Latin America

Latin America

Latin America: a balanced performance

In Latin America, a well balanced mix of markets and products resulted in good performance for Bekaert throughout the whole region in 2010 with the exception of Venezuela.

In general, the economic performance of the Latin America region was good, with a GDP growth of 5.7% and higher demand in the construction sector and the consumption of durable goods, including automotive. The exception to this trend was the Venezuelan economy which continued to suffer from lack of growth, high inflation and high interest rates.

The recovery of construction and infrastructure development in the emerging regions led to a worldwide surge in demand for minerals. Actual growth in mining operations is likely to continue as emerging regions keep urbanizing and industrializing.

Our business in the region achieved outstanding results across all sectors, including construction. Rising demand for raw materials was key to our increased business. Our well distributed presence in different Latin American countries allowed us to benefit from this growth in different mining activities such as copper and aluminum, and in agriculture.

We took additional steps in the Latin American markets towards the integration of our production platforms by further consolidating our activities in the Bekaert Ideal Holding. Collective purchasing activities by the Holding secured competitive prices. To answer the strong drive in demand we invested in capacity expansion at several plants.

Ecuador

The Ecuadorian economy grew in 2010 by 1.9%. Inflation was down to 3.3% versus 4.3% in 2009.

In 2010 we continued the integration of Ideal Alambrec, our Bekaert operations in Ecuador, into the Bekaert Ideal Holding. The company celebrated its 70th anniversary in 2010 and released the Manual para la Construcción, a toolkit compiled to provide construction workers with training and safe building practices in order to erect safer housing units for low income families.

Colombia

The Colombian economy showed a strong performance in 2010 with a GDP of 4.5% versus 0.7% in 2009.

The interest rates were amongst the lowest in Latin America, favoring construction projects as well as the consumption of durable goods with financing becoming more accessible for the local population.

The diplomatic and commercial relations with Venezuela suffered major fluctuations during the year impacting the overall activity of the country, since Venezuela is an important commercial partner and traditionally the second most important destination for Colombian exports.
Our subsidiary Proalco obtained the ISO 14001 certification in 2010 and is leading several environmental and educational projects involving children and other representatives of the communities near our plant in Muña, south of Bogota.
The Muña plant broke its production record for the second year in a row, leading to an increase of production output.

Venezuela

The Venezuelan economy continued to shrink in 2010 as GDP ended 2.5% lower than the previous year. Also, inflation and interest rates remained high in 2010.

During 2010, Venezuela suffered from a severe energy crisis, primarily caused by a long-lasting drought which adversely affected (mostly hydro-powered) electricity generation. As a consequence, our local wire rod producer faced production restrictions thus preventing normal supply to our Venezuelan subsidiary Vicson. We maximized our efforts to maintain supply to our customers, including the import of raw materials. Both top line sales and result were hit drastically as a result of the foreign exchange effect. In 2010 Vicson celebrated its 60th anniversary.

Peru

The Peruvian economy continued to grow at a very fast pace in 2010, as illustrated by the 8.7% GDP growth. Prodac, the Bekaert subsidiary in Peru, performed very well throughout the year.

The agricultural and mining sectors are expanding fast, while the development of construction activities is being supported by low interest rates.

Chile - Brazil

Chile

Chilean GDP grew by 5% in 2010 with only 1.7% inflation. The severe earthquake in February 2010 had only a temporary effect on the continuity of our operations and business in Chile. With the entire Bekaert community working better together and thanks to the strong commitment and spirit of our workers, we resumed all activities at the plant in a mere three weeks. Despite the fact that a significant number of our Chilean employees had to deal with damage or difficult situations at home because of the earthquake (e.g. cut off from water supplies), they spared no effort to keep serving our customers.

The Chilean mining industry is very active in the northern part of the country and is planning to expand. In anticipation of increasing demand, Prodalam, our distribution arm in Chile has opened new branches in Antofagasta to better serve the needs of our mining customers there.

Bekaert provides support for rescue operations in the San José mine

Bekaert made a vital contribution to the rescue of the 33 trapped Chilean miners through its local joint venture company Prodinsa. It provided a rotation resistant rope to be used as back-up wire rope for the hoisting of the rescue capsule.

The Chilean company ASMAR (Astilleros y Maestranza de la Armada) was responsible for developing and engineering the now famous rescue capsule. Yet, from the early development stages, it became clear that the issue of the possible capsule rotation during the hoist had to be tackled.

Prodinsa, therefore, suggested to use rotation resistant steel wire rope. ASMAR was immediately interested. The rotation resistance of Prodinsa’s IZAFLEX wire rope is achieved by stranding of the inner wire layer in one direction and the outer layer in the reverse direction. The wire rope consists of 245 high-carbon level wires which provide high traction resistance.

After thorough testing at the San José mine site, Prodinsa provided a 1000 m long 24 mm diameter rotation resistant rope to be used as back-up wire rope for the hoisting of the 600 kg rescue capsule.

Brazil

The economy in Brazil was fueled by a Brazilian GDP increase of 7.5%, the highest in 8 years of the Lula government. Due to a very strong Real, domestic prices continued to decrease and import levels increased.

Bekaert has been actively supporting a growth strategy in Brazil for many years, taking advantage of favorable market conditions for our activities, including political stability, sound economic policies and a large domestic market allowing economies of scale and export opportunities. The company’s outstanding performance is closely related to the economic boost experienced in the Northeast of Brazil, mainly in Bahia. In order to prepare for the impending migration of business to the region, we realized expansion works of the plants’ capacity.

Already back in early 2009 local tire cord demand in Brazil had picked up again and pushed the capacity utilization of our local production platform in Itaúna to its maximum towards the end of the year. The Itaúna plant also expanded its market share with several local tire producers and succeeded in replacing low profile products with higher tensile steel cord.

Our activities for the construction industry were boosted, as the Brazilian government is stepping up its investments in civil construction due to a significant need for infrastructure (bridges, railways,etc.) and two major sporting events: the 2014 FIFA World Cup and the 2016 Olympic Games. A spectacular example of civil engineering, the 3 595 meter long Rio Negro bridge in Amazônia, the second largest river bridge in the world, is tensioned by stay cable and prestressed strands from Bekaert's joint venture plants.

Belgo Bekaert Nordeste, our joint venture in the Bahia state, was crowned ‘Company of the Year in metallurgy and steelmaking industry’. This award, given by the newspaper Valor Econômico, is considered to be the most prestigious public corporate award in the country. It scores companies on the basis of seven criteria: sustainable growth, net income, value generation, profitability, activity margin, current liquidity and asset turnover.

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