Auto production driving L. American rubber industry.
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 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 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.
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.
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: email@example.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: firstname.lastname@example.org 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
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||Market Focus; includes related list of rubber industry agents and representatives in Latin America|
|Date:||Apr 1, 1998|
|Previous Article:||RMA applauds house action on tire excise tax repeal.|
|Next Article:||PU rubbers, vulcanizable via dimerized TDI, to produce wear-and-tear-resistant roll coverings.|