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2010 GLOBAL FORECASTING & MARKETING CONFERENCE – Miami, October 21 st, 2010
Market Composition & Capital Spending Survey
The Latin American Metalworking Industry
Focus on Mexico & Brazil
Strategic Media Partners:
Presented by
2
Contents
Methodology and reach Equipment Scope for this Report Latin American Market Overview
Market Trend Evolution Metalworking Equipment Imports 2011 Market Forecast by Category
Mexico Demographic Data Imports by Country of Origin Survey findings & Market Forecast
Brazil Demographic Data Imports by Country of Origin Survey findings & Market Forecast
Summary Appendix
Detailed Purchase Intention Results
3
Methodology & Reach
Email survey invited 9,221 Latin American subscribers of Metalmecánica magazine; 9,082 metalworking industry subscribers of NEI magazine (Brazil); and 5,146 metalworking industry subscribers of Reportero Industrial magazine (Latin America).
Limited to one answer by company. In-depth questionnaire.
All participants were validated as qualified readers.
The survey obtained 1,106 valid responses from 17 Latin American countries, representing a 4,7% response rate.
4
Equipment Scope for this Report
Metal Cutting Equipment
8456 - Laser, Ultra-sonic, EDM, Ionic, Plasma arc8457 - Machining Centers8458 - Lathes (Incl. Turning Centers)8459 - Drilling, Boring, Milling Mach.8460 - Deburring, Sharpening, Grinding Mach.8461 - Planing, Shaping, Slotting, Broaching Mach.
Metal Forming & Fabricating Equipment
8462 - Presses, Bending, Folding, Punching, Shearing Mach.8463 - Draw-benches, Thread Rolling, Wire Working Mach.8515 - Welding Equipment
Parts and Accessories
8466 - Parts and Accessories for Machine Tools
0
500.000
1.000.000
1.500.000
2.000.000
2.500.000
2002 2003 2004 2005 2006 2007 2008 2009 2010e
MEXICO BRASIL Arg + Chi + Col + Ecu + Per + Ven
5
Latin American Metalworking Equipment ImportsMexico, Brazil + Top “ROLA” Countries (Rest Of Latin America)
Source: ALADI: Latin American Trade Integration Association.Trend calculation: B2Bportales
Total Import Market:Real ‘09: US$3,07 Billion-33.9% compared to ’08
‘10 Estimated: US$3,5 Billion+13.4% compared to ‘09
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
2002 2003 2004 2005 2006 2007 2008 2009 2010e
ARGENTINA VENEZUELA CHILE COLOMBIA PERU ECUADOR
6
Market Trend Evolution: Metalworking Equipment ImportsTOP 6 “ROLA” Countries (Mexico and Brazil excluded)
Source: ALADI: Latin American Trade Integration Association.Colombia 2009: Estimated on projection of 5 months reported to Aladi
US$
000
FOB
ROLA countriesEstimated‘10 Imports:US$636 million+8% compared to ‘09
BRAZIL
MEXICO
ARGENTINA
CHILE
COLOMBIA
ECUADOR
PERU
VENEZUELA
-8,0
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
10,0
12,0
2008
2009
2010E
2011P
7
Source: ECLAC, Economic Commission for Latin America and the Caribbean.
2008 2009 2010E 2011PBRAZIL 5,1 -0,2 7,6 4,5MEXICO 1,5 -6,5 4,1 3,0ARGENTINA 6,8 0,9 6,8 4,5CHILE 3,7 -1,5 4,3 6,0COLOMBIA 2,7 0,8 3,7 3,0ECUADOR 7,2 0,4 2,5 2,0PERU 9,8 0,9 6,7 4,5VENEZUELA 4,8 -3,3 -3,0 2,5
Average 5,2 -1,1 4,1 3,8
Latin American Market OverviewGDP - Mexico, Brazil + Top Rest Of Latin America
“Although recovery has been relatively quick, lingering questions and doubts regarding the evolution of the global economy may dampen the regional
outlook in the medium-term.” (ECLAC)
Growth is expected to slow down around the second half of 2010. Although the region will continue to expand in 2011, it will do so at only 3.8% approximately
- 100.000 200.000 300.000 400.000 500.000 600.000
8461 - Planing, shaping, slotting, broaching Mach.
8459 - Drilling, Boring, Milling Mach.
