By Lise Alves, Contributing Reporter
SÃO PAULO, BRAZIL – Weak consumer demand in the first half of 2014 have led many industries in Brazil to decrease production and announce employee furloughs for the months of June or July. With much of the first quarter’s production still on store shelves, many companies in the electronics and appliances retail sector are taking action.
The industry is one of the most affected by the slowdown of the economy and lower sales. Whirlpool Latin America, Brazilian owner of brand names Brastemp, Consul and KitchenAid announced the company opted to give employee furlough to all its administrative area units in Brazil between June 12th and 25th. In addition, production line at the Manaus plant will close for scheduled maintenance from June 9th to July 8th.
Brazilian newspaper O Globo reported that one of the largest electronics and appliances companies in the country, Electrolux, has also given employee furlough to 4,600 of its 8,600 employees in its three plants. The furloughs vary from 10 to 30 days.
The IBGE, or Brazilian Statistics Bureau, reports that the latest data for durable goods production shows the segment retreated by twelve percent in April, with negative pressure coming from kitchen appliances (down thirteen percent) and larger household appliances such as refrigerators and washing machines (down 7.9 percent).
Data from Abinee, or Brazilian Electric Electronic Industry Association, shows that in the first four months of 2014, industrial production of electro-electronic products fell by 4.4 percent. According to Luiz Cezar Rochel, economics manager at the entity, the second semester is not promising either. “We are not optimistic about the second semester. With inflation nearing the ceiling of the target, production and consumer demand are likely to suffer even further.”
A survey conducted by Abinee in April shows that only 37 percent of those interviewed registered a growth in orders and/or sales, in comparison to 44 percent in March. For 2014, says Rochel, results are likely to mirror those in 2013. “We are likely to see no changes in growth from what was seen last year.”
To add to the pessimism, National Industry Confederation, or CNI, released its Industrial Business Confidence Index, or ICEI, on Monday, reinforcing the dim forecasts by the industry for the next few months. The ICEI index fell to 47.5 points in June, a decline of 0.5 points from May’s results.
This is the third consecutive month the confidence index has dropped below fifty points. The index ranges from 0 to 100 and any numbers below fifty indicate a lack of confidence by the industry. “The signals given show a continuous slowdown of industrial activity,” says Humberto Barbato, president of Abinee, adding “there is no perspective of a change in business mood for the next few months.”
Yet not all industry segments are unhappy about consumer sales results. Lorival Kiçula, president of Eletros (National Electronic Manufacturers Association) says that the first half of 2014 has been exceptional for TV manufacturers. “In the first four months of this year TV manufacturers sold 5.7 million TVs, hike of 46 percent in relation to the same time last year,” he says. Kiçula adds that Eletros forecasts sales of 16 million TV appliances this year, most sold during the first half of the year, just in time for the World Cup.