Wednesday, 21 December 2016

The 2016 Alternative Christmas Message.

This intermission web-log typically takes a periodic break from its central raison d'etre - presently Brazil's increasingly 'glocal' auto-sector – to offer its typical annual 'Alternative Seasonal Message'.

[NB Before doing so, obvious condolences to those affected by the recent tragic apparent 'retributional act' in Berlin. An undeserved unfortunate shadow has been momentarily cast upon the good name of Scania Trucks].

This intermission web-log simply seeks to highlight that whilst, for good reason, news reports shock, the foundations of Christian morality have been under a broader cultural attack from within (far more so than from outside) for many decades; the results obvious and spanning much.

Examples being: many adults' extended immaturity, resultant poor child-rearing, ravenous materialism, self-centredness, loss of balanced critical thinking, egos built upon over-intellectualised manufactured ideologies and so identities, thereafter power-seeking politicisation, much increased 'group-think' to enact sliding-scale 'activism' (open, hidden and indeed criminal) against 'the (seemingly) oppressive other'. 

As many recognise, the once conservative values which strengthen nations and continents have been decaying because of such trends to inevitably create a very fractured society.

All too ironically Donald Trump's win had more to do with the fact that the majority who populate the 'Fly Over States' of America have closer conservative alignment to devout Southern Baptist Christians (White or Black), who themselves in turn ironically have 'values' that relate more closely to most Muslims than the much encroached far left.

In short, it was recognised that the centre-ground civil aspect of 'civilisation' was so subsumed that even the tenets of basic reasonableness, fairness and decency was at risk of becoming lost.

The action has caused a major reaction and there is now a resurgence of 'the quiet (wo)man' against the evident social fragmentation and shattering of the last three decades by overly vocal grown mass of self-identifiers, many of whom actually lead relatively privelidged lives compared to those truly suffering 'under the radar' and so forgotten.

An improving US economy that should see the lives of the truly long- disaffected, conservative majority improve. But undoubtedly a flashpoint was reached via the appearance of Trump, so giving voice to their socio-economic frustration and societal disaffection.

The acute irony of course being that the 'reviled' bankers will have greater power still as presidential aids and advisors, with in turn, examples of greater "LGBTQ" representatives now seen at the top of the investment banking world, as previous seniors move into influential corridors of power.

Those disaffected in the West themselves seek ideals, and recognise that very unfortunately, long ago Christmas shifted from its original spiritual intent of higher reflection and toward that of little more than a much condensed, cultural event.

The iconography having lost its emblematic meaning, or long since re-orientated to absorb political, national or commercial interests.

Holland's 'Schwartz Pete' (helper to Santa Clause) was created in its colonial times to better absorb Africans and Indonesians into Dutch culture. Father Christmas' red and white suit arrived thanks to 1920s Coca-Cola press and poster advertising. Whilst the Christian Cross has more emotional relevance to young video-gamers in the guise of an anti-Muslim warrior monk than the sanctity of a church alter.

[NB The hatred embued by game play thereafter soaked into the minds of the unemployed, under-employed and more intellectually susceptible, so agrevating cultural clash']. 

The fact is that the “holy-days” are a shadow of their former incarnation.

Instead, the true social relevance behind the Xmas period itself is regards to basic socio-economics; spanning from the end of year wish for a boost to overall national growth statistics, through to the norms of manic shopping, preparation, organisation and over-idealism – with all its attendant pettiness. So denying true spiritual connectivity and philosophy.

The true standard advantage then is that the Season should be the usual sizeable boost to the national economy, thus supposedly of advantage to all those across the economic spectrum.

However, UK consumer spending statistics have recently trended downward, with approximately a -2% drop YoY amongst the major supermarkets and high street retailers. Which itself is of concern when broad national growth measures have been trending upwards, albeit at a measly 0.4 - 0.5%.

This is then of concern.

This may well be because people continue to pay-down their personal debt, or having done so, prefer to (instead of spending unquestioningly) build what they can in terms of a small cash-cushion in still uncertain times.

This understood, there is still concern.

In decades past the start of any new economic cycle might well see such blips as a generation of 20-somethings shift from one phase of life into another – singlehood / marriage / family – so foregoing personal consumption and celebratory consumption so as to save for deposits toward the ideal of their own home.

But the general steadiness of apartment and house prices keeps such a dream out of reach for many, especially given the over-hang of student-debt, the delayed phase of initial consumer gratification (goods and experiences) the increasing the tendency toward single-hood so as to enjoy such 'delayed gratification', and critically the high levels of separation and divorce, with also the emergence of often (in reality) shorter-lived (non-traditional) relationships within the critical 20-something / 30-something phase; as people of whatever gender and orientation become increasingly dissatisfied with previous long-term choices, or indeed choose a more erratic 'menu-based' lifestyle.

Thus, with many of the traditional 'white picket-fence' conventions cast aside, and such greater focus on 'YOLO' (you only live once) attitudes, any such consumer-spending blip as now measured becomes harder to qualify.

Either the money just isn't there for many individuals, and / or those individuals with potential spending prowess have become far more cautious about their futures.

However, such a time should be used to conject whether such signs of socio-economic change could indeed underpin a favourable sea-change in consumer spending, that could be to the advantage of the UK at large.

Essentially a turnabout from the 'Primark' era of low quality in high quantity purchases enabled by a 'cut to the bone' (and sometimes slave-like) global supply chain, toward what could be termed a 'Pride-Mark' future of domestically produced goods and services of higher quality purchases in lesser quantity.

[NB the use of the term 'Pride-Mark' with no relevance to the gay community's use of the word; simply continuation of its historic normative use].

In short, fewer annual purchases of better quality, so as to proffer greater physical, emotional (and so intrinsic) reward. 'Considered Consumerism instead of 'Crass Consumerism', where discernment supercedes proliferation, and gratification comes directly from expectations and appreciation, instead of the now entrenched tendency toward immediate purchase satisfaction; which itself masks so much social discontent.

Economic growth obviously depends upon the creation and satiation of people's needs, wants and desires, yet the reality of the massive schism between (consumer) idealism and (societal) reality has never been greater in the West since the Great Depression of the early 1930s.

The after-effects of the 2008 Financial Crisis remain a decade on, with unfortunately an increased misalignment of societal and social perception between the sexes, races and critically the younger, the middle-aged and those older.

As the US heads toward expected protectionism – setting off a possible worldwide trend amongst other nations (Britain looking to the Commonwealth) - the time has come to fundamentally re-imagine the image that more locally grown and better attuned 'glocal' consumerism should take.

A deeply philosophical perspective is needed that can engender both mono-cultural and multi-culturally inspired consumer solutions.

To prompt new everyday value creation and drive economic impetus, better quality (of much in life) must now be put above mere quantity of arbitrary (almost OCD-like) purchasing habits.

To this end...

“Less Shopping...More Schaupenhauer”.

Sunday, 11 December 2016

Micro Level Trends – Brazil's Automotive Sector – “Brazil 66”...Sixty Six Years of Economic Power Lifting (Part 4.6)

The prolific and expansive educational power of the country's auto-industry from the early 1960s onward did much to help provide the foundations for what became an ever more diverse transportation-based engineering homeland.

The commercial prosperity and intellectually-absorbed propulsion of those co-opted (notionally 'indigenous') foreign trucks, buses and cars provided the roots for new domestic aspirations in both transport engineering and much broader civil engineering.

The capital itself, Brasilia, was designed upon the merged inspirations of then advanced engineering; its basic road layout that of a plan-view of a modern jet aircraft, with a long yet wide central feature (fuselage) for the bureaucratic centre (itself consisting of water-jet fountains), flanked either side by partially swept-back (winged) primary road-ways. These to obviously provide high capacity flows for the influx of new vehicles being nationally built.

The idea was to entrance from the air both the migrating government staff from the coastal cities and to provide the picture of futurism for the foreign visitor. The idea was to evoke awe at the apparent highly totemic and highly efficient modernism, a true 'Metropolis' itself appearing to offering seamless transportation throughout.

[NB it must be recognised that Brasilia itself became later 'sullied' by the emergence of unplanned, squalid, dormitory satellite towns that housed the much needed but 'invisible' low-wage commuter service workers].

Nonetheless, that ideological planning so well crystallised in 'clean-sheet' Brasilia at its formation, would serve as the template for high ideals with regards to the expansion of the mutually assistive domestically (and foreign) financed expansion of the auto-sector.

7. Indigenous Development - Strategic and Value-Added

The commodities, agricultural and low-value export trade basis of the national economy would itself serve the strategic needs of the nation and provide for the 'value-added' ambition of commerce.

One of the obvious high agenda requirements was country-wide public and en-mass private mobility.

And thus throughout modern times the bus and truck segments would be the prime targets for successive generational waves of low-risk entrepreneurial financing.