8456 - Laser, Ultra-sonic, EDM, Ionic, Plasma arc
8460 - Deburring, Shaping, Grinding Mach.
8458 - Lathes (Incl. Turning Centers)
8457 - Machining Centers
US$ 000
126,965
211,846
216,402
240,355
393,429
495,807
8
2011 Imports Forecast - Metal Cutting $1.68 Billion
MEX39%
BR45%
ROLA16%
9
Metal Cutting Equipment Imports – 2008-2011 Comparison
- 100.000 200.000 300.000 400.000 500.000 600.000
8461
8459
8456
8460
8458
8457
2011 (e) 2010 (p) 2009 2008
1.899.347
1.173.791
1.454.140
1.684.804
2008 2009 2010 (P) 2011 (e)
TOTALS
- 100.000 200.000 300.000 400.000 500.000 600.000 700.000 800.000 900.000 1.000.000
8463 - Draw-benches, thread rolling, w ire worling Mach.
8515 - Welding equipment
8462 - Presses, bending, folding, punching, shearing Mach.
US$ 000
933,917
536,249
146,454
10
2011 Imports Forecast - Forming & Fabricating: $1.61 Billion
MEX43%
BR36%
ROLA21%
Significant participation of ROLA countries, compared with 16% in cutting machines
11
Forming & Fabricating Eq. Imports – 2008-2011 Comparison
- 200.000 400.000 600.000 800.000 1.000.000 1.200.000
8463
8515
8462
2011 (e) 2010 (p) 2009 2008
1.911.150
1.402.065
1.401.250
1.616.620
2008 2009 2010 (P) 2011 (e)
TOTALS
-
50.000
100.000
150.000
200.000
250.000
300.000
350.000
400.000
MEX BR ROLA
372.
876
237.
798
111.
925
US$ 000
12
2011 Imports Forecast: Parts & Accessories: US$723 Million
8466- Parts & Accessories
MEX52%
BR33%
ROLA15%
37% of the total investment is dedicated to Parts and Accesories
13
Parts & Accessories Imports – 2008-2011 Comparison
-
50.000
100.000
150.000
200.000
250.000
300.000
350.000
400.000
450.000
500.000
MEXICO BRAZIL ROLA
2008 2009 2010 (p) 2011 (e)
833.372
495.657
627.345
722.600
2008 2009 2010 (P) 2011 (e)
TOTALS
14
MEXICO Factories’ Capacity Utilization Average age of machines in Plant Size of Companies by Number of Employees Main Markets/Sectors Served by Metalworking Plants Mexican Imports by Country of Origin Investment trends in 2011 Equipment imports forecast 2010 Projected Investment Distribution
15
Base: 287
26% report capacity usage of +80%
Down -16% from last year
16% report capacity usage of less than 50%
Same percentage as last year
Mexican Metalworking Plants2009 Capacity utilization
90% or more10%
Between 80% and 89%
16%
Between 66% and 79%
34%
Between 50% and 65%
24%
Less than 50%16%
Less than3 years old
15.6%3-10 years old42.6%
More than 10 years old
41.8%
16
Base: 287
Total reported number of machines : 7,230Average per plant: 25
Average Age of Machines in Plant
Tremendous opportunity for new Machinery Suppliers
17Base: 287
Size of Mexican Plants Included in the SurveyBy Number of Employees (2010)
1 to 1033%
11 to 2015%21 to 50
15%
51 to 10014%
101 to 2007%
201 to 5006%
501 or more10%
Number of companies with 1 to 10 employees answering the survey is 12% higher than the reported in 2009.36% of the sample represents companies of 50 or more employees.
18
Base: 287
Markets/Sectors Served by Mexican Plants (2010)
18%
5%
6%
7%
8%
11%
16%
26%
29%
31%
33%
0% 5% 10% 15% 20% 25% 30% 35%
Other
Medical equipment (optical, surgical and dental)
Instruments/devices: electric, photographic, laboratory, measurement (excl. Medical)
Aerospace
Other transport equipment and components
Machinery, agricultural and construction equipment
Electrical and electronic equipment
Machinery and components (excluding agricultural or construction)
Automobiles and parts
Metal products: structures, valves, pipes, tools, etc.
Molds, dies and tooling
19
Metalworking Equipment – By Country of OriginMexican Imports 2008 - 2009
Source: ALADI: Latin American Trade Integration Association.
