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Auto production driving L. American rubber industry.

Although the Asian economic crisis has tempered growth predictions, most analysts are still bullish on Latin America. They believe government fiscal policies from Mexico to Argentina are strong enough to keep this area's growth on the strong, steady path it's been on the past couple of years. The formation of the Mercosur free trade pact, which includes Brazil, Argentina, Uruguay, Paraguay, Chile and Bolivia, has created a market of over 225 million people, lowered trade barriers in most of South America, and the Mercosur countries are negotiating with the countries of northern South America to extend the pact.

The International Rubber Study Group in its annual study "Outlook for elastomers" said Latin American economic growth could reach 8% in a decade if targets for reform, privatization and better education are met.

The International Institute of Synthetic Rubber Producers called growth in Latin America in 1997 "robust" due to an increase in rubber consumption of almost 6%. Britt Theismann, IISRP information director, said "In Latin America, growth of synthetic rubber continued to outperform expectations in 1997." SR consumption increased 6.8% from 646 kt to 690 kt. All regions of Latin America experienced growth, with Argentina leading the way at 15.4%. Brazil posted a gain from 345 kt to 370 kt last year, and Mexican SR consumption increased by 5.7% from 149 kt to 156 kt.

The IISRP is forecasting a 3.3% increase in SR consumption this year for Latin America and sees growth at an annual rate of 3.5% in its five year forecast. Mexico is expected to experience the largest growth with a rate of 4.6 per annum. Consumption of SR in Mexico should be around 200 kt in 2002. Argentina's growth is pegged at 4.6% yearly to reach 77 kt in 2002, while Brazil's annual growth is expected to be around 3.2% as consumption of SR should reach 434 kt by 2002.

Spurring this growth is the competition between the world's automakers, who have targeted Latin America for expansion. An estimated $15 billion is to be spent on automotive production capabilities by car manufacturers in the region in the coming years. Overcapacity which appears inevitable, does not seem to be a concern. Herbert Demel, president of Volkswagen South America, said that his company would continue its $3 billion investment program in Brazil even though his figures show that if car manufacturers completed announced investments, overcapacity would be at least 20%.

Brazil

Brazil is the main target of the automotive manufacturers in Latin America, with Chrysler chairman Robert Eaton saying "Brazil is the most exciting auto market in the world." Potential is what the automakers see because the country has a ratio of one car per eleven citizens out of a population of over 160 million. The government has instituted incentive programs to spur investment in expansions and new projects. Also, many feel that the government's economic policies, which have been primarily focused on curbing the country's runaway inflation, have been successful.

Currently, Fiat, Volkswagen, General Motors, Ford and Honda manufacture cars in Brazil, but they will soon be joined by nine others, plus a joint venture to manufacture engines from BMW and Chrysler. Brazil has doubled car manufacturing this decade going from one million units in 1990 to over 2.1 million in 1997. They expect to reach three million units by the end of the decade. In addition, there are six truck manufacturers.

Currently there are six tire manufacturers operating in the country. The latest available production figures show that Brazil produced over 26 million car tires in 1995, along with seven million commercial vehicle tires.

Pirelli has four plants, Goodyear has a pair with a third under construction, Michelin is building its second tire plant, Bridgestone has one plant and, domestically, Maggion and Levorin each have manufacturing facilities. They will soon be joined by Continental, Kumho and Fate of Argentina.

Pirelli is currently investing $170 million in a three year plan to expand its Gravatai tire facility that will make it the company's largest tire plant. The plant, which currently has a capacity of 16,000 tires a day and employs 1,000, will add 700 jobs upon completion of the expansion.

Goodyear is building a $60 million plant in southern Brazil. The plant, to open late in 1999, will be the sole supplier of mounted and balanced tire assemblies for a new General Motors plant being built in Gravatai that will have a capacity for 120,000 vehicles annually. Goodyear currently has plants in Sao Paulo and Americana, with a combined output of 46,000 units daily. The company has invested over $260 million in Brazil since 1993.

