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Brazil 2008 Presentation by: Mauricio Vasconcelos U.S. Commercial Service/USDOC U.S. Embassy – Brazil February 2008 PowerPoint Presentation
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Brazil 2008 Presentation by: Mauricio Vasconcelos U.S. Commercial Service/USDOC U.S. Embassy – Brazil February 2008 Brazil: Population: 187 million (Sep.2006) Size: 8,547,404 Km2 26 States and 1 Federal District 5 Positive Points:

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slide1

Brazil 2008

Presentation by:

Mauricio Vasconcelos

U.S. Commercial Service/USDOC

U.S. Embassy – Brazil

February 2008

slide2

Brazil:

Population: 187 million (Sep.2006)

Size: 8,547,404 Km2

26 States and 1 Federal District

slide6

Positive Points:

* Inflation under control since 1994 (under 5%). Balanced budget.

* Foreign Debt: US$200 billion but smaller than current reserves. First time ever, in January 2008. ( Zero debt).

* Foreign Direct Investment at record level in January 2008. (US$35 billion in 2007)

* Stock Exchange: All time high in Nov.2007 and Feb. 2008.

* Import taxes are quite lower than used to be (but still high).

* Higher competition through imports and privatization since 1990.

* Several sectors privatized, or partially privatized, since 1990: Steel making, energy, mining, telecommunications. Starting PPPs

* Exchange Rate: US$ 1 = R$3.75 in 2002

R$1.68 in Feb.26, 2008, same value as in May 1999.

slide7

* Investment Grade from international credit rating agencies, expected in 2008. More favorable terms in international trade and loans, access to credit.

  • * Example: Automotive industry: 3 million passenger vehicles in manufactured in 2007 in Brazil, all time high, record exports and record sales in domestic market.
  • * World leader in ethanol technology and production. Sales of ethanol larger than gasoline in January 2008. Most new cars are flex-fuel ethanol/gasoline. (Pres. Bush visit in 2007).
  • * Most industries running at full capacity, especially food, consumer goods, raw materials, oil, ethanol.
  • * Large supplier of raw materials, high prices in international market. Strong international demand.
  • * President Lula: 53% approval rate in Feb. 2008, after five years in office, in the second year of his second term.
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Negative Points:

* Infra-Structure: energy, ports, roads, airports.

* Privatization and concessions program: very slow.

* Need for huge investments in infra-structure, but no state funds for investments.

* Legislation: Labour, Fiscal,

* Criminality

* Interest Rate: still very high at 11.25% basic rate, although in all-time low.

* Import taxes still high (although they have been significantly reduced.)

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The Perfect Rep / Distributor does not exist, because:

* Financing: Very high interest rates (although the Central Bank basic rate of 11.25% in February 2008 is a historic low). Possibility of the U.S. Eximbank.

* Stocking pre-paid products: extremely expensive and risky

* The cost of selling: visits, travel, tests, labor, expertise, after-sales, advertising.

* Tests & warranty. Local maintenance.

* Price: Import Tax calculated on price CIF. Plus two local taxes that are calculated on the price “CIF plus Import Tax.”

* Competition: very developed local industry.

* The Brazilian rep / distributor will need: Technical assistance, financing, sharing expenses, marketing support,

* Try to buy and assemble peripherals (frames, accessories) in Brazil (if possible); to avoid import taxes.

* Bonded warehouse. Just-In-Time delivery very important.

* A new exporter must spend money, before he can earn money.

slide10

Mining Equipment Manufacturers in Brazil:

Large and diversified Brazilian industry. Many subsidiaries of leading international manufacturers have factories in Brazil.

Some examples:

Caterpillar

2003

2004

2006

Total Sales – US$ million

634

1,023

1,700

Brazilian Market

391

727

Approx. 25%

Exports from Brazil

243

296

Approx. 75%

  • * Factory located in Piracicaba / SP - 4100 employees ( 2005)
  • * 25 different models in 2004 / 14th largest Brazilian exporter.
  • Brazil = 3.4% of CAT sales worldwide in 2004. Exports from Brazil to 120 countries.
  • CAT exports in 2006 from Brazil: US$1.14 bi, the 15th largest Brazilian exporter.
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Volvo Construction Equipment

* Total sales in Brazil in 2003: US$ 138 mn. Total sales in 2004: US$247 mn

* Exports from Brazil in 2003: US$ 95 million. Exports from Brazil in 2004: 179 mn (being US$56 mn to the U.S.)

* Factory in Pederneiras / SP.

Randon: Off-road trucks, components, truck beds, breaks

* Total sales in 2004:US$800 mn, Exports from Brazil:US$118 mn

* Market leader in Brazil for trucks, segment under 35 tons

* Joint-ventures with U.S. Arvin-Meritor and German Jost.