Italy, Taiwan & USA was affected the most with imports decrease in 2009. China is still small in this market, but registered the lesser reduction in US dollars percentage.Last year, Japan was the second exporter to Mexico. This year Germany reached that position.
2008 2009 09/08USA 808.934 38,9% 483.676 35,8% -40,2%Germany 346.481 16,7% 251.832 18,6% -27,3%Japan 283.781 13,6% 177.843 13,1% -37,3%Italy 151.484 7,3% 73.072 5,4% -51,8%China 65.433 3,1% 57.396 4,2% -12,3%Taiwan 57.362 2,8% 33.218 2,5% -42,1%Other 366.851 17,6% 275.889 20,4% -24,8%TOTAL 2.080.326 100% 1.352.926 100% -35,0%
-
100.000
200.000
300.000
400.000
500.000
600.000
700.000
800.000
900.000
2008 2009
20
Base: 287
2011 Expected Investment Trends
No change 47%
Increase48%
5%Decrease
Increase average: 32,6%
Decrease average: 44,3%
This expected trend represents
a potential increase of
13,4%in total
investments
DIRECTION PERCENTAGE
What direction and by what percentage will your investments in machines change in 2011?
21
2011 Expected Investment Trends
"Production of vehicles in the period January-July 2010 grew 78.8% over the same period in 2009". "Compared with the same period in 2008, it still represents a fall of 27.8%"
(Eduardo Solís, President, AMIA, Mexican Association of Automotive Industry).
"The metalworking industry reported a decline and stood at -14.3% in 2009, but a growth of 12.3% is expected by the end of 2010".
(Marco Herrera, Chairman of the Metalworking Sector, CANACINTRA, Mexican Chamber of Transformation
Industries).
22
2011 Expected Investment Trends
"This year, companies in the aerospace parts sector have planned investments of approximately US$1.2 billion to modernize its technology and production processes". “The size of the sector is expected to double in the next five years. The component design industry area will have over 400 specialized companies".
(Mario Martínez, Technology Director, ITESM, Institute for Technology Studies in Monterrey).
"We depend on the recovery of the U.S. market: we hope to reach production levels of 2008 in 2012 or 2013".
(Agustín Ríos, president, INA, National Autoparts Industry)
23
Base: 236
Mexico - Metal CuttingInstalled Equipment 2010 vs. Buying Intention 2011
79%
74%
51%47%
39%
31%
24%
14%
7%
28%
17%
9% 8%
4%
25%
13%
1%
8%
2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Lathes Milling Machines
Grinding Machines
Sawing and Cut-off
Machines
Machining Centers
Turning Centers
Boring Machines
Electrical Discharge Machines
(EDM)
Transfer Machines
Other
Installed Intention
24
2011 Metal Cutting Equipment Imports Forecast: $658 Million(2008-2011 Comparison)
- 50.000 100.000 150.000 200.000 250.000 300.000
8461 - Planing, shaping, slotting, broaching Mach.
8459 - Drilling, Boring, Milling Mach.
8456 - Laser, Ultra-sonic, EDM, Ionic, Plasma arc
8460 - Deburring, Shaping, Grinding Mach.
8458 - Lathes (Incl. Turning Centers)
8457 - Machining Centers
41.309
59.820
63.951
98.629
125.796
268.613
US$ 000
781.261
515.566
580.351
658.118
2008 2009 2010 (P) 2011 (e)
TOTALS
59%
50%
38%
34% 33%
15%14%
11%
4%
35%
24%
10% 9% 8%
0%
8%6% 7%
5%
0%0%
10%
20%
30%
40%
50%
60%
70%
Welding Machinery & Equipment
Presses Turret Punches &
Shears
Plasma-Arc/Plasma
Cutting
Roll Forming Machines
Press Brakes Wire forming Laser Cutting Systems
Water Jet Cutting
Machines
Other
Installed Intention
25
Base: 110
Mexico - Metal Forming and FabricatingInstalled Equipment 2010 vs. Buying Intention 2011
26
2011 Forming & Fabricating Equipment Imports Forecast: $685 Million(2008 – 2011 Comparison)
- 50.000 100.000 150.000 200.000 250.000 300.000 350.000 400.000 450.000
8463 - Draw-benches, thread rolling,wire worling Mach.
