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    • The automotive auto parts and capital goods

    2018-11-07

    The automotive, auto parts and capital goods industries were the largest MT users during the “Economic Miracle” period. The demand for unsophisticated machines was met by the domestic production. The importations, whether of parts and/or components, continued to supply the noblest market segments. Along with domestic supply diversification, the variety of types and models produced by a “multitude of manufacturers that produce identical or very similar machines, both in technique and quality” underwent reductions (Vidossich, 1974, p. 49). As for the MT “technological diversity” in the Brazilian economy—such as the percentage of different produced and used MTs in the country compared to the order GSK-3 Inhibitor IX comprising the international supply—the author emphasizes the role imported MTs to meet technology demands from the national industry as well as the existing technological gap in the MT national industrial park in 1971 Thus, two technological gaps coexisted among the incorporated technology sophistication levels concerning national/foreign supply and domestic MT demands (MT international market, domestic supply, domestic demand, domestic companies and foreign subsidiaries supply). The first gap was between the technology internally used in the country and the latest global innovations (MT/NC/CNC). The second was the technological gap corresponding to the disparity between domestic demands and domestic technology supply. There was a long time lag between the changes in structure demands and the MT supplying of technological capability because “users and producers interact in Brazil within a market that is internationalized by means of imports, local production held ​​by subsidiaries from foreign companies and even by means of international production standards adopted by local users” (Tauile, 1985, p. 683). In the mid-1970s, the sector consisted of three distinct types of producers: (i) small and medium-sized companies, which less sophisticated production was destined to less dynamic sectors of the economy; (ii) medium and large-sized national companies that produced a great variety of sophisticated machines destined to more dynamic sectors; (iii) foreign companies that, given their characteristics and linkages, targeted their production on leading sectors (Magalhães, 1976, p. 17 apudTauile, 1985, p. 686). The growth of the MT sector in the ‘Economic Miracle’ period was extended by the II PND (National Development Plan) investments—given the specific inter-industrial relationships within the sector—which led to productivity gains and to increase in the value of exported products. During this period, the MT companies got government funding for expanding their productive capacity (Cruz, 1985). In the early 1980s, Brazil had a well-diversified and sophisticated capital goods industry but, in international term, it was uncompetitive due to the companies’ excessive verticalization and to the insufficient scales of production in some sectors. The serial capital goods production sectors (such as trucks and tractors, for example) were the most competitive ones. The MT subsector also stood out as competitive, at least with respect to companies with a history of productive and technological learning, which sought to extend their knowledge in order to follow the radical change in the industry’s technological trajectory, i.e., machine tools with computer numerical control (MT/CNC). In the early 1980s, the industry was still geared to the domestic market, but it had reached an export coefficient of 17.4% (Cruz, 1993, p. 31) by targeting the Latin American market, particularly Mexico, Argentina, Peru, Uruguay and Chile (Araújo et al., 1992, p. 93), and this expansion comprised conventional MT and price was key to competition factor to it. From 1981 to 1983, the decline in public and private investments affected the industry as a whole, as well as the capital goods sector, mainly the MT sector. At this point in time, the industrial policy instruments were put in service of the priority macro goals in order to save currencies. Besides, imports control lost its aim of promoting industrialization. Foreign companies also reversed their expansion strategies in Brazil. The internal crisis met the economic crisis in Latin America, which affected countries that traditionally imported Brazilian MTs. Nevertheless, it was possible to solve the crisis by expanding MT/CNC production by meeting users’ modernization needs in the capital goods, auto parts and automotive sectors. In fact, it is known that the leading companies seeking to enter the sector’s new technological trajectory by means of licensing increased their investments in R&D in relation to the net revenue. Actually, only one MT manufacturer spent, in 1982, about 80% of the sector’s technological spending (Ferraz, 1987, p. 439).