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Sapa has laid off directors and management staff in Brazil as it cuts costs as sales drop in the country, its new vp for South America, Sergio Vendrasco, said.
The aluminium extruder’s workforce in Brazil was reduced by around 10% to about 300 people in November, the executive told Metal Bulletin.
Commercial director Erivam Boff and finance director Roberto Silva have left the company, while other management roles have been closed; their responsibilities will be absorbed by the remaining Sapa Aluminium Brasil staff.
“The restructuring is basically over and it is a response to the [extrusion] market’s contraction,” Vendrasco said.
“Sapa’s [sales] volumes have decreased a lot in Brazil, and the changes were made to adjust our structure to the new size of the company,” he added.
Sapa, which has plants for aluminium extrusion and precision tubing in the city of Itú, has seen its sales figures fall at an annual rate of about 20% in recent years, according to Vendrasco.
The executive has recently relocated to São Paulo state, taking on the roles of Sapa’s vp for South America and Sapa Aluminium Brasil gm.
He replaced Ivar Venås, who has taken the extrusion technology director role at Sapa Extrusions North America.
Previously, Vendrasco was vp of Sapa Precision Tubing North America.
“Everybody knows how much the extrusion market in Brazil is suffering, given that the installed capacity in the country is much higher than the demand and there is unfair competition due to fiscal benefits and people that are active in the informal market,” the executive said.
“This is a combination that challenges companies, such as Sapa, that are only active in the formal market and is strongly committed to its values,” Vendrasco added.
Sapa Aluminium Brasil is operating at about 70% of its installed capacity of 2,000 tpm.
“We expect to see a process of natural selection in the industry next year, as for many it will not make sense to continue operating,” Vendrasco said.
Besides reducing its payroll, Sapa has also been intensifying its efforts to cut operating costs and is seeking to increase exports of extruded aluminium products.
“We are convinced that the [domestic] market will return to growth, but until then we are developing new opportunities and getting involved in new markets, especially now that the currency is very favourable for exports,” Vendrasco said.
“Demand in the US market has been strong and we have started exporting some profiles for the industrial sector there,” he added.
While 2016 will be another challenging year for the industry in Brazil, very similar to 2015, “with the efforts to develop new markets and to cut costs, we expect to be able to deliver good results for Sapa’s shareholders”, Vendrasco said.
Danielle Assalve danielle.assalve@metalbulletin.com Twitter: dassalve_mb