8515 - Welding equipment
8462 - Presses, bending, folding,punching, shearing Mach.
69.058
232.869
383.685
US$ 000
835.814
545.975
604.596
685.611
2008 2009 2010 (P) 2011 (e)
TOTALS
0%
10%
20%
30%
40%
50%
60%
70%
New Equipment Used Equipment Refurbished Equipment
61%
16%23%
27
Mexico – 2011 Projected Investment Distribution
Base: 245
New Equipment participation is similar to last year
Refurbished UP from 14% last year
Used DOWN from 24% last year
28
BRAZIL Factories’ Capacity Utilization Average age of machines in Plant Size of Companies by Number of Employees Main Markets/Sectors Served by Metalworking Plants Mexican Imports by Country of Origin Investment trends in 2011 Equipment imports forecast 2010 Projected Investment Distribution
90% or more13%
Between 80% and 89%
21%
Between 66% and 79%
30%
Between 50% and 65%
23%
Less than 50%13%
29Base: 278
Brazilian Metalworking Plants2009 Capacity Utilization
Capacity utilization is lowerthan that reported for 2008.
34% report over 80% of installed capacity;13% reports less than 50%
Less than 3 years old
24.6%
3 to 10 years old44.8%
More than 10 years old
30.6%
30
Base: 278
Total reported number of machines : 5,676Average per plant: 20.4
Average Age of Machines in Plant
Significant opportunity for new Machinery Suppliers
31Base: 278
Size of Brazilian Plants in the Survey By number of employees (2010)
1 to 1029%
11 to 2021%
21 to 5021%
51 to 10012%
101 to 2009%
201 to 5004%
501 or more4%
Number of companies with 1 to 10 employees answering the survey is 8% higher than the reported in 2009.29% of the sample represent companies with 50 or more employees.
32
Markets/Sectors Served by Brazilian Plants (2010)
Base: 278
33%
3%
7%
8%
13%
14%
15%
16%
17%
29%
29%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Other
Aerospace
Medical equipment (optical, surgical and dental)
Instruments/devices: electric, photographic, laboratory, measurement (excl. Medical)
Molds, dies and tooling
Machinery, agricultural and construction equipment
Other transport equipment and components
Automobiles and parts
Electrical and electronic equipment
Metal products: structures, valves, pipes, tools, etc.
Machinery and components (excluding agricultural or construction)
33
Metalworking Equipment – By Country of OriginBrazilian Imports 2008 - 2009
Source: ALADI: Latin American Trade Integration Association.
-
50.000
100.000
150.000
200.000
250.000
300.000
350.000
400.000
2008 2009
2008 2009 09/08Japan 278.966 18,3% 240.716 21,3% -13,7%Germany 275.107 18,1% 200.135 17,7% -27,3%Italy 192.912 12,7% 148.081 13,1% -23,2%USA 139.200 9,2% 130.564 11,6% -6,2%Taiwan 143.685 9,4% 88.479 7,8% -38,4%China 138.984 9,1% 82.866 7,3% -40,4%Other 352.310 23,2% 238.145 21,1% -32,4%TOTAL 1.521.164 100% 1.128.986 100% -25,8%
Despite a decrease in total imports in 2009, USA grew its market share in 2.4%. Contrary to the situation observed in Mexico, China was affected the most during the crisis, with 40% reduction in total exports to Brazil, and 2% reduction in market share.
No change 42%
Increase57%
1%Decrease
Increase average: 34,9%
Decrease average: 33,3%
DIRECTION PERCENTAGE
This expected trend represents
a potential increase of
19,4%in total
investments
34
Base: 278
What direction and by what percentage will your investments in machines change in 2011?
2011 Expected Investment Trends
35
"I have a hunch that the turnover of 2011 will be 20% higher than it has been in 2010. Therefore, it will virtually reach the same exceptional level as it did in 2008.""The metalworking sector was negatively affected during the last quarter of 2008 and the first half of 2009. Starting in July, companies gradually returned to buy”.
(Thomas Lee, director, Grupo Megga, Sao Paulo)
“Hiring in the machine building sector increased in May 2010. It went up 4.4% compared to May 2009, from 232,200 to 242,331 employees. By October 2008, the month prior to the crisis it had felt down to 3.15%”.