The Bus and Truck Segment -

Previously much was explained about the rise and fall of government backed 'FNM' (Fabrica Nacional de Motores) which itself manufactured a massive 'national fleet' of Isotta-Frashini and Alfa-Romeo licenced heavy trucks between the mid 1950s and early 1970s.

FNM's impact was enormous in obvious commercial terms and arguably over-shadowed what at the time was the new beginnings of a substantial national bus, truck and coach body-building sectior.

Invariably, as was seen prior to WW2, the domestically made bodies would be married to foreign chassis-cab expertise.

Thus, just as with cars, it was the foreign provision of the fundamental 'rolling chassis' technology that allowed domestic production of the vehicle's shell and interior to flourish. It could be said that the activities of Brazilian bus sector was the impetus and template for previously seen Gurgel SA regards body-on-chassis indigenous cars and vans.

Thus it would be the truck-makers of Europe, America and Japan who would either set-up dedicated Brazilian production centres, or agree the licensed local production, for the manufacture of the largely unseen but vital 'Chassis Cabs'.

The following names have come to dominate

- Ford Truck
- Volkswagen Truck and Bus
- DAF (Paccar Group)
- Iveco
- Mercedes-Benz Truck and Bus
- Scania (VW Group)
- MAN (VW Group)
- Volvo Truck and Bus

Interestingly, the historic strength of advanced Western HGV-makers becoming somewhat eroded by two factors:

- The perceived shift for indigenous producers - led by Agrale SA – to “package engineer” their own chassis-cabs from domestically-made and foreign-made component sets (eg Mitsubishi-Fuso / Toyota-Hino).

- The arrival of fully built-up Chinese truck imports (eg Metro-Shacman SA)

This understood, we can now view the historical and modern eras of Brazilian Bus and Coach Body Construction. The prime domestic and 'foreign transplant' participants being:

Domestic Body-Builders -
1. Caio Induscar
2. Busscar
3. Marcopolo
4. Neobus
5. Mascarello

Transplants -
6. Irizar (Spanish owned)

Domestic Chassis-Cab Producers -
7. Agrale

Package Integrators -
8. Comil

Caio Induscar SA -
[HQ: Sao Paulo / Botucatu, Sao Paulo State].

Formed in 1946, the company named CAIO was created as one of a three-pronged government mandated commercial effort to mobilise Brazilians.

[NB The other ventures being Busscar and Marcopolo, see below. These both invariably relied on pre-WW2 Ford, GM, Dodge and other branded American and European truck platforms].

Historically beyond obvious major influence in its home country, have been exports to various EM nations including: South Africa, Angola, Chile, Costa Rica, Ecuador, Lebanon, Nigeria, Turkey, Dominican Republic, Tahiti and Trinidad and Tobago.

In 2001 CAIO was sold to the transportation group Induscar Group for build and operate integration purposes with a focus on streamlining the vertical value-chain.

And in 2007 the company formed Caio North America to produce finished vehicles named G3400/G3600 on the (Daimler-owned) Freightliner cab-chassis for US clients.

As proudly illustrated on its website, Caio Induscar reached its 70th anniversary this year, and is the longest-lived of Brazil's bus-builders.

The most recently delivered contract has been to the state of Belem in northern Brazil, wherein a fleet of articulated vehicles offer what appears best-in-class product attributes with WiFi included along with various solutions for the aged and less-able bodied.

Busscar SA -
[HQ: Joinville, Santa Caterina State]

The company was, as stated, also established 1946 and was operational, with municipal and commercial build-orders right up until 2012.

However unlike its two peers, it originated as a carpentry firm by the two Neilson brothers (of Swedish descent) with focus on house-building items. Soon however the firm diversified into the re-building of older buses and truck bodies, initially continuing to obviously utilise old carriage-making methods with cheap and easily worked wooden body frames and seating and thin-section wooden skin panels.

However, under President Kubitschek's 1950s Plan for fast economic growth, it was quickly recognised that the vehicles would need to become primarily metal for durability and in-service longevity.

The market demand of the era set a firm basis beneath the firm and allowed for product improvement and range expansion, with important innovation and/or landmark products offered in 1961, 1987 and 1998.

The financial potential of Busscar Onibus (formerly 'Carrocerias Nielson') drew the attraction of private equity players, and eventually the firm was majority sold after the sudden death of the then family CEO.

However whilst international expansion was indeed successful at first, it was financed in an all too typical PE manner of heavy debt exposure. The Global Financial Crisis of 2008 saw the order book collapse, and thus the corporate notes and rolling-debt agreements could not be serviced, leading to financial ruination.

[NB the company is the focus of a 2016 academic paper from Sao Paulo and Porto (Portugal) universities regards the management of international expansion under family and non-family control, indicating that Busscar's over-extended ambitions and ultimate bankruptcy under transitioned non-family control would have been avoided if the descendants of the founders had maintained a typically 'Swedish' and 'Family' conservative approach].

This unfortunate ending though should not over-shadow the immense success and national impact that the firm enjoyed during its long heyday, producing a broad array of buses, electrically propelled 'pantagraph' trolley-buses and coaches.

Marcopolo S.A. -
[HQ: Caxias do Sul, Rio Grande State].

Founded in 1949 by eight partners and fifteen employees, the firm's original name was Nicola and Cia Ltda, As seen with CAIO previously, up until 1949 buses were bodies in wood, but Marcopolo dedicated itself to all steel (and aluminium) manufacture from 1950 onwards. An early strong order book required a shift to another larger site in the Plateau District.

Unsurprisingly there was much American influence and the early vehicles had a very similar styling with corrugated body-sides and basic 'brightware' as tropes of the modern, whether on GM or predominantly Mercedes chassis. The name became Carrocerias Nicole SA and in 1961 the first export contract was signed for Uruguay. It was in this decade that the SWB midi-size joined the full-sized vehicle to serve the suburbs, smaller towns and rural locations with dirt-track roads.

By 1969 some of its leisure and tourist vehicles had become on par with those in the USA and better than many in Europe. The watershed 'Marcopolo II' was produced and offered a transformable cabin between seating and bedding, in the style of the trans-continental rail carriages of Europe and the best coach-services in the USA. Of such impact, the company adopted the name in 1971 as its official title. A second factory site was created in1981 at 'Ana Rech' and by the mid 1980s a (what was then) 'full-line' of dedicated vehicles was on offer. And to retain as broad a domestic and international market reach as possible, the firm continued to re-body and build 'anew' upon the technically older yet still very capable 'recycled' vehicle chassis (such as the ubiquitous Mercedes LK).

The 1990s saw model-line expansion and pertinently a dedicated Marcopolo School opened for the instruction of new drivers and additionally (to a smaller extent) the 'bringing-on' of younger technicians, staff and managers in the locality. Production of its 100,000 vehicle, undoubtedly deliberately scheduled as the top of the range double-deck 'Paradiso' Tourist Coach The late 1990s saw delivery to the Brasilia BRT (Bus Rapid Transit) network.

The 2000s saw technical and feature update of the model range, the company was recognised for its national and international marketing ambitions and success, and delivery of the Porto Alegre, Rio de Janeiro and Racife BRT Systems vehicles. The 2010s saw delivery of similar dedicated-roadway 'bendy-buses' to the Torino e Viale BRT system in Belo Horizonte.

The firm well recognises the importance of its historical achievements, and indeed those persons who helped to obtain them. Hence, a very respectable archive of material is today dedicated to the memory of Valter Gomez Pinto, who himself directed efforts per the success of the firm on behalf of all stakeholders. “Bravo” to the present Board for highlighting Sinhor Pinto.

Neobus S.A. -
(Marcopolo Group)
[HQ: Caxias do Sul, Rio Grande do Sul]

The company came into existence in 1999, the strategic aim of the parent company to have Neobus initially dedicated to serving both South and North American continents.
As regards Brazil and intentions for broader LatAm and elsewhere, to differentiate itself one of Neobus' star products is the “Mega-BRT”. Using either a VW or Daimler base as a 'traction-head' it is one of the longest 'bendy-buses' in the world. The triple-section, double-pivot articulation provides a truly snake-like appearance and function so as to maximise its carrying capacity and aid mobility. Its obvious aim to fulfil the high-capacity demands of many EM 'Mega-Cities' and the new generation of dedicated 'BRT' roadways.

As regards North America, in 2012 a JV was formed with the US chassis-cab producer Navistar, the new enterprise named NeoStar. This accords with the obvious strategy of targeting federal, state and municipal spend on expanded public infrastructure – what with the probable plateauing of car ownership and rise of the 'sharing economy'.

Critically the establishment of such a satellite operation in the US also allows for Neobus to in the long-term create additional agreements with the other chassis-cab producers who themselves operate on both northern and southern continents.

This provides for far better economies of scale and so cost savings when both business units (NA and SA) simultaneously order similar or even divergent platforms. If indeed feasible series-produced chassis-cab costs could even be possibly calculated based upon the value of shared internal engineering modules, especially important in this high electronics age, thus dissecting the margins of suppliers, as opposed to the conventional finished view of finished powered-chassis.

