The general economy in the region is now growing fast after a slow-down, as with much of the rest of the world, in 2009.
The automotive industry is developing at quite a pace but the local currency is strong against the US Dollar with the Brazilian government implement some programmes to assist with the country’s economic growth.
Although the automotive industry is enjoying a boost the foundry industry, which had witnessed parallel growth rate until 2006, is not growing at the same level. This is in part due to the fact that auto makers are importing castings in to the region from other developing countries and the local foundry industry is more focussed on the mining industry, with around 85% of castings from Brazil supporting this industry. In terms of the auto industry itself most of the cars produced in Brazil are destined to remain in South America.
Iron foundries dominate the region with only a few aluminium casting facilities. The region has also been suffering from the effects of a 14% import tax for raw materials because of a lack of local producers.
The infrastructure in Brazil is growing fast and the railway industry is seen as a growth sector as the network is developed in the build up to the 2014 FIFA World Cup which will be held in the football-mad country.
Whilst the automotive industry is mainly based in Brazil and Argentina with aluminium foundries gravitating to these regions, copper is widely used in Chile and there is a significant market for gold and silver in Peru, Chile and Argentina.
The entrepreneurial nature of the South American people is seen as a real advantage but one of the challenges for the coming years will be how to keep the economy stable. Inflation is a prime objective in Brazil as the government strives to hold consumption over concerns about the future.
Edvaldo Silva who is responsible for South America sales for Morgan MMS told Foundry Trade Journal: “There are some good quality products in South America but the cost of manufacturing is growing. Expectations are that three million cars a year will be produced in the region. The exchange rate favours imports so many companies are importing from China. The cost of labour is also high but foundries are investing in equipment and new technology and the economy is strengthening. It is a growth area and many people are moving from the US and Europe to set up business there.”
Source: foundry-suppliers.com
