While the company declined to enumerate the value of the investment, products that will be included in the new lines include: acrylic, styrene acrylic, vinyl acrylic and polyvinyl acetate. The plant is located at Araçariguama, in Sao Paulo state, about 40 miles from the capital city of Sao Paulo.
One reason for the investment in domestic production is the avoidance of a mix of taxes on imported paint products that can reach 24 percent, noted Lion. Another reason was scarcity of high-quality product in the local market, he said. Brazil’s growing middle class has spurred sales of high quality products to growth rates beyond those of lower quality and middle-quality paints. The rising labor cost in Brazil also has skewed preferences for paints toward products that will cover with one coat rather than successive coats.
Although the economy of Brazil is expected to contract by one percent this year, compared with 0.1 percent positive growth last year, the second semester is expected to be better for the paint industry than the current semester, Lion noted. Brazil’s currency, the real, has dropped 14 percent against the U.S. dollar this year, an 11-year low in value. This foreign exchange dynamic also has made imported paint materials more expensive.
Arkema plans to begin exports of its acrylic resins to the surrounding Southern Cone countries of Argentina, Chile, Paraguay and Uruguay within two or three months, Lion observed. Brazil is a member of the regional trade bloc, which precludes import taxes on member country products.
Apart from the production increase, Arkema also has made investments in areas of logistics and shipping, storage and filtration to further enhance its marketing capability. At the time of the new production announcement, Eric Schmitt, the president of Arkema Quimica Ltda. Brazil, said, “These improvements will enable us to begin migrating production capabilities and product lines currently available in other parts of the world to the facility in Brazil. We can now provide customers local manufacturing of innovative, market-leading products, produced in a modern, automated facility with a focus on consistent, repeatable quality, and environmental responsibility.”
The consuming business of the new capacity production include “architectural coatings, industrial coatings, pressure sensitive adhesives and construction adhesives, textiles, sealants and waterproofing membranes,” the company said. Among new products that will be marketed in Brazil and the region as a result of the new capacity are Encor 265 BR, a “high scrubbing styrene acrylic resin for use in architectural coatings,” and Encor DT 211 BR, a “100 percent acrylic ideally suited for fast-dry traffic paints,” Arkema noted.
The Araçariguama plant produces a “wide range of low-VOC (volatile organic compound) resin technologies including waterborne emulsions and binders, high solids and high performance coating additives for formulators of architectural coatings, industrial finishes, construction products, traffic paints, sealants and adhesive products,” the company indicated.