Mascarello S.A. -
[HQ; Cascaval, Parana State].

The firm's origins stems back to 1957 when three-sister companies within the land and agricultural sectors formed the Mascerallo Group.
Mascerallo Carrocerias de Onibus was founded in 2003 by the portion of group situated in Paraná, given its historic need to transport staff and the high potential of increased populational mobility across Brazil, with recognition that such 21st century mass-transit needed to be innovative.

As to whether the firms products are indeed advanced compared to peers is debatable, but nontheless it utilised conventional know-how to quickly create a full range of buses, from six-wheel full-sized to mini and across all user types. Morerover, (as with its competitors) it offers a Special Vehicles section by which specifically detailed or high customisation requirements can be met.
Within the 13 years of existence the firm has taken over Comil SA and today offers 5 types of Coach, 3 sizes of Urban Bus, 1 type of midi-sized Bus, 2 types of mini-sized Bus and 2 types of micro-sized Bus.

Export orders have been gained across the whole of Central and South America and across much of Western and Eastern Africa, demonstrating its commitment to EM nations as a prime client base.

It Service offering has been expanded to provide conventional after-care, but this a specific interest has been taken to ensure the availability of parts via a parts-network, given the likelihood that those ordering from less developed nations will invariably run their fleets for longer and more harshly (poorer roads, greater propensity to carry fully-loaded and over-loaded with passengers and likelihood of light and heavy accidents).

Thus Mascarello's business model has itself been moulded around the very real operational needs of its mixed-bag of export order customers.

[NB Mascerallo then itself illustrates Brazil's commercial role as 'bridge' between near-AM and second-phase EM nations worldwide].

Foreign Form Brazilian 'Transplants' -

Irizar -
[HQ: Ormaiztegi, Spain]

This company is a leading light in Spain's global commercialism, with 'transplant' factories in: Brazil, Mexico, South Africa, Morocco, India and China, with a best-year annual output of approximately 3,000 units.

Its Brazilian operation is located in Botucatu (like Caio Induscar) opened in the early 2000s.

This site was undoubtedly chosen because of Caio Induscar's parallel existence, any municipal support (tax breaks and incentives) and the long-time existence of Neiva SA (an aircraft company swallowed into the Embrear Group. (Embraer obviously additionally seeks to gain from a skills-transfer of the locally grown 'fit-out' capabilities from Bus to Aero).

[NB It should be noted that 'layout design', component specification and labour intensive 'fit-out' of small and mid-sized aircraft are not dissimilar to coach and bus. Thus the locally grown skills from CAD operator to build technician could be transferred between Neiva and Irizar if one sector unfortunately experiences a cyclical downturn].

Botucatu has become a centre for Bus and Coach production, with undoubtedly a high potential for higher-value specialist work prior to the manually intensive production phase.

Thus Irizar will follow in the footsteps of VW, FIAT, GM and Ford by creating incrementally deepened Design, Research, Engineering and Prototyping capabilities within Botucato, with a high likelihood that as much as possible can be learned via technology transfer with the aeronautical sector, especially regards weight and rigidity for fuel-efficiency, safety-handling/accident avoidance and ride comfort, seating development and even perhaps 'automatic pilots' on uninterrupted trans-continental overland routes.

Additionally, Irizar owns two sub-companies (ie air-conditioning and ramps) as part of its own vertical integration chain, this a likely rationale for Brazil's indigenous body-builders.

Domestic Chassis-Cab Producers -

Agrale S.A. -
[HQ: Caxias do Sul, Rio Grande do Sul]

'Agrale' is a portmanteau of the full and proper name of 'Agram Tro Le' S.A, the company created in 1962 with the remit of manufacturing tractors. Since then it has become perhaps the de-facto heartland of Brazilian industry, with a span across:

- Tractors (and adapted variants)
- Trucks
- Chassis-Cabs (Bus and Coach)
- Off-Road Vehicles (Military and Private - various)
- Generators (Large Static to Small Mobile, and Ancilleries)
- Fork-Lift Trucks

The product span is diverse spanning agricultural, industrial and transportation, with an historical strategic remit to effectively provide for Brazilian industrial independence, that mantra since much exported elsewhere.

The corollary across such a broad vehicle portfolio is obvious, learning taken from one sector into another, whether that be durability from tractors to trucks or comfort from trucks to tractors and much beyond.

To this end Agrale SA has acted as a major contribution towards technical transmittance regards improved costs and quality.

As per Chassis-Cab production, all bus segment sizes are catered for to the Euro V level. However, all powered chassis are front engined (thus akin to the under-structure of the military trucks). This older style – compared to rear-engined large vehicles - is the generally preferred placement for operators seeking lower purchase costs who run vehicles in more demanding conditions, whether rural or mountainous, because of the better balance and traction offered when the vehicle is partially and fully loaded.

Thus it is assumed that Agrale SA is typically dedicated to such needs.

The most interesting aspect is that the company has grown to become the only Brazilian chassis-cab provider, and though seemingly 'old-fashioned' has honed product from experience to suit the further reaches of Brazil, LatAm and much of developing world beyond the biggest EM countries with indigenous truck-makers (India, China, Russia etc).

This is true of today, but it may be the case that at some point in the future that Agrale identifies an opportunity for a rear-engined chassis with tied-in service contracts made available as an entry-level basis for what might be described as lower-lifecycle cost 'BRT' schemes in various second and third tier cities across EM nations seconding to replicate (on a budget) the schemes seen in leading countries.

Domestic 'Package Integrators' -

Comil S.A. -
(Mascarello Group)
[HQ: Erichem, Rio Grande do Sul]

'Comil Carrocerias e Onibus' was established in 1985 when it – backed by the Corradi and Mascerello families - bought the 'fire-sale' assets of the bus producer Incasel via auction. The old model products were continued in low volumes at the original location whilst a new factory was built in the newer designated Industrial District of the city. The turning tide of an improving national economy underpinned increased success, whilst in 1991 export orders were gained to Argentina and Chile.

Comil is effectively an 'integration specialist'. It buys-in high-value module sets and component parts from dedicated foreign suppliers, whilst manufacturing in-house the lower-value components so as to have a full inventory of items by which to build a complete vehicle.

Present procurement of powertrain comes from Mitsubishi's Fuso division, which obviously points to possibilities of follow-on procurement from Toyota's Hino or Isuzu Truck so as to maintain high quality levels in core engineering systems, whilst improving in-house capabilities for other systems and parts.

2004 saw export orders to the Middle East and the start of a new line of 3-axle coaches, thus providing for a broad portfolio of alternatively sized vehicles and uses.

Today, in a typically Brazilian corporate manner, Comil espouses its CSR and Ecological consciousness which vitally underpins the image that the Brazilian government seeks to promote both at home and abroad.

In Conclusion -

Brazil well recognised the competitive advantage of its bus-building sector, which is able to span both AM and EM realms. As such in the lead-up to the Olympics and Paralympics it sought to further distinguish itself by creating and demonstrating world-class vehicles with a value proposition.

Those vehicles were seen and experienced first-hand by visiting foreign government officials, the influx of foreign tourists and business people.

Part of that grand export ambition was especially dedicated to (all too ironically) the notionally ovetly 'advanced' USA, given its far greater focus on public transport relative to re-urbanisation trends and its own tardiness in catering for the physically disadvantaged on public transport.

But the major aspect of the 'Rio Infrastructure Showcase' was to illustrate its capabilities to the plethora of “path-finding” EM countries, so that it may further raise export relations. And a prominent aspect of this strategy is the need to fulfil the public and private mass-tyransit needs of the world's emergent Mega-Cities: the 'network nodal' city centres, expanding suburbs and rural connections.

Thus Brazil championed and “highly articulated” the snake-inspired “Mega-BRT” system, which when derived from good, well planned and executed road and infrastructure planning allows for the speedy movement of millions of people per day.

To this extent it should be reasoned that projects such as the original 1960s Brasilia and the 2000s “Mega-BRT” have set the template for the 'long-view' planning of many EM nations.

As necessary, the Brazilian body-builders/retailers have expanded their own offering to include an ever improving 'Sales and Service' dimension, such support perhaps especially vital to overseas buyers who inevitably require experienced hand-holding for years into the future.

This spans a) technical assistance, b) maintenance advice, c) service and repair parts provision and d) dedicated product operation and technical training.

To this end, the Bus and Coach sector espouses the best of Brazilian global brand-building.

Sunday, 27 November 2016

Micro Level Trends – Brazil's Automotive Sector – “Brazil 66”...Sixty Six Years of Economic Power Lifting (Part 4.5)

(Prior to this weblog's continuation, a message of condolence to all affected by the recent air-crash reported in Colombia, that took the lives of Brazilian football players, staff, journalists and crew).

The previous section highlighted how the apparent ideal of nurturing a truly indigenous auto sector would provide an avenue toward notional national independence.

