Germany blow molding machinery maker Bekum Maschinenfabriken GmbH has scaled back its manufacturing operations in Brazil.
Bekum continues to own the building in São Paulo, where the company will continue to make specialized, higher-technology blow molding machines for local customers.
Bekum do Brasil Indústria e Comércio Ltda cut its workforce from 90 to 25 people, said Bernd Saurbier, managing director of Bekum Maschinenfabriken.
Saurbier said the Brazilian operation will focus on sales and service of the existing Bekum fleet in Brazil a large number of blow molding machines, given the Berlin-based company's long history in that South American country.
Bekum began building blow molding machines in Brazil in 1975 as a way to counteract moves by the Brazilian government to close its borders by jacking up import duties. Bekum do Brasil developed local sources for components and trained machinists.
At its peak, the São Paolo plant employed about 300. Our production line was the complete packaging line of Bekum, adapted to the Brazilian market, Saurbier said.
Then in the early 1990s, Brazil's economy became more open to imported machinery. Blow molding machinery makers from around the world targeted South America's largest country. Bekum also faced pricing pressure from domestic Brazilian suppliers.
Gradually, Bekum's Brazilian manufacturing lost its advantage, as lower-priced blow molding machines came in, Saurbier said in a telephone interview from the company's Berlin headquarters.
Fluctuations in the exchange rate also hit, as a stronger Brazilian real helped imported blow molders gain even more ground, he said. In 2003, Bekum launched what Saurbier called a relatively successful strategy to export lower-priced blow molders from the Brazilian plant to other countries, but the currency issue ended up killing that.
Saurbier said the global economic downturn played a role in the decision to stop full-line production in Brazil. But he said Brazil's economy is doing fairly well. The growth rate at the time being is better than western Europe and the United States, he said.
Saurbier said Bekum may ramp up Brazilian production again at the plant, depending on economic conditions. We will see how the market develops, he said.