Michelin recently announced plans to build a passenger tire plant in Resende that will cost between $88 million and $176 million. The plant will open in 1999. The company has a truck and bus tire plant in Rio de Janeiro.

The Goodyear plant and the Michelin facility will be the first new tire facilities built in the country since 1981. Of Pirelli's four plants, two were built before 1954. Goodyear's Sao Paulo plant was built in 1939 and Bridgestone's facility in Sao Paulo was built in 1940.

The Brazilian rubber product manufacturing sector is undergoing change as multinational companies chase the car maker and the government's incentives make investment attractive.

Germany's Saar Gummiwerk is building an automotive seal plant in Sao Paulo to supply European car makers. It will be a joint venture with Saar being the majority owner. Saar has had a technical agreement with Duplex Ltda., who has four plants in Brazil and one in Argentina supplying automotive parts.

Another German firm, Woco Industrietechnik, opened a plant late in 1996 to make antivibration components in Sao Paulo. Getoflex Metzeler, a subsidiary of BTR plc., is adding capacity for its antivibration systems components products. The company has three manufacturing sites in the country.

Sweden's Trelleborg acquired the majority interest in Projetos e Apli-cacoes de Vibrotecnica e Vedacao Ltda. The company's main products are rubber-to-metal antivibration components for truck manufacturers such as Scania, Volvo and Mercedes Benz, with a plant in Sao Paulo.

Brazil's rubber consumption has more than doubled since 1975 and reached 475,000 mt in 1997. More than 60% of the rubber goes into tire manufacturing. In 1997, synthetic rubber production reached 305,000 mt and natural rubber production totaled 47,000 mt. South American Leaf Blight is still the major detriment to the NR industry, which once was the largest in the world.

Brazil's oil and petrochemical industry is slowly being privatized. There are three synthetic rubber producers, Nitriflex, DSM Elastomeros Brasil and Petroflex, that have capacities to supply the domestic market, but their production outputs have not kept pace with consumption, making the country a net importer of rubber. With all of the planned rubber product activity, the country is going to need more rubber production. DSM is expanding EPDM annual capacity at its Trunfo plant from 15,000 mt to 20,000 this year. Another expansion will take capacity to 25,000 mt to be finished the first trimestei of 1999. Nitriflex has a capacity of 25,000 mt, of which half is NBR at its plant in Rio de Janeiro. Petroflex has three SBR facilities with a total capacity of near 400,000 mt. Petroflex also has some capacity for thermoplastic elastomers and latex.

Argentina

Argentina has experienced remarkable growth in its automotive industry over the past couple of years. The country's auto production is expected to increase 125% between 1997 and 2001. Production, which stood at 314,500 in 1997, is expected to grow 17% a year to reach 708,700 vehicles manufactured in 2001.

The Argentine tire industry is expected to grow at a slower 5.6% annual rate in the same time frame. Four tire manufacturers have facilities in the country. Bridgestone, Pirelli and Goodyear have plants in Buenos Aires and Argentine owned FATE has an 8,500 tire per day plant in San Fernando. Tire production has increased from 6.9 million tires in 1995 to 7.2 million units in 1997. It is expected to reach 9.5 million by 2001.

The Argentina rubber industry has tracked the country's economy, which has gone through a number of recessionary periods in the past quarter of a century. According to FAIC (Federacion Argentina de la Industria del Caucho), rubber product manufacturing peaked in 1974 when 99, 100 mt of rubber was consumed. Production bottomed out in the early 1980s and totalled 75,300 mt in 1992. Consumption reached 87,000 mt in 1996 and the IRSG estimates consumption will reach 93,000 mt this year.

A. Cortez Ruiz of FAIC said that the globalization of the industry has had a deleterious effect on the country's rubber product manufacturers who found themselves competing with imports, many of better quality. Numerous plants shut down and the remaining ones have gone through upgrades in technology and equipment to stay competitive. The FAIC says that imports increased from $17.27 million in 1986 to $323.58 million ten years later.

The FAIC has 300 member companies presently, down from a high of 400 in 1990. Most of the manufacturing (87%) is done in the industrial area around Buenos Aires. FAIC estimates there are 7,600 people employed in the non-tire sector with their members. Another 2,900 are employed in tire manufacturing.