However, it was also recognised from the late 19th century onwards that Brazil would not fulfil its broad economic potential if their was sole reliance upon Brazilian assets and its generally inferior domestic technical capabilities.

As with elsewhere previously, steam-power, rail-roads, the internal combustion engine and electrical generation massively progressed the commodities based economic miracle in the period, with similar advancements simultaneously transforming Japan (which like Brazil gained much from German, and American, cross-fertilization.

But it would be the speed and leap-frog economic gains of German, Italian and Japanese post-WW2 reconstruction, assisted by capitalism, more efficient methods and new technologies that would serve as the continued development template.

And although Brazil had not been decimated – indeed it partially thrived in comparison – those revolutionary changes to the broad economies elsewhere in commerce and the populace's much improved quality of life, could not be ignored.

Yet likewise, to avoid absolute dependence, there had to be a cultivation of indigenous assets and capabilities, those resources that were physical, technological and intellectual.

Thus, although Brazil quite understandably sought to delineate a degree of self-independence, as exemplified by hydro-electric power and ethanol fuels (their low eco-impact and cost-savings indisputable compared to the immense gains) the fact remains that beside such engrained knowledge of such disciplines, up until the beginning of the 21st century Brazil's own internal capabilities had lagged behind, specifically in both:

1. advanced technology creation (Autos to IT to Aero)
2. the mass-manufacture of mid-value and high-value, complex products and services

The astounding advancement of the USA, Europe, Japan and South Korea across the respective breadth of the 20th century, promoted by technical research backed by capitalism, meant that up until the 1990s the so called BRICs had become even greater laggards to the Old West and New East. (Indeed the commercial confluence of both 'supercharged' that development).

Thus whilst always promoting nationalism, all the past and present governments of Brazil have recognised the advantage of international relationships, and obviously sought to broaden its capture of the add-value ladder, from base mineral and agricultural commodities (mined and farmed with greater scale efficiencies using foreign equipment or IP) through to self-eduction into the realms of such disciplines as low construction cost cars in the 1960s, and fifty years on, 'digitally intelligent cities' today.

Most pertinently, whilst the geography and spirit of of Rio de Janeiro, Brazilia and The Amazon are the merged face of Brazil to outsiders, undoubtedly it was the automobile that enabled and altered life so much that it became central to the developmental spirit and so true persona of Brazil.

Undoubtedly it was the snowball and avalanche impact of GM's and Ford's trucks, VW's Fusca / Micro-bus / Brasilia / Gol and FIAT's 147 / Uno / Palio that instigated the developmental ambition; spanning much from B2B research and development through to B2C modernised retail models and much expanded consumer financing through to C2C brand-centric tribal affiliations.

Thus whilst vehicles like the Brasilia Gol or Palio may appear identifiably Brazilian, it was globalisation that enabled such nationalistic creations.

6. Multi-National Companies and Globalisation

As now well recognised, the economic boom of the 1990s founded upon the commodities super-cycle, led to MNC's and domestic producers considerably expand consumer choice, from FMCG to 'big-ticket' items.

Aspirational everyday brands, the uptake of widespread auto-ownership and the later gradual but prolific impact of internet have together altered the commercial and social landscape of Brazil; the country had at last once again “has come into its own” by the turn of the millennium.

However, the foundations of such economic success had, in part, been formed by the industrial rationalisation effect of the far more austere 1980s. It was in that era that VW and Ford recognised the need to combat FIAT's growing success, creating 'AutoLatina' to do so.

AutoLatina -

This was in essence a four-part Joint Venture between the seperate operating companies of VW and Ford in Brazil and Argentina - 51% was held by VW and 49% by Ford.

Obviously created to effectively minimize costs across the board whilst maintaining a feasible Brazilian and Argentinian market presence in cars and trucks during what were problematic times.

Mutually beneficial product substitution was the prime focus via a necessary strategy of cross-companies 'badge engineering'. To this end in the cars realm we saw:

1. the European derived 'B2' Passat introduced in 1984 was given an extended life as the first JV vehicle in 1991, badged as VW Passat and Ford Verseilles/Royale (sedan/estate); with facelifts in 1994 and 1998. It was discontinued in 2002, thus giving 18 years service.

2. the European Ford Orion used as the platform basis for vehicles named the Ford Verona and VW Apollo, sold between 1989 and 1993.

3. the newer Escort (Mk V) used between 1993 and 1996 for the new Ford Escort and VW Pointer and 2-door VW Logus

It must also be recognised that 'AutoLatina' was established with not just the Brazilian and Argentinian markets in mind, but as the hub for broader cost-controlled exposure to the rest of Latin America. It was understood that these mainstream vehicles could remake the names of VW and Ford in the Southern and Central Americas; offering good quality (though not cheap) cars with pricing constraint helped by high volumes, even if the individual markets themselves at the time were relatively small.

The creation of 'AutoLatina' allowed the Wolfsburg and Detroit partners to appreciably drive down costs through either the much longer length of a product's lifespan, as with the near two decades of the 'B2' Passat/Verseilles', or by utilising the 'Global Car' ideal and so international economies of scale, as with both Passat and Escort.

[NB the 'B2' Passat gained enormous scale economies, and so worldwide pricing flexibility, precisely because of its voluminous manufacture in China, where it became the de facto trusted vehicle by taxi drivers, government and wealthier families of the period].

This expansive and pervasive approach to 'baton down the hatches' during recessionary times allowed for the latter-day enlarged revenues of the 1990s to be immediately injected into operational and strategic re-expansion projects aswell as the 'bottom line'. So providing for: availability of more product types, the part-corporate financing of new franchise dealerships, much improved press and TV marketing, growth in cross-departmental headcount and critically decent reward for shareholders at both the local level and the parental firms.

Lasting until 1994, the JV's 'concentration of contraction' provided the basis for the impressive corporate rebounds as strong and continually strengthening de-merged independent entities between the boom decades between 1994 to 2014.

In turn this generated a large multiplier effect for local, regional national and pan-LatAm economies, the greater advantage going to Brazil itself.

The next developmental revolution, that of 21st century Information Technology, would also in great part be spawned by the globally connected local auto-sector.

The Introduction of IT Enabled Global Planning -
(ITC and CAE: CAD-CAM) -

As early adopters and advocates of IT, the automotive MNC's (Multi-National Corporations) operating in Brazil were ostensibly the initiators, vanguard and 'preachers' of IT based productivity enhancements.

Though adopted noticeably later in Brazil as a consequence of market dynamics and thus delayed need, the requirement to act quickly to respond to PESTEL change meant that in the late 1980s and early 1990s the new world of Information Technologies could be deployed to appreciably assist both the need to quench new consumer automotive needs and to (in of itself) create new value-added services which appeared higher up the value chain.

That embraced electronic age allowed Brazil to leap into a new era of product research, design, development, manufacture, distribution and retail. It was as if internal development capabilities of the sector – and thereafter other sectors - had suddenly shifted from that of the 1960s into the seeming 2000s; the transformation was so dramatic.

So whilst the Brasilia, Mk1 Gol and 147 Panorama are recognised by as the Brazilian 'originals', the de facto 'originators' of the highly integrated process that is modern industrial Brazilian design and build, were the Mk2 VW Gol, the localised FIAT Uno and the Palio.

It was these vehicle programmes that properly captured the advantages of the then new digital age, as the new and burgeoning research and development centres used new age communuications equipment – from the fax machine to the super-computer and a myriad of international satellite servers and terminals – to revolutionise the design-development process of Brazilian made cars.

The result was that Computerised Aided Design, Computer Aided Engineering and Computer Aided Manufacturing was absorbed far quicker in Brazil than previously seen elsewhere, where it had had to be learned 'first hand' and as the IT disciplines themselves slowly emerged.

Instead after the year 2000 the combination of both social trends and corporate competitiveness rapidly changed the country's industrial landscape. The conjuncture between a younger tech-savvy workforce able to learn quickly and proficiently (so themselves technologically accomplished) and the need for EM located corporate divisions to better technologically align themselves with typically more advanced IT capabilities at their HeadQuarters, meant that the pace of change was unprecedented.

[NB it must be recognised herein that those tech-aware youngsters were usually the fortunate sons and daughters of the old (ie bureaucrat) middle classes. And that the majority of such IT learning – in Engineering and Design at least - was not from colleges / universities (themselves with only basic IT ) but whilst within the corporations themselves].

The foreign auto-producers themselves recognised (and still recognise) that then, as now, and into the near future, it is they who must take on the role as primary educator.

Nevertheless, as seen, such enthusiastic young people were able to quickly learn those digitally based processes and methods that had themselves been created in the USA, France and Germany; from the pan-departmental use of Microsoft's Office (in American English and Portugese) to Engineering's use of Dassault System's CATIA and AUTODESK to NX CAM from Siemans.

[NB the larger global providers such as Dassault and Siemans long since expanding their integration into corporate methods by offering much expanded Product Lifecycle Management IT beyond design, engineering and manufacturing, to span the full value chain from raw material to recycling or disposal].

