Brazil Swot 5a3331
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COMPETITIVENESS of the BRAZILIAN FOUNDRY INDUSTRY
By Cassio Machado, member of ABIFA and SIFUMG [email protected]
January 2005
COMPETITIVENESS of the BRAZILIAN FOUNDRY INDUSTRY Contents KEY NUMBERS OF THE SECTOR SWOT ANALYSIS CRITICAL SUCCESS FACTORS MARKETS PRODUCTION PRODUCTIVITY EXPORTS / IMPORTS PROJECTED DEMAND x CAPACITY CONCLUSION
Brazilian Foundry The Key Numbers Foundries Revenue Direct Labor Annual Production Installed Capacity Companies size
1 200 + US$ 3.0 billion + 54 000 jobs 2.8 million t 3.10 million t/year 95% Small/Medium
Brazilian Foundry
Strategic Analysis - Strengths Labor force: abundant, low cost, receptive and trained Management: flexible, open minded Acquired and adapted know how Low production cost Good image (quality and delivery) Solid economical profile of companies Strong class entities (state and federal)
Brazilian Foundry
Strategic Analysis - Weaknesses Capital shortage for investment Environmental legislation compliance Low reference in international market Low knowledge about foreign competitors
Brazilian Foundry
Strategic Analysis - Opportunities Good location Near to foreign markets (Europe and USA) Nearby raw material suppliers (pig iron, steel scrap, ferro-alloys, resins, sand, tooling, etc.) Near to technical colleges and schools Local concentrations of competitors and their chain of suppliers Political and economical stability of the country Demanding markets (domestic and foreign) Chinese vulnerability New markets to be opened
Brazilian Foundry Strategic Analysis - Threats Chinese production / price / subsidized cost Shortage of certain raw material (resin, ferro-alloys) Country’s logistics and infrastructure Foreign trade barriers High interest rates / cost of money Volatile exchange rate Volatile federal policies (electrical power, tax law, etc.) Bureaucracy
Brazilian Foundry
Strategic Analysis - CFS CRITICAL SUCCESS FACTORS Increase production capacity Acquire funds for investment at reasonable rates Reduce production costs Implement marketing policies to penetrate new markets and to sustain current ones
Brazilian Foundry Market Distribution (% of sales) 3,2 16,1 5,2 56,3
14,1 5,1
Infrastructure Exports Others Capital Goods Steelmakers Automotive
Brazilian Foundry Domestic Market Analysis 67% of castings are for auto-parts High ratio inhabitants x vehicle - (2001) Developed countries - 1,2 - 2,0 Argentina 5,2 Mexico 6,1 Brazil 8,6 9a Largest Vehicle Fleet in the World - 20,1M (2001) Capital Goods Industry - recovering Steel Industry - Brazil 9o largest world producer Railway Segment – recovering
Brazilian Foundry Annual Production (1000 t) 2004 - estimated
3000 2500 2000 1500 1000 500 0
80
82
84
86
88
90
92
94
96
98 OO O2 O4
Brazilian Foundry
Evolution of Monthly Production (1000 t) 250 200 150 100 50 0 jan/00
jan/01
jan/02
jan/03
jan/04
Brazilian Foundry Metal Distribution by production (t - %)
8,5
by revenue (US$ - %)
30
7,0
57 84,5 iron
steel
non-ferrous
13
iron
steel
non-ferrous
Brazilian Foundry Production by Region (%) São Paulo 34 %
Centre/MG 29,3 %
North/NE 2,3 % Rio de Janeiro 6,3 %
South 28,1 %
Brazilian Foundry vs World Production - (t) - 2003
! " # $# % &'()*+ &,*(- ./01-23 *)
Brazilian Foundry Productivity (2004 estimated)
55 50 45 40 35 30 25 20 15 10
1990
1992
1994
1996
1998
2000
2002
2004
Brazilian Industry Exportation Ratio (%) 70 60
62
60
50
56
40
37
30 20
16
10 0
Pig Iron
Aluminum
Ferroalloys
Steel
export / production
Foundry
Brazilian Foundry Annual Exports (US$ 1000) 2004 = 830 million US$ (estimated)
900 800 700 600 500 400 300 200 100 0 1980
1983
1986
1989
1992
1995
1998
2001
2004
Brazilian Foundry Exports in 1980 - 77 Million US$ in 2003 - 565 Million US$ in 2004 (forecast) - 830 Million US$ Growth rate of 9 % per year Enhanced “mix” value
Brazilian Foundry Imports Irrelevant Basically components, not raw castings
Brazilian Foundry Projected Demand x Installed Capacity (ton) 4000 3000 2000 1000 0
2003
2004
2005
2006
2007
2008
2009
2249 demand install cap 3000
2800 3100
3130 3400
3400 3400
3580 3400
3770 3400
3910 3400
Brazilian Foundry Projected Demand x Investments •
Investment 2004/5
- US$ 387 M
•
Required Investment up to 2009
- US$ 1,2 B
COMPETITIVENESS of the BRAZILIAN FOUNDRY INDUSTRY CONCLUSIONS Foundry business is a Brazilian natural VOCATION We can compete in a global market Our production is intimately linked to auto-parts production Production capacity needs to be increased Brazil could position itself among the top 7 world producers of castings by 2010
Special thanks to Mr. Roberto Joao de Deus ABIFA’s Executive Secretary
