a new SÃ£o Paulo headquarters that will increase capacity for its blow molding unit by 20 percent, according to Neuhaus. He declined to provide investment figures.
Other firms, mainly locally owned suppliers, are expanding their operations.
For example, film and sheet extrusion equipment supplier Rulli Standard IndÃºstria e Comercio de Maquinas Ltda. of SÃ£o Paulo is moving to a much-expanded headquarters operation, and Imacom IndÃºstria e Comercio de Maquinas Ltda. of Diadema, Brazil, opened a larger factory and introduced an extruder that mixes PVC with wood flour.
The local suppliers said the country's currency devaluation works to their advantage. The Brazilian real has fallen to about one-third its value against the dollar since 1998, making imported machines and equipment much more expensive.
Injection press maker Himaco Hidraulicos e Maquinas Ltda. of Novo Hamburgo, Brazil, said it expects sales to be up 20 percent in 2003, which sales manager Cristian Heinen said is due both to an improving economy and the currency advantages for local manufacturers.
Plastics equipment sales in Brazil posted an 18 percent increase in sales, amounting to 482 million reais ($143 million), according to figures from Brazil's machinery trade association, Abimaq, based in SÃ£o Paulo.
“This was an above-average result for the machinery sector as a whole, which grew 13.7 percent in 2002,” said Abimaq President Luiz Carlos Delben Leite. According to his estimate, equipment sales to the plastics sector will grow 15 percent this year.
Plastics machinery exports also grew in 2002, ending the year at $34.1 million, compared with $32.5 million the year before. That 5 percent growth is partially due to entering new markets such as Canada, Singapore and Portugal, to make up for business lost to Argentina's economic crisis.
“Brazilian-made machines are entering very competitive markets, demonstrating the technological improvements the sector underwent lately,” said Maristela Miranda, president of the Brazilian Machinery for Plastics Chamber, a division of Abimaq.
The difficulty of selling imported machines, particularly with the currency devaluation, was the main reason Negri Bossi decided to build in Brazil, said Antonio Rampone, area manager for the Milan, Italy-based firm.
The cheaper Brazilian currency made imported machines 80 percent more expensive, when tariffs and transportation are factored in, he said. So the company is launching a small injection press factory in Mogimirim, in August, with capacity to build 60 machines a year, he said.
The factory will start producing hydraulic and hybrid machines with clamping forces of 160-500 tons, with 60 percent Brazilian content, Rampone said. The company said it may produce new all-electric machines there, too, because it sees a need in Brazil.
Brazil is indeed a market in need of up-to-date machines — 70 percent of its plastics processing machines are more than 10 years old. But the challenge is getting the capital to replace them.
Plastics molders are holding off on buying equipment, waiting to see what happens with the economy and the new government of President Luiz Inacio Lula da Silva, said Fabio Seabra, general manager of Husky do Brasil Sistemas de InjeÃ§Ã£o Ltda. in Jundiaí. Canadian-based Husky maintains a technical center in the country and has started to manufacture hot-runner manifolds in Brazil.
“With the uncertainty and the instability of the currency, everybody is saying, 'Let me wait,' ” Seabra said. He said it is very hard for businesses to plan with resin prices up so much — 102 percent in the past year — and the weak Brazilian currency.
If the economy were more stable, Husky could sell 50 percent more machines, Seabra said.
One of Husky's local competitors, however, is growing.
Mold component manufacturer Polimold Industrial SA has spent US$6 million in the past two years to add 33,000 square feet and 10 computer numerically controlled machines to make hot runners and bases for high-speed molds, particularly to compete with Husky.
Polimold's business is good because the automotive and electronics industries have to develop new products that require new molds, but Alexandre Fix, director of Polimold, said the Brazilian industry remains fragile because of high interest rates and worries about the war in Iraq.
“It is very difficult to tell if the market will grow this year,” he said. “The mold-making industry is not good. … With interest [rates] so high, it is difficult to run a business.”
Blow mold machinery maker Bekum do Brasil IndÃºstria e Comercio Ltda. does not see the Brazilian market as strong right now. But the company thinks its manufacturing plant in SÃ£o Paulo will do much better in 2003 because Brazil is becoming a low-cost manufacturing center for the company.
“I think because of the currency it has made our machines that much more affordable,” said Carlos Helfenstein, vice president of sales and marketing for Bekum America Corp. in Williamston, Mich.
In the past 15 months, the company has exported machines to Asia, Africa, the Middle East and Eastern Europe from Brazil, and expects to build 45 machines in SÃ£o Paulo this year, compared with 32 last year.
Exporting “has been quite substantial for us,” he said.
Portugal's mold-making community also sees a split in Brazil. Those tool shops that have production in Brazil are doing reasonably well, particularly in their core automotive markets, while those trying to export to the country are stymied by the high euro.
“They are waiting for stability in the economy,” said Manuel Oliveira, secretary general of Cefamol, Portugal's mold-making trade association.