For the Brazilian divisions of both the major volume vehicle producers and their locally based domestic and international supply-chain, by the mid 1990s Product Development process itself had transformed. From that of previously being ostensibly 'serial' (ie the secondary re-engineering of a European platform, as with Uno) to the truly 'parallel' (ie the simultaneous engineering of a complimentary EM platform, as with Palio).

Globally reaching IT had enabled the decades-long ambition of creating congruent yet necessarily altered product offerings from a component set with high degree of commonality in as quick a time as possible.

That allowed for greater correlation to the ideal of more accurate Product Planning which in turn allowed for better Manufacturing Planning, whereby the higher scale of manufacturing volumes could be used to drive down Procurement costs, whilst speedier Engineering Development (itself increasingly computerised with 'digital mules' etc) also ensured greater internal cost efficiencies, from manpower to capital expenditures.

However, this IT advantage was initially approached differently from within the respective VW and FIAT empires.

The VW Gol Mk2 of 1994 was an update version of the previous BX platform, with much change in a lengthened wheelbase and more curvaceous exterior. Thus VW's ideological approach to digital technology investment was effectively about altering and honing much of the given 'carry-over' sub- structure to further amortise the costs of in-place tooling and equipment.

This lesser demand of its digital processes meant that it could 'up-skill' the back-end of its Brazilian engineering workforce, to ensure a more seamless transition between the Product Engineering and Manufacturing Engineering functions, especially regards the increasingly important issue of cosmetic appearance, 'fit and finish' etc. Thus instead of re-inventing the fundamental 'wheel' (the complete platform itself) instead better to improve the customer's perception of a quality vehicle. This then points to a high degree of 'answerable autonomy' in the period by Volkswagen do Brasil.

In contrast on the new Palio of 1996, FIAT Automoveis was required to wholly harmonise with the Global Product Planning, Design and New Programme functions in Turin, Italy. To maximise the competitive gains super-computing could bring, in time / speed / quality, it was believed that the EM dedicated Palio must be created with as broad a geographic input as possible to ensure the vehicle's capability and thus brand credibility. Furthermore it would allow the programme to be run
in sync with its AM segment siblings so as to contrast and compare engineering solutions for relative performance and cost. The programme was named the “Project 178” and would essentially be “all new” itself subtly mechanically altered for specific variants (hatchbacks, sedan, estate/wagon and 'ute') which would cater for a myriad of different customer types and respective needs.

The enormous co-opted and mutual learning from HQ in Italy on Palio was a vital stepping stone toward the successful time-cost-quality execution for the later “all-Brazilian” Novo Uno introduced in 2010. As the replacement for the old (and near legendary) Uno it was expected be an “Uno +” and the 'novo' (new) model was indeed so. It had to be bigger and stronger to meet the needs of volume-hungry users (for loads and feeling of spaciousness) and to still be able to tackle the outer and upper geographical reaches of Brazil, broad LatAm and the Rest of the World.

As such its regional research regards use and marketing was the most comprehensive ever, as was the prototype and 'first-off' test regime. Thus where as previously Brazilian NPD familiarity had been regards structural and aesthetic quality, and the match to manufacturing, the Novo Uno project would see greater engineering research (from normative competitor tear-down to far more 'in the field' user demands), so melding greater marriage of Marketing Research, Design Research and Engineering Research.

The other local MNC's of Ford and GM similarly sought to deploy IT and more relative to their specific strategic market and product lifecycle requirements, with a likewise snow-balling of Reasearch and Development capabilities as ambitions grew greater over time to meet a much expanding market, competitive threats and consumer expectations.

Thus GM do Brasil introduced it in the VW manner when re-skinning Corsa as the upgraded Celta, concentrating upon the 'back-end' of the project to create an improved quality vehicle with considerations of shut-lines, 'A' surfaces, interior and exterior plastics etc.

Expanding the local Engineering team at the turn of the century allowed GM do Brasil to create a joint development project for a small MPV with GM-Opel in Germany. The result was the Meriva Mk1 of 2003, which whilst luke-warmly received in Europe provided the Brazilian young family with the near-perfect motoring solution. This project was the big IT and Quality learning curve for GM Brasil.

However, the toward the end of Meriva's lifecycle GM do Brasil recognised the need to create a true EM orientated product, better suited to other less developed countries than Meriva, and enlarged to enable 7 seats and create a “Zafira for the EM-world”. Again its Engineering capabilities grow significantly as it sought to self develop the new Spin, launched in 2012 in Brazil and simultaneously produced in Indonesia as of 2014.

Ford do Brasil's first efforts at a self developed vehicle was the modification of the European Ka (Mk1) launched locally in 2003. This the primary 'localisation' effort was the alteration of the rear hatch and lamp housings, so allowing the then relatively small engineering staff to undertake small acclimatisation design projects across the span of: sheet metal (inner and outer), plastics and glass. This also allowed for improved local supplier input and relationships, and was key to establishing the next far more locally important Ka (Mk2).

The new Ka of 2008 was effectively a Brazilian designed model so requiring a large 'ramp-up' in engineering talent for its development. This model fundamentally altered over its predecessor in size, engine capacity and additional seating, so as to move up a segment from the A-segment into the B-segment. In design and engineering terms this was Ford do Brasil's 'Independence Day' leading to its becoming 'on-par' (in terms of functions if not scale) with the Development centres in the USA, Europe and Australia by 2010 or so. (Indeed the European division had undertaken a JV with FIAT using the 500 base for its small Ka replacement in 2009).

In 2014 the new Brazilian Ka (Mk3) was launched, appreciably bigger that its European-designed cousin it was derived from the old generation Fiesta, and with a broader span of engine capacities and fuel types, this model demonstrates the world-class skills of the Brazilian design and engineering teams. Reckoned to be a good-value proposition for Europe aswell it has recently arrived as 'Ka+', to expand the entry level offering.

Thus as we see, though still closely connected to their respective HQ's, the Brazilian arms of FIAT, VW, GM and Ford have adroitly illustrated themselves as the curent deep-knowledge centres of EM attuned global 'converged product' engineering.

Paving the Way into Global Automakers -

Brazil's entrepreneurial realists recognise the fact that in an ever more trade connected world with ever greater consumer information about product quality (born from costly research and development), and critically the increasingly inter-connected web of capital markets, that trying to beat the world's entrenched, massive and powerful major auto-makers is a “fool's errand”.

Failed attempts with the likes of Malaysia's Proton and Perodua and the limited local regional success of Iran Khodro illustrate that trying to create a world-beating EM originated vehicle producer is nigh on impossible. Whilst massively supported initially, both Proton and Perodua have each stumbled to grow beyond their national boundaries in any meaningful manner, whilst, as seen, Khodro's maintains its more pragmatic method of 'badge-engineering' other's vehicles with Gol the latest incarnation of that tried and tested (if indeed overtly local) approach.

To this end, the acutely aware local entrepreneur with internationalist outlook, will instead seek to create a national brand and product(s) which will eventually be easily absorbed into a major player's vehicle portfolio.

Herein, indigenous and Regional ventures of such an ilk have come into fruiting and been promoted in the Brazilian media through news stories, dedicated 'roadshows' and advertising.

The indigenous company Troller was established in the early 1990s, with its Jeep-like T-series (now refreshed and very visually appealing in its 4th generation) has seen success and is being heavily marketed. But its generic mid-size truck [eg Ford Ranger] the Pantanal appears to have been discontinued. Tellingly, now as a Ford unit, it is Ford Credit that is underpinning many of the Troller's sales.

Troller then depicts how indigenous companies who originate as local niche or specialists can and should be developed to, when brought under the wing of, or in association with, MNC's can provide suitably aligned targeted product to the world.

Toward the Bigger 'Value-Pyramid' of Tomorrow -

As is well known, many products sit within a broad 'pricing-pyramid'; one which encompasses a mass market price-sensitive base, a sizeable middle which balances quality and price and a top which provides premium qualities.

Half a century on from its truly tractable beginnings, Brazil has successively moved through the lowest and middling phases, with the 2000s seeing a meaningful growth in imported premium vehicles from Germany, Japan, UK and Italy.

Thus the upmost echelon (the peak) of the pricing-pyramid has also become normative for a fortunate thin slice of Brazil's entrepreneurial talent.

However, as seen with much from IT to Retail, given that globalisation has untapped much thus far, and that there remains still much future potential as a leader of the EM world and intersect with the AM world, the fact is that Brazil's complete auto-sector pyramid is set to grow larger and larger.

At its base new entrants such as exemplified by Effa Motors. Based in Uraguay it imports and rebadges a range Chinese manufactured vehicles (from differing brands) for 'finished assembly' and regional market into various Latin American countries. Recent soft-protectionist actions to deter such imports will undoubtedly succeed in the near-term to keep poor quality and copy-cat products at bay; but it seems probable that 15 years or so into the future, with improved quality and non-copies, Brazilian-Chinese and Brazilian-Indian joint ventures will be manufacturing vehicles for those people who require more affordable, low-end, mobility.

