Hyundai Rotem invests US$ 50 million in new plant in Araraquara for the manufacturing of trains

It will be the company’s first plant in Brazil and the second largest of the brand in the world; Project relies on the support from Investe São Paulo

On November 18, Hyundai Rotem, one of the largest manufacturers of railway systems in the world, announced the construction of its first plant in Brazil, in the city of Araraquara, 250 km from the state capital. In total, US$ 50 million will be invested, which is equivalent to approximately R$ 125 million, and 400 jobs will be created in the plant that will produce trains, also known as undercarriage.

The announcement was made at an event held at the Palácio dos Bandeirantes. On the occasion, the global president of Hyundai Rotem, Kyuhwan Han, entered into a Memorandum of Understanding with the president of Investe São Paulo, Luciano Almeida, which aims at the settlement of the future plant by the company and the continued support from the agency in tax, environmental and infrastructure issues, in addition to the dialogue with public and private entities.

“We have visited several cities and dozens of properties with the South Korean executives and we are doing everything possible to speed up the issuance of all permits and meetings with government entities, which will be essential for the project to success. It is a great joy for us to assist a company in the rail industry, since the development of this segment is one of the main factors for the economic progress of São Paulo and Brazil,” said Almeida.

“Araraquara is reinforcing its economic vocation with the settlement of another transportation industry in the city. To provide for the segment and benefit the population, we are establishing a metal mechanic sector Fatec (state technical college) which will train qualified handwork, stimulating the region’s development and generating income”, said the secretary for Economic Development, Science, Technology and Innovation of the State, Nelson Baeta Neves Filho.

The new plant will be Hyundai Rotem’s second largest plant in the world and is expected to start the production in the first half of 2016. The idea is to deliver, by August 2016, 240 cars for São Paulo Metropolitan Train Company (CPTM) and 112 cars for Metrô Bahia, in Salvador. For this, the construction works of the plant should finish by the end of 2015.

While the new facility is being built, Hyundai Rotem will perform the assembly of trains ordered by São Paulo and Salvador in the current plant of Iesa in Araraquara. That is because Hyundai Rotem has fully assumed the contracts that had been executed by the joint venture created with the Brazilian company.

According to Andre Han, director of the project in Brazil, the need to have a rate of domestic content in the public procurements of trains has greatly influenced the decision of Hyundai Rotem to come to the country. One of the trends of rail projects contracts in Brazil is the demand for domestic content. We even have a project to nationalize our subcontractors, transferring the technology to some companies that already operate here,” he said.

After the contracts with CPTM and Metrô Salvador, Hyundai Rotem intends to continue manufacturing 200 cars per year, closing new contracts. “We are discussing with the three government instances for the construction of our plant to be the first step for the transformation of Araraquara into a rail hub,” said Han. The undertaking will also house the administrative office of the company in Brazil.

The executive explained that the city was chosen because it already hosts other companies of the rail industry, such as Iesa and the future plant of Randon, in addition to other suppliers in the sector that must settle there in the upcoming years. In addition, the city is considered a meeting point where all types of track and trails cross, making it logistically strategic. “We also gave priority to the state of São Paulo, which has a greater potential for rail projects and a better market perspective,” said Han.

"The growth prospects of the railway sector throughout Brazil are very good, and Araraquara has a unique condition for the development of this segment, such as the new switching yard and now the arrival of Hyundai-Rotem, a company recognized worldwide for its expertise in the sector. In this partnership between Araraquara and Hyundai, governor Geraldo Alckmin and Invest Sao Paulo, once again, were essential. This joint effort results in the installation of a company that will positively influence our municipality, opening employment opportunities, exchange of experience, technology and income generation, "said the mayor of Araraquara, Marcelo Barbieri.

The trains produced by Hyundai Rotem that are already circulating on the train lines of São Paulo were assembled by this joint venture, but with parts and components imported from South Korea. The new plant will even bring a new technology, which does not exist in the Brazilian plants yet: the technology of trains without drivers, which will be supplied for Metrô Bahia.

The company acquired an area covering 150,000 square meters to build the new plant. Even after the completion of the new plant, the idea of Hyundai Rotem is to keep the shed where Iesa is currently operating as a support plant to the parent company.

About Hyundai Rotem 

Founded in 1977 through a merger between the companies Hyundai Precision Industry, Hanjin Heavy Industries & Construction and Daewoo Heavy Industries & Machinery, Hyundai Rotem was acquired by Hyundai Motor Group in 2001, becoming a global benchmark in the provision of railway systems within a short period of time. Further ahead, the company also entered the field of heavy industry, becoming the sole producer of tanks in South Korea.

Headquartered in Seoul, Hyundai Rotem is publicly-traded on the Korean stock exchange and operates not only in railway systems, but also in military defense, industrial engineering and industrial machinery. Its revenue totaled US$ 31.56 million in 2013. Altogether there are four national unities, in addition to presence with manufacturing plants, sales centers and offices in 18 countries.

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