The change in trade policy, which opened Argentina's markets, also enabled a number of companies to export more freely. Brazil, Argentina's Mercosur partner, has been a major destination for these exports. FAIC officials said exact historical figures aren't available, but there is a recognized increase in exports. In 1996, the country's rubber product manufacturers exported $97.1 million worth of products. Of that amount, $76 million went to Mercosur partners, with Brazil being the destination of $56 million worth. The leading exports include tires and tubes, adhesive products, surgery gloves and automobile aftermarket parts. Currently, BTR is spending $6 million to add sealing system and antivibration system component capacity at its plant near Buenos Aires.

With the exception of SBR and NBR, Argentina has to import most elastomers and other compounding ingredients. Prior to the expansion of the auto industry, Argentina was a net importer of SBR in 1994. PASA currently has a capacity of 55,000 mt for SBR/HSR and 5,000 mt for NBR. They will double the NBR capacity by 2002. The company says it is undertaking a feasibility study on a new multipurpose plant for polybutadine and styrene butadiene solution (radial and in block) with an estimated capacity of 100,000-120,000 mt yearly.

All rubber to metal adhesives and peptizers must be imported along with most antioxidants. Local production accounts for 40% of the accelerator consumption. Cabot is the only carbon black producer in Argentina and produced 9,250 mt in 1996.

Mexico

The Mexican economy, which began an upward movement in 1995, is performing above almost everyone's expectations. According to government figures, Mexican GDP grew 8.1% in the third quarter of 1997 compared to the same time in 1996. For the first nine months of the year, GDP was up 7.3%. This forced forecasts to be revised upward to over 7% growth. The North American Free Trade Agreement (NAFTA) has made the country a prime site for western hemisphere distribution of products.

The troubles the Mexican economy have been through are evident in its rubber consumption figures, which have yet to recover to 1985 figures, when consumption stood at 208,000 mt. Consumption bottomed out in 1995 at 146,000 mt. Consumption rebounded to 183,000 mt in 1997 and the IRSG predicts consumption should reach close to 190,000 mt this year. The IISRP sees consumption reaching near 200,000 mt by 2002.

Five automobile manufacturers have facilities in Mexico and there is an estimated capacity of near one million units yearly. This will increase when Volkswagen opens a new plant in Mexico City next year. There are nine tire manufacturing plants. Bridgestone, Michelin, Tornei and Euzkadi have two plants each and Goodyear has an 18,000 unit per day facility in Mexico City. Passenger tire production in the country reached a high of 6.7 million units in 1990, but slipped to just over six million units in 1995.

NAFTA has many rubber product manufacturers considering some sort of manufacturing presence in Mexico. The major tire companies already had plants located there. Lower cost manufacturing was the main reason Goodyear said it was going to build a $15 million engineered products facility that will begin production in 1999. The company is shifting its power transmission belt business from Lincoln, NE.

Continental has entered a joint venture agreement with Grupo Tebo to manufacture hose assemblies at a plant near Mexico City. Standard Products and Nishikawa Rubber have built a $14 million sealing systems plant in Aquascaliente.

Avon Rubber of England is undertaking a $1.5 million expansion to boost hose production at its Orizaba facility primarily to supply the new VW facility. Federal Mogul opened a 102,000 sq. ft. lighting assembly plant in Juarez.

On the supplier side, Japan Synthetic Rubber plans to establish a joint venture with a Mexican synthetic rubber producer to produce 60,000 tons of solution SBR beginning in 2000 to be marketed to North American tire producers. Presently, Mexico has a synthetic rubber capacity of 141,000 mt. PPG Industries is opening its first facility in Mexico which will be a 30,000 mt amorphous silica plant. The company will market the product to tire and mechanical goods manufacturers throughout Latin America.

