For Brazil Equipment Buyers, Support Is King
As new, construction-equipment brands—many of them Chinese—arrive in the Brazilian market, fleet owners here say they want superior after-sales support. This level of service, they add, will make the difference between the success or failure of newcomers in the country.
Vendors broadly discussed the issue at the M&T Expo 2012, held from May 29 to June 2 in São Paulo, Brazil. M&T Expo is the largest trade fair for construction machinery in Latin America. Produced every three years, this year's show attracted 48,000 visitors.
The trend marks a shift in thinking for buyers and sellers in Brazil. Rather than just buying a machine that satisfies the needs of a project, owners are becoming more savvy and seeking strong partners who will support them long after the ink on the deal is dry. As a result, equipment vendors are stepping up their game in this emerging market.
Sobratema, or the Brazilian Association of Technology for Equipment and Maintenance and the show's organizer, estimates there has been a 10% growth in equipment sales this year in Brazil, with 89,000 machines sold, stimulated by the region's economic expansion.
Mario Gasparri, CEO of CNH Construction Equipment, points out that the company's most significant growth in the recent years has taken place in Brazil and Latin America. The region already stands for about 25% of the company's global revenue.
Competition in the Brazilian market is fierce. Seven years ago, 11 manufacturers were operating in Brazil. Today, 30 brands are operating, many of them Chinese. Since the Chinese internal market shrunk by roughly 40%, those manufacturers have turned to other countries for sales.
"Users' demands and the very machines' technology have become more sophisticated," Gasparri says. The growing difference between brands is marked not by machine price or productivity but by "the technical support and spare parts offered by Brazilian plants all over the country."
In Brazil, CNH runs three industrial plants in the agriculture segment and three in the construction market, including a new plant in Montes Claros, part of an ongoing program on a $294.7-million (R$600 million) investment. A CNH plant in Contagem produces the Case and New Holland brands and serves as a platform for global exports, such as powered compactors.
Neil Hamilton, director of JCB Brazil, says the Brazilian market is already mature and looking for technology and after-sales services—two elements that newer, "opportunistic" brands find it difficult to offer. JCB is strengthening its structure by inaugurating a new, 32,000-sq-meter plant and parts warehouse in Sorocaba, where it has invested $100 million. JCB is giving the same level of detail to its dealer network "because after-sales is the key to build clients' loyalty," he adds.
Plants Under Construction
John Deere has been active in Brazil for 34 years but almost exclusively in the agriculture segment. However, the brand recently announced it would ">enter the construction market by simultaneously installing two plants in Indaiatuba. A $180-million investment, the plants are expected to come on line at the end of 2013. Two-thirds of the cost will be paid by John Deere and the rest by the Japanese company Hitachi, Deere's global excavator partner.
South Korea-based Doosan has decided to come to Brazil because it sees stability and potential for growth. For these reasons, it is building a Brazilian plant, an investment of about $98.2 million (R$200 million), according to Dong Hoon Lee, CEO of the company for South America. Expected to be completed by the end of this year, the 50,000-sq-m plant is being built in Americana on a 160,000-sq-m piece of land.
"If we take macroeconomic factors into consideration, Brazil is one of the most important and strategic markets for any company. Within this scenario, Doosan sees construction, infrastructure and, more recently, mining as the most promising segments for investments," Lee explains.
Korean Hyundai and Chinese Zoomlion are working with their distributor, BMC, to build their own plants, as well. Other new brands with production units operating in Brazil are U.S.-based Manitowoc and China-based Sany. XCMG, also from China, and Ammann, from Switzerland, have announced similar plans to lay brick and mortar in the region.
The explosion of manufacturing capacity signals gradual growth in this sector rather than a sudden sales boom of full-line machines, says Brian Nicholson, Sobratema's research coordinator. Initially, manufacturers will produce items tailored specially to the Brazilian market. "The idea is to make room," he says.