In the mid-ground, as seen from foreign interest levels, more of the European firms, Japanese and S.Korean firms will seek local production for their own 'glocal' vehicles. Albeit small, Renault's own Brazilian design team helped co-conceptualise the radical cross-over coupe 'Kwid' as an offering to a multitude of EM nations. Developed with creative input from Renault's satellite design centre in India, and first shown at the 2014 Delhi Auto Show, the well finished concept vehicle itself was obviously a PR exercise for the brand 'glocally'; and vitally a segue for the recently launched 'Kick' X-over. Others have since shown such interest to make their similar marks across EM countries. Thus the mid-ground will inevitably attract more diverse brands and products as the middle-classes re-expand in the future.

And with any such economic expansion, the first to enjoy such fruits tend to be the more wealthy, at the forefront of business themselves. This expansionary trend thus propelling the interest of premium and luxury car-makers. So at the peak of the price-pyramid many a premium manufacturer has highlighted intent to enter Brazil for 'glocal' production purposes, able to enjoy expanding national and export markets, whilst gaining from a typical lower cost of labour; especially necessary for so called 'crafts-people tasks'. Jaguar-Land Rover seeks to massively expand its presence (as illustrated by its PR efforts of in-car celebrity coverage at Interlagos and around Sao Paulo). Its mix of luxury/status, AWD and security obviously seen to prime attributes the wealthy seek.

And likewise VW has seen great success with its expansion of Audi and Porsche into Brazil and LatAm, similarly Mercedes-Benz and BMW, with FIAT seeking Maserati, Ferrari and Alfa-Romeo's expansion in the markets. (These buoyed by the existence of Argentina's Pur Sang Cars which makes exact replicas of yesteryear marque icons such as the A-R 8C). As wealth grows so will the consumer base for luxury goods companies (including the now embraced “things automotive”). Under this idiom, if deemed suitable and profitable, Aston-Martin could indeed set-up yet another new assembly plant (for CKD kits) from Wales to Brazil.

To Conclude -

To end, the point is that even though the Brazilian government is seemingly becoming more protectionist so as to re-direct the possible outward flow of investment monies back into the country – and especially toward higher-value activities – the fact remains that historically Brasilia has well recognised the importance of the connected globalised economy.

So as to provide very necessary commercial diversity that can further strengthen its already broad interests from base raw materials right through to scientific instruments and services. And moreover, foreign automotive input has always played a leading role, whether policy was notionally written as 'closed-door' or 'open-door'.

An analogy is that of F1 driver Felipe Massa's recent (and abrupt but very gracious) retirement.

Just as one door apparently closes so another (closely connected) opens. Thus it would be good to see Senhor Massa become an Ambassador for Brazil's future technological aspirations and efforts.

Aspirations that should be married to the technical ambitions of both domestic and foreign 'Technologists' (such as Williams', and McLaren's hi-tech divisions) and those of the bigger MNC's, so that Brazil can continue to wave its flag with grand ideals internationally.

Sunday, 13 November 2016

Micro Level Trends – Brazil's Automotive Sector – “Brazil 66”...Sixty Six Years of Economic Power Lifting (Part 4.4.2)

Formula One arrived at Interlagos this weekend and Brazilian GP fans can gaze upon the re-generative hybrid power-trains mated to ultra-expensive carbon-fibre tubs and panels designed for mass, aero and impact.

Fifty-two years ago the circuit witnessed a landmark event when a DKW-Malzoni GT was rebodied in what was then the first local example of a new and revolutionary material...Glass Reinforced Plastic. 

GRP went on to provide the foundations of the small but truly indigenous Brazilian auto-sector for the next thirty years.

In today's global political climate of increasing national protectionism (as already witnessed in Brazil with new 'back-door tariffs' against inferior Chinese and Asian goods) it is useful to review the events of the past, to mould policy that obtains the best from both globalisation and self-reliance.

Given its contribution to the Brazilian economy as regards national employment and export earnings, the automotive sector deserves special governmental attention.

Economics/Ecology Within a National/Global Construct -

As explained at the beginning of this long, topic dedicated weblog, since the country's formation during the various bygone eras when Brazilian export trade contracted, and national economic fortunes likewise constrained, many believed Brazil must become both more self-sufficient and vitally raise the inherent value-added of its export base beyond high volume low earning general commodities.

This long held attitude amongst 19th century industrialists was further prompted by the UN's ECLA (Economic Commission for Latin America) after WW1, and as seen over the last century and well recognised since WW2. Brazil quite obviously did indeed sprout a multitude of new economic tentacles to climb the added-value ladder, both at home and abroad, which now span an array of topics: from consulting services to other EM nations about its highly successful Sugar Cain derived Ethanol policy, to the use of the Rio de Janeiro template for likewise instigating web-enabled 'intelligent cities' again at home and abroad, to the its protection of the Amazon Rain Forest and a so a persona of guardian of Giai (Mother Earth).

In latter decades, and ahead of others, Brazil's considered use of its natural resources and as sympathetic as possible industrial consciousness led to eco-orientated projects, these arguably led by the enormous Itaipu hydro-electric dam which when created in 1984 providing power via twenty sub-stations for Brazil's new era of cleaner industrialisation.

As shown, that dam was the inspiration for much in the auto-industry, from the creation of a radical all- electric city-buggy, to the ability to deliver reliable and variable power to a new cohort of incoming global auto-makers, themselves beacons of Brazil's successful FDI initiatives.

Self-sufficiency became a popularist perspective, especially after the trade deprivations of WW1, WW2 and the impact of the 1973 Oil Crisis. But beyond the desire for independently produced transport fuel, by the mid 1960s Brazil also sought to create its own, necessarily alternative, passenger car and light truck solutions.

Unlike the strong rational for partial (ie blended) self-supply of transportation fuel (to absorb oil supply and price shocks) the rational behind Brazil's own wholly indigenous automotive industry has proven to be, if not faulty, then perhaps over idealistic. Though without doubt, for a period between the late 1960s and early 1990s it was a commercial goldmine thanks to propagation of the national interest.

However, although for a period there was impetus and success, the technical and scale short-comings of that necessarily alternative route would eventually become self- evident, and ultimately even what was a niche corner of the vehicle market would shrink to becoming today almost invisible.

That necessary route was of course based upon a requisite “low cost” mentality and mantra. Yet it also led to industrial learning and application which provided, for a time, national pride.

Such efforts toward new competencies should be re-ignited today as Brazil seeks to bolster its role as vanguard of EM progress and a participant in AM commercial and consumer demand.

Low Cost Vehicle Construction :
GRP (Glass Re-Inforced Plastic) and 'Plasteel'

As seen previously, the story of state-owned FNM as Brazil's 'national champion' was primarily regards heavy goods trucks and much subsidised support for likewise licensed manufacture of a premium passenger car. FNM products were essentially advanced European vehicles that had been born from the fruits of Italy's own rapid post-WW2 reconstruction era.

But the end of FNM by the early 1970s, sold to Alfa-Romeo to encourage (and succeed) in further Italian FDI, meant that (like VW, Ford and GM) truly advanced engineering would remain in the hands of the major auto-players who earned their major income elsewhere and were able to re-invest to maintain business propulsion worldwide.

Advanced Materials to Mirror Advanced Countries

Consequentially, it meant that any idea of a Brazilian-own vehicle or brand would have to be predicated upon a very different business case and associative technologies, domestic affordability right through the value-chain, from raw materials to recommended retail price, vital to commercial success at home, and possibly abroad.

Given the explicit and implicit promises made by Brasilia to incoming foreign producers, the rejuvinated homeland effort would need to target the remaining available 'white space' within the national market. In practice this meant effectively those areas which the government procurement process could plausibly favour (in the nation's interest) and a small self-created sliver of the commercial and private arenas in which the big players had no or little interest.

This inevitably reduced the home-grown to a quite specialist 'niche vehicle' sphere, and the idioms of simplicity to aid cost reduction meant the deployment of very contained capital expenditure offset and supplemented by the considerable use of cost-attuned manpower.

The business model was to be a practical adoption of the examplar 'case studies' as proven in both America and Europe, and would be based upon the extensive use of 'fibre-glass', or glass re-enforced plastics' (GRP).

Yesteryear Background -

The science behind GRP had been essentially re-born in the early 1930s in the industrial laboratories of American glass-makers, having been previously discovered in Germany, but not developed, during the 1910s. When blown with a powerful air flow, molten glass could be formed into tiny globules which themselves could be set into long strands, which in turn could be rolled-up (like the silk-making process) and/or could be set into a matted form.

[NB Both the rolled-strand and cross-overlaid mat would later inspire the creation of carbon fibre].

