In March, shortly after the start of coronavirus pandemic in Brazil, the president of the Brazilian multinational Iochpe-Maxion, Marcos Oliveira, did not believe that the impact on the company would be so strong. Since then, the global leader in the production of automotive steel and aluminum wheels has closed one of its two factories in the United States, restructured that cut 8% of its workforce, reduced investments and postponed the inauguration of almost two years. a unit in China.
Part of these measures was already being evaluated, but the crisis that came with the covid-19 made them necessary, informs Oliveira. In the third quarter, the company saw its net profit fall 115.5% compared to the same period in 2019 and recorded a loss of R $ 18.8 million. Oliveira, however, remains optimistic. “The recovery has been faster than we imagined,” he says.
For him, an eventual second wave of the pandemic should not alter the current global forecast for production of light vehicles, of 73 million units, almost 18% lower than the result of 2019. The return to last year’s volumes should only occur in 2022 or 2023.
The challenges to improve results in this last quarter include difficulties in the supply of raw materials, a problem faced by several industrial sectors partly precisely because of the stronger than expected economic recovery. The group that has 31 factories, eight in Brazil, already operates with 75% to 80% of its production capacity. In the country, it has summoned employees to work overtime mainly to make up for delays in suppliers’ deliveries.
New external contract
The pandemic period was not just bad news. Two months ago, Iochpe-Maxion won a contract for the supply of steel wheels to the American Taksmaster Components, which operates in the trailer segment, beating competitors from the USA and China itself. Most of the wheels will be made in Brazil, and part will also go to Mexico and India. “We do not disclose values, but it is a contract that allows us to increase our participation in the American market and also to acquire new customers”, says Oliveira.
The exchange rate helped in winning the new contract. Oliveira informs that the company buys the raw material used in production in the regions where it produces, so it has a natural foreign exchange head, which reflects positively on the revenue from the results of subsidiaries abroad. “The negative point is that it impacts our debt”, says the executive.
Iochpe-Maxion currently employs around 15 thousand workers, of which 7 thousand in Brazil (where there were no cuts), and has 27% of its revenue coming from Brazil, a share that was already 40% before the 2014 crisis. growth of external operations, Oliveira believes that this slice should reach a maximum of 30% when business stabilizes.
The company has also made several partnerships to prepare its products for the electric, autonomous and shared mobility future. Among the projects in progress are reducing the weight of steel wheels and smart wheels that collect travel data and measure tire pressure.