Financing is another import barrier. The government's loan program, called FINAME, is offered only for machines with at least 60% Brazil-made content, which is calculated by weight and volume, according to Sobratema.
"We will be closer to the consumer market,” says Felipe Cavalieri, CEO of BMC, Hyundai's Brazilian distributor. The new plant will enable buyers to get financing to buy machines with FINAME, he adds.
Earthmoving-machine sales in Brazil rose at a compound annual growth rate of 19.2%, to 33,550 units, between 2007 and 2013, according to Sobratema. Units are expected to reach 43,300 annually by 2017. Sales of all heavy equipment is expected to hit 76,080 units this year and rise to 111,000 units by 2017, growing at an annual rate of 10.3%
Hyundai Ramps Up
Construction of the new production unit, which occupies 560,000 sq ft of manufacturing space on a 6-million-sq-ft parcel of land, started in October 2011. The civil work and industrial assembly started in May 2012. At its peak, the work involved 500 workers.
Construction and industrial assembly were managed by Hyundai Amco, an engineering and construction unit of the Hyundai Group. Hyundai Amco was in charge of the construction of the new plant that produces Hyundai-branded cars in Piracicaba, a city in the state of São Paulo; the plant started production last year. Hyundai has another car plant in Anápolis, located in the state of Goiás; that plant is under license to a national company.
Hyundai says it has received orders worth $60 million for 500 pieces of equipment that will go to eight major projects in Brazil, including a hydroelectric powerplant and a railway.
Doosan, another large South Korean group, is opening a factory this month in Americana. Initially, the new $80-million plant will produce hydraulic excavators.