This mat would be laid into a mould. This could be either a single part 'female only' type, or a double part mould with both 'female' and 'male' parts brought together. After a release-agent was brush-painted into the mould the matting would (in the case of a female-only mould) be brush-painted with a cellulose based liquid so as to soak into the matting and harden in the respective new shape. For more tolerance critical objects a male-female mould would be closed and securely clamped with the matting obviously enclosed. Into this, via a small input hole, the cellulose liquid would be gravity fed or pumped, so filling up the internal chamber and fully soaking the fibre-glass matting.

The new object would be released and trimmed of excess material and typically painted to provide a better harder and coloured ('A-surface') finish.

The method was productionised within a limited scope in WW2 when applied to sections of aircraft fuselage and internal fittings, alongside a far greater use of transparent acrylic 'Plexiglass'. However, because of the long mould curing time, and so slow productivity rate, and the limited number of recognised applications, the GRP process had little real-world impact for US military and civilian organisations during WW2.

This would change dramatically in the post-war era, when in a new climate of advancement, cost-consciousness and experimentation, a raft of new applications were identified within firstly American and thereafter European industries – primarily across the 'hi-performance' realms of private light aircraft, private marine and performance orientated automotive.

But as seen in Brazil it was also deemed the appropriate answer to the first modern attempts of low cost transportation and zero or low emissions eco-mobility.

However, the beginnings of automotive GRP was not in the lowest social quarters, but the highest.

In the automotive realm, even though Henry Ford has experimented with soya based plastic skin panels (hoods and trunks) in the 1940s, the first prominent product was General Motors 1953 Corvette. GM's engineers and designers well recognised the popularity, attributes and relatively high price tags of the small lightweight European sports-cars that had been imported by the US military officers after WW2. Recognising that such personal cars had become badges of 'taste' amongst the 'social set' that trend could be replayed GM set about creating an all-American car in size and style but with the key attribute of European ethos regards good power to weight ratio. To be built in smaller volumes and with high sticker price, the perfect technical solution was GRP, providing relative 'feather-light' build, a rigid enough structure and critically low investment spend on moulds and jigs. When added to the standard union rates for greater man-power content, break-even would be early and thereafter profitability greater than a standard steel-bodied vehicle.

The Corvette led the way in the “GRP revolution” (akin to the carbon-fibre revolution of today) and thus as an affordable (almost by-product) material it provided the perfect solution for a plethora of other new and updated automotive names; so as to markedly bolster the European and American supply of purist dedicated motorsport vehicles and as associated 'race-bred' lineage of 'personal- performance' cars during the economic boom times of the late 1950s and 1960s.

The first to properly broadly experiment with GRP elsewhere was France's 'DB' (previously Deutsch-Bonnet, and later absorbed by MATRA),who most interestingly had impetus to understand its uses not just in motor-sport but also in popular micro-cars; even though none were ultimately manufactured.

'DB' however has the (oft overlooked) accomplishment in retailing the world's first mid-engined sportscar – the Djet - in 1962/3 using a steel backbone chassis, GRP body and Renault components. Its inherent logic of “balanced low-mass” thus set the construction formula for the De Tomaso Vallelunga a year later and the Lotus Europa 3 years later. (Similar construction materials however had been used on the 1962 Lotus Elan).

GRP thus became the de facto body solution for lower cost, lower risk business templates. It was viewed by many, from informed engineers to shady 'get rich quick' entrepreneurs, as the perfect answer in transforming the automotive arena. The product formula of far lower production costs (vs metals) and much reduced 'sprung weight' meant it could theoretically be applied across a very wide price spectrum given thanks to the created 'product attributes'. From the rarefied delights of high performance in the higher price brackets, through to the stylistically unique for middling prices, through to more affordable (often alternatively propelled) mass-mobility.

Interestingly however, the route to GRP in theoretical mass-mobility did not for the most part come directly from sportscars ('DB' the experimental exception). Instead the material underwent technology transfer from the boating industry in which it was quickly initially adopted for small rowing boats, powered dinghys, small sail-craft and thereafter motorboats, launches to speed-boats. GRP suited the basic 'tub' design of boats (requiring only a large female mould) and so was quickly taken-up.

Motorcycle side-car producers recognised this as a very suitable technical route for themselves, and thus (as with caravans) allowed for a new sub-segment of lower priced products to be made for both motorcycles and even scooters. This trend was thought to be the natural solution for micro-car producers and so the likes of Britain's 'Peel Engineering Co' amalgamated GRP and motorcycle power to create what it though would be a new generation of popular micro-cars.

However, it was perhaps only the UK's Reliant Motor Company in the 1960s onwards and later France's MicroCar Company in the 1980s onward who would gain success with GRP enabled affordable mobility. Primarily thanks to the PESTEL peculiarities of their respective home nations.

[NB Indeed MicroCar was formed because of the boat-making core competance of its parent, the Beneteau Group].

The Perfect Economic Fit -

With the high start-up costs of major auto manufacturing undertaken by, and thus dominated by, VW, GM, Ford and FIAT and the undoubted planned transfer of state ownership of FNM into the wholly private hands of Alfa Romeo, a new route for truly 'domestic automotive' was required.

The combined adequate rigidity of GRP structures in specific land, air and marine use, together with the innate flexibility of (theoretically very adaptable) associated business models thanks to low start-up costs and the adaptable nature of production provided the ideal basis for what was assumed a myriad of opportunities and spectrum of business approaches.

This would range from periodic and piece-meal manufacture for higher priced rarefied vehicles in sports and luxury segments, to the nigh on continuous relatively high output of utility type products.

Moreover, critically GRP niche production was well recognised as being the polar opposite of conventional big production. And with that came locational and re-locational advantages, with the ability – as circumstances require – to either: a) follow the low cost curve on a town by town or region by region basis (akin to globalisation), or b) take advantage of local state and municipality subsidies to attract light industry into development focused areas.

Thus it was wholly unlike a permanently fixed location of an 'in-situ' mass-manufacture vehicle plant, with required geographic proximity to high electrical power generation / feed, the closeness of its prime supply Tier 1 supplier-base and the requirement of good infrastructure to aid speedy and reliable logistics.

The innate GRP process allowed for what seemed an infinite possibility of regional development possibilities. It was then no surprise, that having seen the futuristic product advances in the US and Europe and the impact of such a business model on local areas that the Brazilian government sought to prompt commercial uptake of GRP production – it was an absolute 'wonder' as regards:

1. the myriad of shapes and sizes the material could be moulded into.
2. the differing forms that associated business models could take.
3. the positive impact upon the local economy.

In the mid 1960s Brasilia had undoubtedly, from afar and perhaps close at hand, looked at the local development impact of various examples.

These included:

USA: GM's Corvette in Bowling Green, Kentucky...Studebaker's Avanti in South Bend, Indiana.
UK: Reliant Motors' Regal production in Tamworth, Staffordshire....TVR's Grantura/Vixen production in Blackpool, Lancashire....Lotus' Elite/Elan/Europa production in Cheshunt, Hertfordshire.
France: Matra's M530 production in Romoratin-Latheny, Simca's non-productionised exploration of GRP rear panels and whole body for the 1200 coupe (which could have altered its demise) in Poissy.

And perhaps most interestingly another much changed and developing country had deployed GRP as the foundations for its own second attempt at a national car.

Turkey: Otosan Anadol's production of the A1 saloon, coupe, the P2 'ute', (and later STC-16 sports) in Istanbul (using Rootes and Ford mechanicals).

By the mid 1960s then it had become well understood that GRP dedicated manufacturing companies (ranging from cars to boats, planes to caravans, utility furniture to container silos) could have a major economic impact upon out of town areas which had been fundamentally economically altered by the mechanisation of agriculture, and had been too far geographically remote to gain from the ongoing growth of conventional town-centric and city-centric industrialisation.

Here was an industry suited to the provinces and could help soak-up the surplus of untapped labour therein, and help revitalise more rural areas.

In Europe the impetus for such innovation would consist of a typical mix of both private and state funding / subsidies, the level of the latter dependent upon the political 'big picture'.

Thus for the post Kubitschek governments in Brasilia seeking new economic platforms for the more overlooked suburbs and regions, the idea of “Plastic Cars” became a very tempting policy route.

The Past Examples -

As depicted previously, even though small in ultimate numerical output, Brazil's niche vehicle production ultimately spanned a period of just about 30 years. It was effectively opened and closed by the sporadic activities of the Puma Motor Company between 1966 and 1995; with a heyday during the 1960s and 1970s.

