Friday, 24 February 2017

Micro Level Trends – Brazil's Automotive Sector – “Brazil 66”...Sixty Six Years of Economic Power Lifting (Part 5)

'Carnival' is underway in Rio de Janeiro, and those less fortunate will, for a time, forget their woes in the current dour economic climate, and look to a brighter future, even if that be 'the day after tomorrow', once recent reforms have revitalised society.

The preceding sections of this weblog sought to inform of both the Macro-Level issues of the country's historical PESTEL context, and thereafter provide general insight into those Micro-Level factors pertaining to the automotive sector through which B2B and B2C actions satiated and indeed prompted the needs, wants and desires.

From the macro perspective of Parts 2 and 3 it was seen how – with new revolution always a threat - the overtly profit-centric (and so socially divisive) mercantile ethos of 19th century Brazil gave way to a cohesion of better societal cohesion, and the impact of a self-reliance guiding principle under President Vargas, with the spoils of primary industries providing broadening commerce which began to provide socio-economic 'trickle-down', and the basis of secondary industries (esp. energy, steel) put into place as state owned enterprises. Thereafter President Kubitschek used this base to attract a plethora of foreign auto-companies which would mobilise the potential of the nation.

Whilst the micro perspective of (the multi-aspect) Part 4 illustrated that since its very start the sector has been rooted in the technical and economic advantages of international relations, initially the US, then Europe and Japan, and latterly China and India, spanning much from agricultural small tractor production, the licensed manufacture of heavy trucks, self-created niche cars of advanced construction there after leading to proprietry 'light green' military vehicles, through to world-class coach and bus. From 1950s HGV trucks hauling crops, timber and cement, to 1960s dual-use hi-style pick-up trucks for self-made men, through to the ubiquitous VW 'Fusca' and 'Kombi', seen in multiple roles from police cars to family and group transport. Thereafter from the 1970s onward foreign vehicles and brands taken to the nation's heart, injected with ever greater self-educational 'know-how' and made more and more de-facto 'Brazilian'. Perhaps more than any other, the auto-sector transforming the lives and aspirations of many millions for decades, to this day, and into the distant future.

Vitally, as seen and proven time and time again, across all of these endeavours, the successful and less so, has been the central theme of a strong trade ties, industrial correlation and industrial and regional planning with the capabilities of other countries; spanning everything from AM-derived technologies through to EM-enabled low cost supply-chains.

The following Part 5 will provide a summary of the primary political forces that shape the industrial and commercial landscape of the present day, with specific attention drawn to:

- The 'Plano Real' (1993/4)
- The Asian Tiger Financial Crisis (1997/8)
- The Globalisation Boom (1999 – 2012/3)
- The 'Plano Brasil Maior' (2013 onward)
- The "Car Wash" Reforms (2017 onward)
- The Current Economic Picture

The latest of the prime policy initiatives – 'Plano Brasil Maior' - itself could be seen as a precursor, or indeed a possible prompter of, the recent retraction from globalisation by the USA.

[NB a seeming abrupt about turn of its own pro-globalist stance, previously supported by much hard and soft power. (The tectonic plates of much theorised 21st century “world-power” now seen to be visibly shifting in real-time under Trump's 'American Pledge'].

How things develop for Brazil will only bee seen in the fullness of time, but with broad Asia and equatorial Africa still much affected by the Chinese slow-down and stabilisation, and Europe still in apparent politically-driven 'reconfiguration' mode, Brazil may well see its mid-term future as that of increased self-reliance allied with greater trade and indeed mutual FDI exposure to the domestic bullishness of the USA.

This begs the question as to whether under the guise of any new 'ISI' edict and policies the likes of Microsoft, Alphabet-Google, FIAT-Chrysler Auto et al could be given new incentives to prosper, so as to establish there own versions of campus-orientated “Fordlandias”, nearly a century after Henry Ford's failed original 'township' attempt.

[NB such an acute relationship with the USA ideally latterly re-enacted with European, Japanese, S.Korean and Chinese firms, to re-prompt timely 're-globalisation']

So, instead of depleting and tapping the forest-lands as of old, the agendas of such corporations would be to nurture and tap the aspirations, energies and minds of Brazilian youth and thus recapture a rising socio-economic tide for all.

To better understand the present socio-economic status quo, the following weblog section looks at each of these important issues in turn to gauge to what degree politicians, industrialists and the populace - through the mechanisms of the auto-sector and much more - should be able to see beyond their country's presently erratic economic position.