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February 14, 2011

BRAZIL: Production and jobs on a high in January

Despite the month on month sales slump in January being higher than the historical average (36% less than December), the Brazilian market remains on the boil.

Despite the month on month sales slump in January being higher than the historical average (36% less than December), the Brazilian market remains on the boil.

Year on year sales rose 15% to 244,900 light and heavy vehicles.

Production was 6.4% higher at 245,900 CBU and CKD (assembly kit) vehicles together. This was partly due to a strong start to the year in Argentina, Brazil’s biggest export market.

Reflecting the production increase, the number of direct jobs at Anfavea members topped 137,921 last month, including those who make agricultural machinery. This is the second highest level since December 1990 (138,372).

This number is important in itself because labour productivity 20 years ago was far lower than today’s. Automation of Brazilian assembly lines, body parts stamping, welding and painting has grown considerably since then.

Outsourcing services and the transfer of high volume components production outside of the automakers, together with industrial cooperation, were practically non existent two decades ago.

Industry production in 1990, for example, was just 915,000 units. Last year it hit an all-time record of 3.64m units a four fold increase.

Unfortunately, the sharp increase in labour costs, raw material price rises and country infrastructure shortcomings, together with the appreciation of the real in the last eight years, have offset a good portion of the improved labour productivity and affected the competitiveness of automakers established here.

This year the forecast total production rise is just 1%. And, in 2011, cars and light commercials not produced in Brazil will account for 23% of the domestic market.

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