7 - Trends in Brazil S.R de Aqiuno

8/11/2019 7 - Trends in Brazil S.R de Aqiuno

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BRAZILS FORGE TRENDS


2/13

GDP

0.880.84 0.87

0.64

0.55 0.5 0.55

0.66

0.88

1.09

1.37

1.65 1.62

2.14

2.45

2.25

2.05 2.09

0

0,5

1

1,5

2

2,5

3

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

USD(trillion)

The GDP grew consistently until 2011 in dollars

Low growth in the last 3 years comparing to other developing countries

7th biggest economy in the world (at the moment)

GDP growth (%)

2007 2008 2009 2010 2011 2012 2013 20146.1% 5.2% -0.3% 7.5% 2.7% 0.9% 2.3% 1.8%


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Inflation and Interest Rate

Inflation (%)

2007 2008 2009 2010 2011 2012 2013 2014

4.5% 5.9% 4.3% 5.9% 6.5% 5.8% 5.9% 6.4%

Interest Rate (%)

2007 2008 2009 2010 2011 2012 2013 2014

11.2 13.7 8.7 10.7 10.9 7.1 9.9 11.5

Historically, Brazil has had a high rate of inflation, and the government tries to

control it by increasing interest rates

A lot of volatile money coming into the country

Forging parts are expensive to export

Brazil is importing many manufactured goods because of the strong currency

(Real)


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International Reserves

51 43 36 33 35 3749 52 53

85

180 193

238

288

352 373 358 340

0

50

100

150

200

250

300

350

400

USD(bliion)

Twelve (12) years ago, the international reserves were USD 30 billion

In 2012, international reserves hit a record of USD 373 billion. Now they are

lowering due to the end of the trade balance surplus

Three (3) years ago, Brazil was self-sufficient in oil, but the government is subsiding

gasoline to lower the rate of inflation


5/13

The Brazilian Government

Hostile business environment:

83 different taxeseach company spends 2,700 working hours per year on taxes

Taxes are 36% of the GDPmuch higher, if you compare to the United States (26%) and

Mexico (14%)

too much bureaucracyit takes 150 days to open a company

Lack of confidenceThe government does not respect contracts

The government has been unable to complete several infrastructure projects:

- Public transportSo Paulo has 20 million inhabitants and only 70 km of underground

lines- Roads1 ton of soya beans costs 200 dollars to reach the harbor

- Electricityall projects are at least one year delayed

All these factors bring low investments into the country only 19% of the GPD


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The Brazilian Government

There have been strong public demonstrations against:

- the government

- the Congress- rises in public transport fares

- violence

- corruption

- the 2014 FIFA World CupUSD 13 billion were spent on the event

- the low quality of public education

The Government has been losing popularity since 2012, falling from 70% to 40%

After the presidential elections in November 2014, several strong economic

adjustments are expected

The government net debt is low compared to other economies

Government Net Debt Comparedto the GPD

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

50.0% 48.0% 46.0% 45.0% 38.0% 41.0% 39.0% 36.0% 35.0% 33.0% 32.0%


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People

181184 186

188 189191 193

195 196198

201 203

170

180

190

200

210

Population

(m

illion) Population

3,0403,607

4,739

5,788

7,194

8,623 8,373

10,980

12,580

11,340

10,199 10,300

-

2.000

4.000

6.000

8.000

10.000

12.000

14.000

GDPpercapita

(USD)

GDP per capita

Population of 203 million in 2014small growth trend

More than half are in the middle class

Two income sources per family trend


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Work Force

A 5.5% unemployment rate in Brazil is regarded as full employment. The

salaries and costs with salaries are high compared to other developing

countries

Companies pay 100% of benefits on salaries. For example, if a workerhas USD 1000 in wages, the company spends USD 2000 on that worker

9,99,3

7,8

8,1

6,76,0

5,5 5,4 5,5

0,0

2,0

4,0

6,0

8,0

10,0

12,0

Unemploymentrate

(%)

Unemployment


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Vehicle Production

2069

15731350

16811817 1791 1827

23172530 2611

29773215 3182

3381 3407 3342

3740 3700

446 457304 339 235 159 169 260

319432 544

597 512716 828 764 791 700

0

500

1000

1500

2000

2500

3000

3500

4000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e

Vehicles(thousand)

Brazils 2013 close-to-record vehicle production will not happen again this

year:

- increase in vehicle taxes

- exports to Argentina will decrease 40%

- 2014 FIFA World Cup holidays

- Over a 2-month vehicle inventory stored

Brazil Argentina


10/13

Vehicle Production

28 automotive industries

19 brands

90% of cars are bi-fueled (alcohol or gasoline)Taxis are tri-fuel (alcohol

or gasoline or gas)

50% of the production are small-sized cars

6th biggest automotive industry in the world

Since 2012: Euro-5 trucks

850,000 Cars + Trucks Imports600,000 Cars + Trucks Exports


11/13

Brazilian Forging Production (thousand metric tons)

Argentina and other South American countries

(Metric tons)

2008 2009 2010 2011 2012 2013 2014

Drop forging,

press, upset

forging , and

cold forging

384 305 370 400 354 425 360

Open-die

forging, and

ring rolling

66 52 63 68 63 75 65

TOTAL 450 357 433 468 417 500 425

TOTAL 93 74 90 97 90 80

45 forging plants

26 Sindiforja associates

18,000 employees

50% idle

High electricity prices: 0.15 USD per

0.15 KWh

High steel prices20 to 30% more

expensive than international prices

Labor is 28% of the cost2011 2012 2013 2014e

272 173 220 180

Brazilian Trucks and Buses (thousands)

TheForge Industry


12/13

Autoparts Production - 2012

335

295

216

103

73 6742

28 23 22

190

0

50

100

150

200

250

300

350

400

USD(billion

s)

2/3 of the Brazilian forged autoparts are imported

Strength of the Brazilian currency (Real (R$))Less competitiveness

Sindiforja Associates

- 199257 forge industry associates and 4 steel makers

- 201426 forge industry associates and 2 steel makers


13/13

Silvia Ribeiro de Aquino

[email protected]

Sindiforja Brazilian Forging Association

http://www.sindiforja.org.br/home.asp
http://www.sindiforja.org.br/home.asphttp://www.sindiforja.org.br/home.asp

Documents

7 - Trends in Brazil S.R de Aqiuno