Ep. 91 – Producing Automotive Parts in Brazil with Rogerio Salvatico

On this week’s episode we’re continuing our tour of the machining world outside the United States.

Today’s stop is Brazil, where I’m speaking with Rogerio Salvatico, Industrial Manager at Engemet, a major precision parts supplier for Tier 1 and Tier 2 Automotive in Sao Paolo, Brazil.

Scroll down to listen to the podcast. Or listen on your phone on Apple Podcasts and Google Podcasts.

Main Points

(3:00) Rogerio gives his background. He grew up in São Paulo, Brazil. During high school he attended a specialized school with technical classes in the afternoon. When he was 17 he started an apprenticeship at Mecano Fabril, a machining company producing automotive components. The first machine he learned on was a Haas SL10, which he says he immediately fell in love with. He says for him the idea of CNC machining parts for cars was fantastic. Mecano Fabril had 60 Wickman cam multi-spindle screw machines.

(4:20) Rogerio says that after high school he went to university to study engineering. Later he went to work for Engemet, a large automotive parts supplier, where after eight years he became engineering manager. 

(5:30) Rogerio says São Paulo has a lot of industry and technical schools. He says the city has a lot of opportunities for people to work in the machining industry because lot of automotive suppliers are located nearby. 

(6:30) Rogerio says Engemet is primarily an automotive supplier. It supplies parts for Tier 1 and Tier 2, both cars and trucks.

(6:50) Rogerio states that most of the parts Engemet makes are for domestic use, though the company has supplied some firms in Germany. He says Brazil has factories of most of the major car companies from around the world. He says most of the cars manufactured in Brazil are sold in Brazil.

(8:20) Rogerio talks about Embraer Brazil, a Brazilian owned company that is the third largest aircraft manufacturer in the world, behind only Boeing and Airbus. He says many regional jets in the United States are produced by Embraer, usually models with 100 seats or less. He says Boeing recently tried to merge with Embraer, but the merger was stalled by the COVID-19 pandemic. 

(10:20) Rogerio says that the salary of a machine operator in Brazil starts at around $500 a month, however this number is misleading because the current economic crisis has made the Brazilian reais plummet. He says when the currency is stable it is around 3 or 4 reais to the dollar. Recently the currency fell to 5 reais to the dollar and at one point it was around 6 to one dollar.

(12:20) Rogerio says that because of the falling Brazilian currency a lot of customers are asking domestic vendors to make parts that they were buying overseas in the past. He says this is a big opportunity for Brazilian manufacturing companies. However, current automotive parts volumes are at 40% of their average because of lower demand for cars during the pandemic. 

(15:00) Rogerio says there are a lot of machining companies in Brazil doing medical and dental implant components. He says there are also many companies machining components for the oil and mining sectors. 

(17:00) Rogerio shares that he hopes the Brazilian economy is going to improve before the end of the year. He says the country was optimistic the economy was going to have a good year at the beginning of 2020.  

(18:00) Rogerio says that it is pretty difficult to borrow money in Brazil. He says the country’s interest rates are very high, and it’s hard to buy capital equipment from abroad because used machine tool imports are taxed at 30 percent.

(20:20) Rogerio explains that it’s hard to start an automotive or aerospace parts supplier in Brazil because it takes so much capital, but he sees a lot of startups in the Dental and Medical sectors. 

(21:45) Rogerio says that Brazil’s president Balsonaro has been called the country’s version of Trump because he is pro free markets and often makes impulsive remarks. (Watch the clip below).

(23:15) Rogerio says that people in Brazil’s favelas (ghettos) sometimes work in machining shops, but it isn’t easy for them to get those jobs.

(25:15) Rogerio likes that people in Brazil are social and enjoy life. He says that families there spend a lot time together and he loves the country’s food and music. He says when the economy is good Brazilians are content, but when the economy has problems a lot of people want to leave. He says he would like to move to a smaller city in the country because it’s peaceful and without much crime, while still having a lot of industry.

(27:00) Rogerio says that Brazil is the seventh largest economy in the world. He says the country has a lot of opportunities to prosper in the future because of its manufacturing, oil, mining, and finance industries. However it’s still developing, so life there isn’t always easy.

Question: Is Brazil a place you would like to visit?

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