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Rodrigo Oliveira, Commercial Manager, Ara Ashland "Discrepancies in State Taxes Needs to be Checked to Encourage Composite Industries in Brazil"

Ara Quimica was established in 1995 in Aracariguama city, state of Sao Paulo, Brazil. Its plant offers modern facilities for unsaturated polyester resins manufacture, besides having being sized for constant expansions of productive capacity.

Four years after the commencement of its activities, Ara Quimica associated with Ashland Specialty Chemical, branch of Ashland Inc. So a new company, Ara Ashland came into existence that has aggregated Brazilian market knowledge to the technological resources of the largest manufacturer of chemical specialties for polyester composites. This merger brought great benefits to national composite industry, because besides keeping the resin production from the usual unsaturated polyester, Ara Ashland began to manufacture specialties for the sophisticated production processes like RTM, SMC, BMC, pultrusion and continuous filament. In an exclusive interview Commercial Manager, Ara Ashland, Rodrigo Oliveira, shares his experience with Editor, Lucintel, K. Venkateshwar. Rao. Excerpts:

1. What are the key drivers for composites consumption in Brazil?

Rodrigo Oliveira: As far as my opinion is concerned civil construction, a segment that can ensure positive impact on two fronts of the Brazilian composites market: housing and basic sanitation. Resources contained in government programs to encourage the construction of houses and the universal access to basic sanitation is being released, though slower than we expected. Another sector that stimulates local demand is wind energy generation. Although the Brazilian consumption of this type of energy is low, the country relies on two large exporters of wind blades.

2. What are some of the key challenges faced by your company in the composites market?

Rodrigo Oliveira: In the previous months, the greatest challenge was to manage cash flow difficulties that haunted a large number of our customers. Such shortage of cash led the consumed value to fall significantly ever since the crisis begun.

3. Tell us about the impact of government policies on composites industry?

Rodrigo Oliveira: Any government policy that favors infrastructure development is positive to our market. Therefore, I shall highlight the Growth Acceleration Program (PAC) and “Minha Casa, Minha Vida” program as two tools that are generating positive impacts to our industry. There is also “Caminho da Escola” program; the purpose is to renew the school buses fleet. On the other hand, Brazilian government should be alert to State taxes equalization, considering that there are several discrepancies in taxation depending on the region of the country.

4. Key challenges faced by composite end-users in Brazil?

Rodrigo Oliveira: Recycling is the greatest challenge currently faced by end-users, especially by the automotive industry. On the other hand, as a raw material supplier, we noticed that the competition to reach the end-user is increasingly tough. This applies, for example, to the dispute against suppliers of the polyethylene used to manufacture water storage tanks.

5. Government support and policies change that is required to encourage exports of composite components?

Rodrigo Oliveira: Overall, the primary incentives to exportation are created by the importing country. Nonetheless, Brazil should focus more on the execution of bilateral agreements, similar to what Chile has done in the last few years with the U.S.

6. Emerging applications that you foresee to have a significant bearing on the composite consumption in Brazil?

Rodrigo Oliveira: In addition to wind blades, another promising application in Brazil is pipe. Only 10% of the piping used in the country today is made of composite materials, whilst the great majority is made of steel or iron. In the rest of the world, this relation is the opposite.

7. How has global slowdown affected the market? How has been your organization’s growth in the last 2-3 years and how do your foresee the growth forward?

Rodrigo Oliveira: Crisis has affected the market especially due to credit supply reduction. Several companies that worked with operations linked to bank loans have faced difficulties, which forced them to drastically reduce the production volume. As a result, they began to consume fewer raw materials, such as the resins we provide. I believe there will be an improvement in the second half of the year, but banks are still very conservative when it comes to financing. Therefore, the Brazilian composites market shall not manage to repeat the growth rate reported in 2008.

8. Do you see high-potential for composites in the market? If yes, what are some of reasons for the same?

Rodrigo Oliveira: Yes. Composites are still at its very beginning in Brazil, a country where the use of metals and thermoplastics prevails. Hence, I believe consumption shall grow intensively over the upcoming years.

For further information on Brazil Composite Industry please check the link "Growth Opportunities in the Brazilian Composites Market 2008-2013, September, 2008, NEW "

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