21 June 2016
Brazil's Construction Sector Looks to Shrug Off Recessionary Worries
Despite burgeoning economic woes, political turbulence and concerns over the Zika virus, Brazil's building industry showed up in buoyant form at this year's Feicon Batimat, one of Latin America's largest annual construction trade events.
"The biggest opportunities come in difficult times," at least according to Juan Pablo De Vera, the President of Reed Exhibitions in Brazil. Speaking at the opening ceremony of Feicon Batimat 2016 – Brazil's largest construction trade show – De Vera claimed that some US$200 million worth of business was done during the preceding year's event. Indeed, the president's optimism may be borne out – there was little sign at this year's show that the country was facing a worrying recession.
Certainly the presence of so many big stands seemed to indicate a degree of confidence. Stam, a Brazilian specialist in door locks and padlocks, was celebrating 45 years in business with a 430-square-metre stand in the form of an island homaging Rio de Janeiro.
Similarly, it required some 500 square metres for Brazil-based Fortlev – under the slogan "water is everything" – to showcase its selection of water tanks. Meanwhile, the stand required for the display of compressors and hand tools in black and yellow from Vonder was bigger still. And then there were the dancers. Fortlev had ballet dancers, Megatron Cables had a Parisian street scene, and hundreds gathered twice daily to see a sizzling 20-minute hip-hop show on a purpose-built stage behind one stand.
That particular stand – the biggest by some distance at more than 1,000 square metres – belonged to Sao Paulo-based Lorenzetti. Explaining his company's indulgence, Marketing Director Paulo Serio Galina said: "We always have a big display at this event and we always have the dance show.
"The only difference is, because of the Crise Hydrica – the drought – and in line with our commitment to the environment, this year no water will be used in the performance. Usually there is a lot of water." That would surely have been appropriate enough for the company's new range of black, white and chrome shower and bathroom fittings.
Asked if such a prominent – and expensive – display suggested a confidence in the long-term health of the construction sector, Galina said: "Yes. While the economy has slowed down, we are very sure that it will start improving soon. For me, the turnaround will start tomorrow."
Galina was referring to the then upcoming debate in the Brazilian Congress when, as expected, more than two-thirds of the members voted for the impeachment of President Dilma Rousseff. Many in Brazil now believe in the need to bring in a new government, one with the public support required to take firm steps to help the economy.
More immediately, though, Galina believed that growth in the construction sector would come from building houses. He said: "It is all about housing and the private sector will soon be building homes."
Overall, Feicon Batimat featured every aspect of construction, including plumbing and wiring, plaster and brickwork, diggers and drills, pumps and compressors, windows and doors, bathrooms and drainage, ladders and lighting. And door locks from Stam.
Rita Franco, Stam's Marketing Manager, was the first to admit that the company's stand was bigger than usual this year. She said: "It is a little bigger, because of our anniversary. We are based one to two hours' drive from Rio de Janeiro, so our stand is showing the blue skies, the beachside bars, and the paved walkways by Copacabana Beach…
"Our locks are 100% Brazilian. We have the biggest manufacturing centre for door locks and padlocks in Latin America. We also have the most modern technology.
"We are now looking to expand across Latin America. We already sell into Bolivia, Paraguay and Uruguay. Some countries, such as Chile, have a different standard for lock sizes, so we would have to manufacture specifically for that market. Given the size of the likely demand, it is not worthwhile for us. However, I expect us to continue to grow next year, through new products and by working hard."
In something of a daunting prospect for the industry, Brazil's 10 years of large, government-commissioned building projects may be coming to an end. The World Cup in 2014 (US$13 billion on stadia and infrastructure) and the Rio de Janeiro Olympics in 2016 (US$24 billion on roads, light rail, and other infrastructure and accommodation projects) are unlikely to be followed by similar events any time soon. Despite this, the construction sector remains surprisingly positive.
The National Association of Construction Materials Retailers (ANAMACO) was predicting an overall growth of 6% this year, after a 5.8% dip in 2015. Its monthly survey of sales found that, while the South and South-East had contracted slightly in February, there was growth of 18% and 10% in the Centre-West and the North.
Commenting on the figures, Claudio Conz, the association's President, said: "We continue to maintain our optimism even in the middle of uncertain economic times. Brazil has 65 million homes to maintain."
Perhaps sharing this optimism, more than 200 Chinese exhibitors at the show occupied one entire side of the Exhibition Hall. Among their featured products were hand tools (hammers, spanners and pliers), copper and brass joints and valves, cutting tools (hacksaw and rotary blades) and screws.
Their presence had been facilitated by China Intop Exhibitions in partnership with the Chinese Importers and Exporters Chamber of Commerce (CCCMC) and the Trade Development Bureau (TDB) of the Ministry of Commerce. Helpfully, Chinese-Portuguese interpreters were located throughout the China Pavilion.
For some, it was their first time in Brazil. Explaining the reason for her company's presence, Amber Zhang of Guangzhou Heying Universal Parts, said: "We came because we have had a lot of support. It is our first time in Latin America, but we have many customers here."
According to Zhang, at present the company sells online to business-to-business customers in Brazil and Chile. She said: "Our Brazilian customers communicate by email, order online, and we send the products. Some customers have promised to visit us here. Our main markets, though, are Europe and Asia, largely because our quality and prices are a little high for the Brazilian market."
She was not worried that many of the Chinese companies were selling similar products, saying: "Competition is very fierce in this industry and we are all used to that."
A number of other companies – notably Zheijiang-based Yuhuan Feucet Hardware – have already built up a substantial client base in Latin America. A spokesman for the company said: "We sell directly to Brazilian own equipment manufacturers and we have 20 clients in Brazil. We visit this event every year. It is the most important construction event in Latin America – in fact, many of our clients tell us it is better than visiting shows in North America, Europe or Asia. Here they can see all the products that are appropriate for Brazil.
"Of course, I expect that the economic slowdown will affect our business. When the economy was good, they used better materials. Now they are looking for cheaper and lower quality products." The chrome taps, shower heads, connectors and accessories that the company had on offer were specifically targetted at Brazil.
At an adjacent stand, Yancheng-based Corner Abrasives was showing its range of abrasive cloths, papers and sanding attachments. Evaluating the market, Janice Ye, the company's Marketing Manager, said: "They don't have these abrasives in Brazil. This is a very big market and we see lots of potential here."
Another sector prominent among this year's Chinese exhibitors was solar energy. One company keen to take a lead here was Zhejiang-based SunSurf New Energy Technology. At present, the company manufactures a range of solar water heaters and solar panels, while targetting the Brazilian market through a dedicated Portuguese-language website.
Commenting on his experience of the event, Leon Shen, the company's General Manager, said: "It is our first time here, but the market is growing. We have had lots of customers at the show. I think we will come again."
The 22nd Feicon Batimat Construction Show 2016 was held at the Sao Paulo Expo Anhembi in Brazil from 12-16 April 2016.
John Haigh, Special Correspondent, Sao Paulo