By Cassio Machado, member of ABIFA and SIFUMG [email protected]
January 2005
COMPETITIVENESS of the BRAZILIAN FOUNDRY INDUSTRY Contents KEY NUMBERS OF THE SECTOR SWOT ANALYSIS CRITICAL SUCCESS FACTORS MARKETS PRODUCTION PRODUCTIVITY EXPORTS / IMPORTS PROJECTED DEMAND x CAPACITY CONCLUSION
Brazilian Foundry The Key Numbers Foundries Revenue Direct Labor Annual Production Installed Capacity Companies size
1 200 + US$ 3.0 billion + 54 000 jobs 2.8 million t 3.10 million t/year 95% Small/Medium
Brazilian Foundry
Strategic Analysis - Strengths Labor force: abundant, low cost, receptive and trained Management: flexible, open minded Acquired and adapted know how Low production cost Good image (quality and delivery) Solid economical profile of companies Strong class entities (state and federal)
Brazilian Foundry
Strategic Analysis - Weaknesses Capital shortage for investment Environmental legislation compliance Low reference in international market Low knowledge about foreign competitors
Brazilian Foundry
Strategic Analysis - Opportunities Good location Near to foreign markets (Europe and USA) Nearby raw material suppliers (pig iron, steel scrap, ferro-alloys, resins, sand, tooling, etc.) Near to technical colleges and schools Local concentrations of competitors and their chain of suppliers Political and economical stability of the country Demanding markets (domestic and foreign) Chinese vulnerability New markets to be opened
Brazilian Foundry Strategic Analysis - Threats Chinese production / price / subsidized cost Shortage of certain raw material (resin, ferro-alloys) Country’s logistics and infrastructure Foreign trade barriers High interest rates / cost of money Volatile exchange rate Volatile federal policies (electrical power, tax law, etc.) Bureaucracy
Brazilian Foundry
Strategic Analysis - CFS CRITICAL SUCCESS FACTORS Increase production capacity Acquire funds for investment at reasonable rates Reduce production costs Implement marketing policies to penetrate new markets and to sustain current ones
Brazilian Foundry Market Distribution (% of sales) 3,2 16,1 5,2 56,3
14,1 5,1
Infrastructure Exports Others Capital Goods Steelmakers Automotive
Brazilian Foundry Domestic Market Analysis 67% of castings are for auto-parts High ratio inhabitants x vehicle - (2001) Developed countries - 1,2 - 2,0 Argentina 5,2 Mexico 6,1 Brazil 8,6 9a Largest Vehicle Fleet in the World - 20,1M (2001) Capital Goods Industry - recovering Steel Industry - Brazil 9o largest world producer Railway Segment – recovering
Brazilian Foundry Annual Production (1000 t) 2004 - estimated
3000 2500 2000 1500 1000 500 0
80
82
84
86
88
90
92
94
96
98 OO O2 O4
Brazilian Foundry
Evolution of Monthly Production (1000 t) 250 200 150 100 50 0 jan/00
jan/01
jan/02
jan/03
jan/04
Brazilian Foundry Metal Distribution by production (t - %)
8,5
by revenue (US$ - %)
30
7,0
57 84,5 iron
steel
non-ferrous
13
iron
steel
non-ferrous
Brazilian Foundry Production by Region (%) São Paulo 34 %
Centre/MG 29,3 %
North/NE 2,3 % Rio de Janeiro 6,3 %
South 28,1 %
Brazilian Foundry vs World Production - (t) - 2003
! " # $# % &'()*+ &,*(- ./01-23 *)
Brazilian Foundry Productivity (2004 estimated)
55 50 45 40 35 30 25 20 15 10
1990
1992
1994
1996
1998
2000
2002
2004
Brazilian Industry Exportation Ratio (%) 70 60
62
60
50
56
40
37
30 20
16
10 0
Pig Iron
Aluminum
Ferroalloys
Steel
export / production
Foundry
Brazilian Foundry Annual Exports (US$ 1000) 2004 = 830 million US$ (estimated)
900 800 700 600 500 400 300 200 100 0 1980
1983
1986
1989
1992
1995
1998
2001
2004
Brazilian Foundry Exports in 1980 - 77 Million US$ in 2003 - 565 Million US$ in 2004 (forecast) - 830 Million US$ Growth rate of 9 % per year Enhanced “mix” value
Brazilian Foundry Imports Irrelevant Basically components, not raw castings
Brazilian Foundry Projected Demand x Installed Capacity (ton) 4000 3000 2000 1000 0
2003
2004
2005
2006
2007
2008
2009
2249 demand install cap 3000
2800 3100
3130 3400
3400 3400
3580 3400
3770 3400
3910 3400
Brazilian Foundry Projected Demand x Investments •
Investment 2004/5
- US$ 387 M
•
Required Investment up to 2009
- US$ 1,2 B
COMPETITIVENESS of the BRAZILIAN FOUNDRY INDUSTRY CONCLUSIONS Foundry business is a Brazilian natural VOCATION We can compete in a global market Our production is intimately linked to auto-parts production Production capacity needs to be increased Brazil could position itself among the top 7 world producers of castings by 2010
Special thanks to Mr. Roberto Joao de Deus ABIFA’s Executive Secretary
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