(Abimaq, July 2010 Report)
2011 Expected Investment Trends
36
“We believe that the outsourcing manufacturing market was one of the sectors that was hurt the most during the 2009 crisis. Some of our customers said that their own clients stopped outsourcing their projects and went back to manufacturing them on their own.In my opinion, manufacturers of elevators, steel furniture, electrical cabinets, air conditioners, refrigeration, power generation, industrial ovens, among others, are the most active thanks to the increasing expansion of the construction sector".
(Ferri Amilson, Director General - Salvagnini do Brasil)
2011 Expected Investment Trends
80%
71% 71%
42%
34%
26% 25%
10%5%
56%
17%
7% 6% 5%
21%
9%5%
3%
35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Lathes Milling Machines
Saw ing and Cut-off
Machines
Grinding Machines
Machining Centers
Turning Centers
Boring Machines
Electrical Discharge Machines
(EDM)
Transfer Machines
Other
Installed Intention
37
Brazil - Metal CuttingInstalled Equipment 2010 vs. Buying Intention 2011
Base: 156
• As in Mexico, high interest in Machining Centers.
For this year significantly increased buying intention for transfer machines.
38
2011 Total Metal Cutting Equipment Imports Forecast: $761 Million(2008-2011 Comparison)
- 20.000 40.000 60.000 80.000 100.000 120.000 140.000 160.000 180.000 200.000
8461 - Planing, shaping, slotting, broaching Mach.
8460 - Deburring, Shaping, Grinding Mach.
8459 - Drilling, Boring, Milling Mach.
8456 - Laser, Ultra-sonic, EDM, Ionic, Plasma arc
8457 - Machining Centers
8458 - Lathes (Incl. Turning Centers)
60.483
112.330
113.959
108.205
179.634
186.344
US$ 000
783.243
470.440
639.458
760.955
2008 2009 2010 (P) 2011 (e)
TOTALS
68%
49%
31%27%
24% 23%
8%6%
1%
55%
18%
12%9%
7% 7% 7%
2%5%
2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Welding Machinery & Equipment
Presses Roll Forming Machines
Plasma-Arc/Plasma
Cutting
Turret Punches &
Shears
Press Brakes Wire forming Laser Cutting Systems
Water Jet Cutting
Machines
Other
Installed Intention
39
Base: 241
Brazil - Metal Forming and FabricatingInstalled Equipment 2010 vs. Buying Intention 2011
As in Mexico, Laser Cutting has a high installed/intention ratio
40
2011 Metal Forming & Fabricating Eq. Imports Forecast: $586.5 Million(2008 – 2011 Comparison)
- 50.000 100.000 150.000 200.000 250.000 300.000 350.000 400.000 450.000
8463 - Draw-benches, thread rolling,
wire working Mach.
8515 - Welding equipment
8462 - Presses, bending, folding,
punching, shearing Mach.
45.701
133.524
407.344
US$ 000
529.950 532.090
492.915
586.569
2008 2009 2010 (P) 2011 (e)
TOTALS
0%
10%
20%
30%
40%
50%
60%
70%
80%
New Equipment Used Equipment Refurbished Equipment
76%
10%14%
41
Brazil - 2011 Projected Investment Distribution
Base: 193
New Equipment DOWN from 79% last year
Refurbished UP from 8% last year
Used UP from 12% last year
SummaryAfter consulting several sources, including the results of the Capital Investment Survey and industry experts opinion across the region, the Metalmecanica’s 2011 forecast for capital investment in imported equipment is summarized as follows (US$ Millions):
42
Total Latin America $ 4.024 100%
By Country
Mexico $ 1.716 43%
Brazil $ 1.585 39%
Top 5 Rest of Latin America $ 722 18%
By Group of Products
Cutting Machinery $ 1.685 42%
Forming & Fabricating Equipment $ 1.615 40%
Parts & Accesories $ 723 18%
www.metalmecanica.comwww.reporteroindustrial.comwww.nei.com.br
Miguel Garzón, Editorial [email protected]
Thank you!Teri Rivas, Associated [email protected]
Eduardo Tovar, [email protected]
44
Base: 154
Mexican Buying Intentions by Investment Amount, 2010
1. Machining Centers
See Appendix for detailed report by country by segment
Less than $30,00030%
From $30,000 to $60,000
13%From $60,001 to $120,000
22%
From $120,001 to $250,000
12%
More than $250,000
23%
YES25%
NO75%