By Tim Hanley - May 15, 2013
I returned from another interesting week in Brazil and with each visit I find that I get a better glimpse of the dynamic changes happening in this market. This was my second visit in the past six months, and given the deep and ongoing interest by manufacturing companies, it certainly seems to be a place that deserves increasing attention.
During this most recent trip, I had the opportunity to meet with several senior executives at top Brazilian and multinational companies. It was fascinating to receive firsthand accounts from these manufacturing leaders on both the strengths and challenges of the current business environment in Brazil and their outlook on prospects for the future. Not surprisingly, despite the diverse manufacturing sectors these leaders represented, their insights had very common themes.
One of the themes that came up in every conversation was a focus on talent and specifically, talent development. A CEO I spoke with noted they were making increasing investments within their company in this area—and also pointed out they had concerns about the adequacy of incoming talent to meet their growth demands. The shortage of finance talent in particular was cited by several as a common concern.
I found this to be interesting, particularly, as access to “talent-driven innovation” was highlighted by over 550 CEOs and manufacturing leaders surveyed by Deloitte Touche Tohmatsu Limited’s Global Manufacturing Industry group as the top driver of competitiveness in the 2013 Global Manufacturing Competitiveness Index. As it relates to Brazil, executives surveyed viewed Brazil’s current global manufacturing competitiveness has slipped to eighth ranking today, as compared to a ranking of fifth in the initial survey from the 2010 Global Manufacturing Competitiveness Index. This should not be surprising given the challenges in the Brazilian economy in recent years.
When asked about their view of Brazil’s competitiveness five years from now, it was interesting that the executives I met with recently had a much stronger view (moving their ranking up to third globally). These manufacturing leaders, however, were all very pragmatic, pointing out the talent gaps and the need for more investment in infrastructure, as real limiting issues.
From my discussions with a fairly diverse group of CEO’s, it is clear that while they were still bullish on the long term prospects for their business in Brazil, they recognized some short term challenges remain. One CEO noted the challenge of the many layers of bureaucracy in Brazil, making timely decisions to support a better business environment very difficult, echoing the views of the CEOs surveyed in the 2013 Index report mentioned above.
One of the additional challenges Brazil faces is the presence of trade barriers that exist which make it very difficult to export products into the country. To overcome this and given the interest in the robust consumer market, a number of manufacturing companies have recently decided to make more investments in Brazil to establish or strengthen their local presence.
The executives I met certainly agreed however that in the longer term, there is no doubt with the many benefits and advantages that Brazil has, that they should continue to be a very strong manufacturing economy for years to come.
Tim Hanley is the Global Leader of the Manufacturing Industry group of Deloitte Touche Tohmatsu Limited (DTTL). In his global industry leadership role, he directs strategic initiatives and investments to grow Deloitte member firm market share within the manufacturing industry. During his distinguished 34-year career, Hanley has led teams serving all business aspects, including consulting with top management regarding organizational financial strategy development and execution, acquisitions, and market development. Follow Tim on Twitter.