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Valeo: Brazil On The Rebound.

After more than two years in the economic basement that has plagued much of South America, Brazil will come charging back beginning in 2000. So predicts Valeo Chairman Noel Goutard, who says he is confident enough in a turnaround to launch six new plants in that country next year.

"Brazil is bouncing back," he says. "It is a land of wide swings." With that in mind, Valeo took advantage of the slowdown to close six less competitive plants in neighboring Argentina in favor of the new facilities in Brazil. "We regrouped in Brazil and we built new plants for sectors in which we were not represented," Goutard says. That includes climate control systems, electronics, clutches, electronic motors and friction materials.

Even so, the recent economic crisis in Brazil cut Valeo's business in half from $400 million to $200 million. But, "we are still cash positive," he says. "By the end of the year we will be back at $400 million."

Goutard sees slower growth in China and India but plans to stay the course. "We cannot ignore a market with almost a billion inhabitants," he says referring to India. Around 70 million people there earn about $7,000 a year, which makes them middle class. "The threshold is $5,000 when people think about moving from a bicycle to a motor scooter," Goutard says.

About 5% of Valeo's business is in South America and Asia, so it is positioned for growth, Goutard says. "I want short-term results but a long-term strategy."

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Author:Sorge, Marjorie
Publication:Automotive Industries
Geographic Code:1USA
Date:Jun 1, 1999
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