Others

Of the remaining countries in the region, Colombia and Venezuela have the most rubber production with each near 65,000 mt in consumption. Bridgestone, Goodyear and Pirelli have tire facilities in Venezuala and the country's tire production was near five million units. Goodyear and Icollanatas manufacture tires in Colombia. Goodyear also has plants in Chile, Guatemala and Peru. The Firestone facility in San Jose, Costa Rica is undergoing a $33 million expansion that will more than double tire production. When the expansion is complete in 1999, the plant will be producing more than one million tires yearly. Bridgestone is a 20% owner of the company and is negotiating for majority interest. Bridgestone recently purchased 14% interest in NECSA of Chile which has been a Firestone licensee since 1983.

Icollantas has a plant in Lima, Peru; Continental manufactures tires in Ecuador; FUNSA has a plant in Uruguay and Carlisle has a plant in Trinidad & Tobago. In the non-tire segment, Goodyear-Incosur, a licensee of Goodyear's Shoe Product Division is building a rubber sole manufacturing facility in Montevideo, Uruguay.
 Latin America tire production

Passenger tire production

 1975 1980 1985 1990 1995

Argentina 3,102 3,878 2,513 3,220 5,287
Brazil 12,952 18,160 16,970 19,890 26,227
Chile 172 699 648 1,224 1,747
Columbia 1.022 1,386 1,460 1,497 1,430
Mexico 3,400 5,207 5,330 6,783 6,052
Venezuela 1,868 2,438 3,150 2,807 3,480
Others 1,200 1,200 1,140 1,330 1,850

Commercial vehicle tire production

Argentina 1,190 1,440 1,190 1,736 1,782
Brazil 2,752 3,942 5,182 7,868 7,070
Chile 57 232 216 408 583
Columbia 378 513 540 553 440
Mexico 1,913 3,520 4,870 4,989 4,952
Venezuela 801 1,045 1,350 1,203 1,620
Others 500 850 1,100 1,290 1,810
 Rubber production

Synthetic rubber
 1975 1980 1985 1990 1995 1998
Argentina 40 33 51 57 54 65
Brazil 129 249 266 256 286 305
Mexico 60 91 146 133 109 130

NR production
 1975 1980 1985 1990 1995 1998
Brazil 19 28 40 31 44 44
Guatemala 6 9 12 18 27 27
Other 6 11 11 12 18 18
 Rubber consumption

 1996 1997 1998

Argentina 82 89 93
Brazil 445 460 475
Chile 31 330 34
Colombia 67 68 69
Guatemala 10 10 10
Mexico 176 183 190
Venezuela 58 62 63
Others 90 90 90
Total 959 995 1,024

 '000 metric tons


RELATED ARTICLE: L. American directory of agents and representatives in the rubber industry

The following is a list of companies with representatives or agents in Latin America. It is followed by a listing of companies that are seeking agents/representatives in the region
Acrolab
Brazil
Parabor Ind. E Com De Produtos
Quimicos Ltda
Rua Fausto, 364, CEP 04285-080
Sao Paulo, Brazil
Phone: (011) 6914-8324
Facsimile: (011) 6915-7152

Chem Trend
Brazil
Chem Trend Industria Inc & Cia
Rua A, No. 529, Bairro Macuco
13.279-159 Valinittos, SP Brazil
Phone: (55) 19 881-8212
Facsimile: (55) 19 881-8211

Cryogenic Systems & Parts
Brazil
Febratec Com. Repres. Ltda.
647 Rua Antonia Das Chagas
Sao PaulO, SP, Brazil 04714-001
Phone: 011-551-15182144
Facsimile: 011-551-15182236

Franklynn Industries, Inc.
Mexico
Raul Tellez
Sales Consultant
Pinquinos 21
Las Arboledas Edo
Phone: 25-824-7025

Central, South America
LAV Quimica
Alameda Itajuba, 1750-Joapiranga II
Valinhos - SP Brazil
CEP 13270-000 - Caixa Postal 611
Phone: 019-869-2001
Luiz Andre Veira, Genral Manager
Carlos Roberto Da Silva, Sales
Consultant

Glassven
Colombia
Distribudora Andina (Disan)
Calle 12 A No 680-25 Santa Fe de
Bogota, Colombia
Phone: (571)280-2111/280-4011
Facsimile: (571)290-2702

