Trade opportunities vary in Brazil and Colombia

By: | at 08:00 PM | Channel(s): International Trade  

By Karen E. Thuermer, AJOT

Brazil, with its rapidly expanding economy, and Colombia, which could reap multiple benefits from a free trade agreement with the United States, offer enormous potential to shippers of imported and exported goods.
Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil’s economy outweighs that of all other South American countries. And Brazil is expanding its presence in world markets.
While hit by the global recession, Brazil was one of the first emerging markets to begin a recovery. In second quarter 2009, consumer and investor confidence revived and GDP growth returned to positive. The Central Bank expects growth of 5 percent for 2010.
Today, key industries in Brazil encompass textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment.
While the worldwide economic recession saw huge investments pull out of Brazil, major investments remain. Ford Motor Co. will invest nearly $2.3 billion there over the next five years to modernize factories and expand production. Ford has doubled its market share and become one of the most profitable automakers in Brazil. Its biggest problem now is that its factories cannot keep up with the surging demand for its cars and trucks. A few years ago, Fords state-of-the-art manufacturing complex in Camaçari, in the northeastern Brazilian state of Bahia, is not only the centerpiece of Ford’s Brazilian turnaround plan; it is also one of the most advanced automobile plants in the world.
At Camaçari, more than two dozen suppliers operate right inside the Ford complex, in many cases producing components alongside its main production line. Inventories are kept to a bare minimum, or dispensed with entirely. Components, such as dashboard assemblies, flow directly into the main Ford assembly line at the precise point and time they are needed.
General Motors is investing $1 billion to modernize and expand two plants in Brazil at the Sao Caetano do Sul and Mogi das Cruzes plants, both in Sao Paulo state.
“The new plant is part of our long-term strategy of investments between 2008 and 2012 that allows us to increase production capacity and totally renew our portfolio of Chevrolet vehicles in Brazil,” says Jaime Ardila, president of General Motors in Brazil, in a statement.
Caterpillar is expanding its operations in Brazil to meet customer demand. The new facility will produce backhoe loaders and small wheel loaders. These are currently made at Caterpillar’s Piracicaba, Brazil, operations. Once the manufacturing facility begins production, it will allow Caterpillar to increase capacity for the other machines produced in Piracicaba.
Dell Computer has also made significant investments in Brazil. Four years ago it opened a factory in Hortolândia, São Paulo that facilitates the import and export of components and products. The facility was set up to reduce production costs, expedite delivery, and place Dell closer to the majority of its customers in São Paulo City, the largest economic center in Latin America.
Other companies making large investments include those in the pharmaceutical, alternative energy and energy sectors. The need for construction materials and telecommunications equipment is also on the rise as that nation prepares for hosting both the Olympic Games and the World Cup in 2016.
Among the top U.S products exported to Brazil are computer accessories, chemicals – organic, plastic materials, pharmaceutical preparations, telecom equipment, metallurgical grade coal, semiconductors, petroleum products, and chemicals – fertilizers. In return, the United States is importing largely crude and fuel oil, green coffee, pulpwood and wood pulp, steelmaking materials, civilian aircraft, chemicals – organic, tobacco, waxes, petroleum products and other parts and accessories.
If the recent past is any indication of how those goods will be transported, figures assembled by Zepol C

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American Journal of Transportation