* Factory in Caxias do Sul / RS.

slide12

CNH: Case + New Holland + FIAT-Allis + O&K, Kobelco

* Mining, construction and agriculture machinery

* More than 16,000 machines/year in Brazil.

* 40% share of Brazilian market for agriculture and construction machinery

* Total sales in Brazil: + US$1 bn; Exports + 25% (including to US)

* Bank CNC Capital, has financed 30,000 clients.

* Factories in Curitiba, Piracicaba and Contagem.

* Also of the same FIAT Group: IVECO trucks, factory in MG.

slide13

Cummins

* Manufactured 42,000 engines in 2003. Exported 6,500.

* In 2004: 49,000 engines.

* Factory in Guarulhos / SP.

Ingersoll Rand

* Compressors, temperature control division Thermo King, refrigeration equipment Hussmann.

* Factory in Londrina / PR: average of 60% Brazilian components. Exports equipment to Latin American countries and components Ingersoll Rand / USA.

slide14

METSO (Finland)

* Took over Svedala, Dynapac, Nordberg, Trellex and Faço. www.metsominerals.com.br / Factory in Sorocaba / SP.

* Total sales in Brazil: approximately US$ 100 million in 2003, exports from Brazil = 35%, especially Latin America, USA and Canada. World total sales: Euro 5.2 billion/y.

* Sold Euro 50 million to Sossego CVRD Project, being approximately 50% made in Brazil and 50% imported.

* Supplier of crushers, screens, transportation systems and engineering projects. Has a foundry for 1,900 tons/year.

P & H MinePro Services

* Supplier of shovel loaders, draglines, excavators. Assembly line in Belo Horizonte. Total sales in Brazil in 2006 were US$60 million, being 12% of that amount exports from Brazil.

slide15

Sandvik (Sweden)

* Total sales 2003: US$ 190 million

* 32% of total sales was mining and construction equipment (drilling tools and cruching equipment), 40% tools and 28% specialty steel.

Palfinger (Austria)

* Cranes for mining, oil and construction. Reach stackers.

* US$ 19 million in 2003. Factory in Caxias do Sul / RS.

Haver & Boecker (Germany)

* Factory in Monte Mor / SP, since 1975. Exported two giant screens to Syncrude Sweet Blend / Canada for betuminous oil sands, 2003 / 2004.

scania vabis do brasil
Scania-Vabis do Brasil:
  • Manufactured 18,500 units (buses and trucks, combined) during 2006, being 65% exported and 35% sold in Brazil.
  • Forecast for year 2007 (in May-07) is a total output of 23,000 units, being 72% for export and 28% for the Brazilian market.
  • Started manufacturing in Brazil in 1959.
slide17

GE Transportation

* Started manufacturing locomotives in Brazil in 2005.

* Has manufactured 50 locomotives till Feb. 2008, only smaller locomotives, up to 3000 HP.

* Plan to manufacture 30 locomotives in 2008, including big ones, up to 6000 HP.

slide18

Others Leading Manufacturers in Brazil:

Atlas Copco Asea Brown Boveri Alstom

Boart Longyear Dorr-Oliver Flygt

Goodyear Liebherr

NSK, FAG, Timken and SKF bearings

Orica (blasting systems) Schenk Process

Saint-Gobain ceramics Siemens

Voith Wehr Schenk

Trucks: Mercedes Benz, Ford, Scania, Volvo, Iveco, Caterpillar

SKF: manufactures automotive components, in Cajamar / SP. Imports and distributes bearings.

Aircraft: Embraer

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Mining Trade Show:

Exposibram: Sep., 2009 (Held every two years, in Belo Horizonte). Sponsor and organizer: IBRAM / The Brazilian Mining Institute: www.ibram.org.br

Websites:

http://brasil.infomine.com/news/partners/brasilmineral/welcome.asp www.signuseditora.com.br ( Magazine “Brazil Mineral”) www.minerios.com.br/minerios (Magazine “Minerios”) www.inthemine.com.br (New magazine, started in 2006)

www.geologo.com.br (professional geologists association) www.abimaq.org.br (ABIMAQ - Brazilian Association of Machinery Manufacturers, with online database of manufacturers) www.abmbrasil.com.br (ABM - Brazilian Metallurgy Association)

slide20

Obrigado!

Thank you !!

Mauricio Vasconcelos U.S. Commercial Service Belo Horizonte - Brazil mauricio.vasconcelos@mail.doc.gov Tel.: (55 – 31) 3213.1573

U.S. Export Assistance Centers of the USDOC. In Charleston - WV: Leslie.Drake@mail.doc.gov 1116 Smith Street - Tel. 304 – 347.5123