Cummins foresees average growth of 10% a year in Brazil until 2016
Valor Econômico
The Brazilian subsidiary of Cummins, one of the biggest independent manufacturers of diesel engines in the world, should have its relevance increased for the global business of the group over the next five years. Accountable for 9.6% of the earnings of Cummins Inc. in 2009, compared to 9.4% one year earlier, the Brazilian operation should present average growth of 10% a year until 2016, according to an estimate of the managing officer of the business unit of engines of Cummins in Latin America, Luis Afonso Pasquotto.
Last year, Cummins Brasil had earnings of US$ 962 million, with a 26% fall compared to the earnings of US$ 1.3 billion in 2008. In number of engines produced in the plant of Guarulhos (SP), the fall reached 30%, to 60 thousand units - in 2008, the production had been record setting, at 86 thousand engines. This year Cummins should produce 82 thousand engines, which are responsible for more than 50% of the earnings of the company in the country, commented Pasquotto. The recovery of the truck market, whose growth compared to 2009 should get to 33%, and the resumption in sales of off-road vehicles, both for agriculture and civil construction, of nearly 50%, fuel up the projection for the production.
Despite the resumption in the sales and in the use capacity of the plant, Cummins has no immediate expansion plans. "Maybe in 2012 there may be the need for a new cycle of strong investments", said Pasquotto, recalling the manufacturing unit had its capacity increased recently. Between 2004 and 2009, Cummins invested US$ 120 million in the Brazilian operation, and this year it should invest another US$ 20 million. The improvement in the market made Cummins hire 173 employees at the beginning of the year - in 2009, in the wake of the crisis, 190 positions were terminated - and resume the third shift at the São Paulo plant. "We have been taking this (the positive perspective for Brazil) and the headquarters backs it. We are fully confident in what is to come ahead", said Pasquotto.