To recap the prime examples of GRP founded business models were:

1. Brasinca Veiculos SVT S/A – located in Sao Paulo City (1964 to 1967)
2. Puma Motores S/A – located in Matao of Sao Paulo State (1966 to 1995)
3. Gurgel Motores S/A - located in Rio Claro, Sao Paulo State (1969 to 1993)
4. Miura Motores S/A – located in Porto Alegre, Rio Grande do Sul (1977 to 1993)
5. Lafer Motores S/A - located in Sao Paulo State (1974 to 1990)
6. Santa Matilda Industriel S/A – located in Rio de Janeiro State (1978 to 1995)
7. Farus Motores S/A – located in Belo Horizonte, Minas Gerais (1979 to 1990)
8. Dacon Industriel S/A – located in Sao Paulo State (1983 to 1994)
9. JPX do Brasil S/A [EBX-Auverland-Panhard] – located in Rio de Janeiro (1992 to 2002)
Each of these enterprises sought to exploit what were considered untapped potential for a majority or complete 'home-grown' Brazilian vehicle in specialist arenas.

These depict initial exploration of GRP's use on major panels with the Brasinca SVT 4200GT (a very good evocation of a truly luxurious personal car in the manner and style of its inspiration, the all-GRP Studebaker Avanti of the period), through to very speedy broad technical and commercial acceptance of the basic material for complete body structures, as per the Puma et al in sporting guise, and the early offerings from Gurgel.

Gurgel's Reactionary Pragmatism -

As shown previously, the most prolific exponent of GRP design, manufacture and in-use redesign was Gurgel Motores in Rio Claro of Sao Paulo state.

Whilst other companies were keen to direct sports-car and luxury-car efforts toward the private realm of status orientated wealthy consumers who typically themselves ran large enterprises (in industry and agriculture), Gurgel soon recognised the inherent risk of such a relatively 'high-stakes' venture dependent upon the strength of the economy and associated spending prowess.

Instead of entering such a theoretically high margin yet very competitive field, the founder (Joao Augusto Gurgel) preferred business stability to grow his vision of very functional vehicles for Brazil's self-betterment. And so pointed his firm toward the more cost conscious yet more stable and larger volume procurement needs for basic utility vehicles. These would include the Brazilian military, which would in turn give confidence to large federal organisations and regional state owned enterprises.

It seems highly likely that Gurgel was recommended this business direction by auto-sector bureaucrats, and given generous subsidies and incentives as part of the Brazilian self-sufficiency ideal, and thus had a ready-made customer base and so predetermined business case.

There is little point in recapping the previously mentioned series of vehicles that were ultimately produced, instead focus herein upon indigenous innovation the early creation of patented 'Plasteel' is highlighted.

“Plasteel” -

In itself it was hardly revolutionary, since it was long recognised by Americans and Europeans that basic GRP had strength limitations dependent upon dimensions and shape, which would typically be 'engineered around' in standard form via use of: curved corners, 'U' section channels, shallow or deep corrugation and internal 'webs'.

When such solutions were unsuited early builders could and would utilise small quantities of metal (aluminium preferable over steel) if deemed necessary to strengthen a specific portion of the moulded item. Thus 'Plasteel' was hardly new, even if marketed as such to possibly naïve Brazilian customers. Nonetheless 'Plasteel' allowed Gurgel to uprate his company's USP of light fuel efficient and relatively durable vehicles.

This came into be after the strength limitations of the basic unstrengthened material became apparent with structure failures on the second Gurgel model, the Xavante. As is the normal case with the military and many government and private users in EM countries regards pick-up trucks etc; the vehicles would be consistently overloaded to maximise their use.

[NB This would be well recognised by the Japanese (Landcruiser and Hi-Lux) and Germans (Unimog and G-Wagen) who effectively over-engineered their vehicles to absorb additionally high expections. Joao Gurgel would learn through experience].

Historically GRP has had very limited applications for military vehicle use, effectively restricted to only necessarily lightweight and highly mobile reconnaissance vehicles and as half-tonne load carriers. Given this limitation the vast majority of the world's military fleet would be for decades conventionally engineered in steel and aluminium for performance, durability and in-the-field and motor-pool repair reasons. That metal construction typical for a plethora of vehicle types across medium and heavy load bearing logistics vehicles (from single unique loads to freight containers), those general transport vehicles which would need to be 'up-armoured' (ie the addition of heavy armour plating) for combat zones and of course those vehicles dedicated to combat environment operations, from personnel carriers to tanks to mine-sweepers, etc.

Thus inevitably international armed forces recognised that GRP had a very useful, but very limited, role to perform regards the body structures of cross-country 'recon' buggies and as a sacrificial skin for very light, non ballistic, attacks (eg urban rioters' use of Molotov cocktails).

[NB this engrained convention only now slightly shifting with the introduction of increased carbon-fibre on task-dedicated vehicles].

However, with a keenness to appear modern and advanced, so as to grow a military export base, it is likely that 'Plasteel' was born as much from the behest of the Brazilian government and Joao Gurgel's own 'vision'.

Together Brasilia and Gurgel sought to fundamentally alter the status quo of all-metal vehicles within the 0.5 to 2 tonne 'light load' sector. And doing so because it recognised the massive international demand for basic light and efficient multi-task utility vehicles, themselves typically required in high production order numbers; 'plentiful, adaptable and cheap' the customer's mantra.

Recognising the mutual advantages and disadvantages of both GRP and steel Gurgel quite logically combined the two materials, putting steel bar, steel sheet, steel angle and steel channel as specifically placed substrates in the high stress areas of the vehicle's GRP 'tub'.

Thus whilst 'Plasteel' was hardly a true innovation, it did provide a sizeable increase in the durability of Gurgel's plastic-bodied vehicles so adding to their capabilities, lifespan and so ultimately general reputation.

'Plasteel' would thereafter feature in Gurgel's multi-passenger and load-lugging VW powered light trucks, vans and 'maxi-taxis'.

The End of the Indigenous 'GRP' Era -

Joao Gurgel's company had been the prime beneficiary of Brazil's protectionist stance from the late 1960s through to the early 1990s. Throughout this time, under the 'closed door' ethos to major foreign influence, Brazil had led Latin America in terms of its self-sufficiency political thinking.

The likes of its 'Pro-Alcool' Ethanol Fuel programme informed other suitably apt countries in South American and elsewhere to adopt or explore a similar strong domestic stance (including early introduction in the USA). And Gurgel did indeed gain export success to neighbouring countries – often with a heavy Socialist bent - who likewise had been reliant upon cheap low quality imported petroleum and thus, for greater independence, likewise sought fuel efficient utility service vehicles made in in South America.

But whilst Gurgel Motores had been thriving, by the late 1980s the winds of PESTEL change were to alter the Brazilian and LatAm environment. The erosion and eventual fall of Soviet Communism whose trade deals and finances had helped prop-up portions of Latin America had an enormous economic ripples.

Via cinema, TV and radio the peoples of Brazil and much of LatAm had seen much of The West and The East enjoy standards of living far in advance of themselves. And simultaneously inevitably viewed their own Communist-Socialist leaders as being in reality part of a collusive elitist set who themselves enjoyed the fruits of commercial monopoly in various sectors. Thus to this day Joao Gurgel himself (as with many other middle-men, merchants and industrialists) is deemed to have gained far too much government largess for too little real socio-economic return.

Instead, into the 1990s that 'closed world' diminished and Brazil substantially altered its ISI policy to allow the importation of usually better designed and manufactured world-class goods; vehicles the leading examples which illustrated how Brazil had in effect been stuck in its own time-warp for at least a decade and a half if not longer.

Into that vacuum that was Soviet collapse - and the resultant re-orientation away from an insular relationship with LatAm and Central American cohort countries – came the rest of the world: the Americans, Europeans, Japanese, South Koreans and the Chinese. Each came offering either better technologies or cheaper goods, often supported by strong stable and cheaper external financing to lubricate the Re-Globalistion process for Brazil.

The Ongoing Economic Re-Balancing Act -

Donald Trump's Presidential win has political and economic commentators on tenter-hooks about the real outcomes of his apparent very protectionist mindset. That in turn has created a domino effect amongst other nations regards a sizeable sway toward economic self-interest and self-reliance.

But let us remember that even in the midst of Brazil's 1950s Import Substitution Industrial policy it sought to retain the likes of already invested Ford and GM, and extended an invitation to the most apt foreign providers of suitable vehicles VW and later FIAT.The world itself, and the auto-industry specifically, is far too globalised to consider fundamental protectionist change. It was the case seventy years ago and it remains more so today.

However that should not halt Brazil from undertaking its own indigenous research, development and even low level production of 'advanced vehicles' in its own image. Perfecting such a vision to offer the world something new.

An ecologically sound recyclable lightweight material that performs far better than GRP but costs far less than carbon-fibre to produce would be perfect. Brazil extolled the virtues of ethanol for self-sufficiency and affordability and it gave that to the EM world.

It might be able to do the same with vehicles themselves.


In the 1980s-excess zeitgeist revealing book and film 'American Pyscho' the main character asks “is that Donald Trump's car?” Decades later the mass populace will echo those very words as Trump rides within the armour protected leviathan that is the Presidential 'Beast'.

How refreshing it would be to have a future Brazilian President riding in a very different animal, one of Brazil's own creation which offers revolutionary eco-technology to the world.