Guatemala-El Salvador
Proquirsa
4ta. Av. 3-68 Zona 9 01009
Gutemala
Phone: (502)3318523 - 3320677 - 3313644
Facsimile: (502)3347686

Uruguay
Alquisa S.A.
Av. Damaso Antonio Larranaga (Fx
centenario) 3168 P.A.
Phone: 59.82. 4875918 - 487-0287
Facsimile 59.82. 487-0180

Peru
R & C Suministros;
Calle Guadalajara 276. Urb.
Mayorazgo II Etapa Ate Lima 03
Phone: 511.1. 349 10 01 - 438-3118
Facsimile: 511. 1. 349-1001

Mexico
National de Servicios Dargue
(NASEDA)
Aquiles Serdan #125 (Parque Via
Tacuba) 02090 Mexico D.F.
Phone: 525. 399-8376
Facsimile: 525. 399-4925

Argentina
Caufit SRL
Camino Real Gral Belgrano 1570
91870 Avellaneda, Bs. As.
Phone: 54.1.204 29 96/203 56 60
Facsimile: 54.1.205 1294

Lord Corp.
Brazil
Lord Industrial Ltda
Via Anhanguera, KM. 63, 5
Distrito Industrial
13.200 Jundiai, Sao Paulo
Phone: 011-55(11)-7392-7755
Facsimile
011-55(11)-7392-3581

Struktol Co. of America
Mexico
Degussa Mexico, S.A. de
C.V.Division Productos Quimicos
Calz. Mexico-Xochimilco 5149
1461 Mexico, D.F.
Phone: 011-525-673-1370
Facsimile: 011-525-673-6649

 Agents wanted

Tom Mix
Aeroglide Corp.
P.O. Box 29505
Raleigh, NC 27626-0505
Phone: (919)851-2000
Facsimile: (919)851-6029
E-mail: tmix@aeroglide.com
Internet: www.aeroglide.com
Custom designed thermal processing
equipment
Latin/South America

Glassven
Z.I. Soco, Av. LasRosas #24 La
Victoria, Aragua, Venezuela
Phone: (58)(44)223747/212353
Facsimile: (58 + 44)223607
Precipitated silica
Brazil, Paraguay and Bolivia
Thomas M. Schade

International Mold Steel
6796 Powerline Rd.
Florence, KY 46042
Phone: (606)342-6000
Facsimile: (606)342-6006
Pre-hardened plastic and mold
steels. Agent familiar with rubber
and plastic tooling

Neil Burns
Pilot Chemical
230 Half Mile Road
Red Bank, NJ 07701
Phone: (732)576-1900
Facsimile: (732)530-0844
E-mail: nburns@pilotchemical.com
Surfactants for emulsion polymerization


RELATED ARTICLE: Automobile, tire production in Latin America

Mexico Chrysler Ford GM Nissan Volkswagen 950,000 units

Bridgestone (2) Euzkadi (2) Goodyear Hullera Tornei (2) Michelin (2) 17.5 million

Colombia GM Mazda Renault 80,000 units

Goodyear Icollantas (2) 3.5 million units

Peru Goodyear Icollantas 1 million units

Uruguay Funsa 600,000 units

Costa Rica Bridgestone 660,000 units

Venezuela Chrysler Ford Flat GM Honda

Hyundai Renault Toyota 90,000 units

Bridgestone Goodyear Pirelli 7.1 million units

Brazil Ford Fiat GM Mercedez Benz Scania Volkswagen 1.6 million units

Bridgestone Goodyear (2) Maggion Michelin Pirelli (5) Unipart 39 million units

Argentina Ford Fiat Peugeot Renault

Scania Volkswagen Mercedez Benz 400,000 units

Bridgestone FATE Goodyear Pirelli 9 million units

Chile Goodyear NESCA 2.6 million units

Ecuador Continental 1 million units

Guatamela Goodyear 825,000 units
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Title Annotation:Market Focus; includes related list of rubber industry agents and representatives in Latin America
Publication:Rubber World
Date:Apr 1, 1998
Words:3316
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