As Aftermarket Business World delves into the challenges and opportunities for the automotive aftermarket in Brazil, we sat down with Zomar Oliveira, Director of Operations, with Fras-le North America, Inc. With Fras-le’s corporate headquarters in Caxias do Sul, Brazil, Oliveira (a native Brazilian) gave us his insight on business operations in the country and how aftermarket companies can maximize their success in the Brazilian market.
What are some of the main challenges when conducting business in Brazil?
Oliveira: Brazil is a growing country with many opportunities for aftermarket companies, primarily due to increased vehicle production. The Brazilian government protects local manufacturers through tariffs, so this is one factor you should consider when doing business in Brazil.
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No matter where you do business in the world, you always need to analyze the local situation. You should consider the taxes, exchange rate, and how the exchange rate is being managed, and how much of it is driven by government policy. Because we are a company that exports, the exchange rate plays an important role as we consider different markets.
Of course you have to understand your competition. Brazil is a country where some competitors do not pay taxes so products are sold at a price that may be 15 percent to 20 percent lower than you. It is not as fair of a playing ground in Brazil as it is here.
But the Brazilian government has taken action in order to better manage taxes in the country.
Another factor is the informality and lack of record keeping in a lot of smaller, traditional Brazilian businesses. So the government has gotten very involved in record keeping for corporations. Every month, companies must submit to the government a report of invoices that have been billed. The government also monitors when the payment comes in, and they make sure that the exact billed payment comes in and is accounted for. It makes giving any kind of a credit after a shipment very difficult.
Interest rates are also much higher in Brazil.
All of this brings up the importance of having a partner in the country that already knows the culture. With a local partner, you might miss the subtle cultural differences. For example, when doing business in Brazil punctuality is not necessarily important. So having a partner with intimate knowledge of the complexities of conducting business in Brazil is very important.
What do you see as the biggest benefits to being a global company?
Oliveira: We have learned different ways of doing business in different areas of the world to use as a benchmark.. However, there are always inherent risks you have to analyze before you decide to move forward.
As a global manufacturer, we have a portfolio of products we've developed for many different markets, and this helps with expansion.
It is important to manufacture products in a place where they are going to sell and the ability to make a good margin. If an exchange rate is not favorable to import, then export. You have to play the game in order to succeed. Sometimes companies can shift production from one place to another to keep costs under control. There are a lot of possibilities, so you must be flexible.
Tell me about your Work Truck and Fleet Brake Pad Program, its features and growth.
Oliveira: As Fras-le is one of the North American leaders in both OEM and aftermarket heavy-duty truck friction, as well as OEM friction for medium-duty trucks, our products are a perfect fit for the work truck and fleet segment of the aftermarket.
Although our former full-line program included many work truck applications, we have shifted our focus entirely toward the work truck and fleet market segment. With this shift, we have also added more work truck applications to our portfolio, as well as 11 FMSI references for air disc brakes for commercial vehicles.
Although Fras-le has been selling aftermarket hydraulic disc brake pads for work trucks since 2009, the Work Truck & Fleet Brake Pad Program is our new program offering for the North American aftermarket. Our market research showed an underserved market that would provide opportunities for distributors that are primarily focused on light vehicles, as well as those focused on the medium- and heavy-duty truck market, to be able to better reach the fleet market with this important product line.
We offer a broad portfolio of products with more than 1,000 items on the fleet side.
Medium-duty is a very underserved market. The market has light-vehicle and heavy-duty distributors, but nobody has really focused on that large chunk in the middle. Fras-le is expanding and going after the fleets with these needs.
We will provide distributors with complete sales kits on how to sell these products with marketing information, catalogs and many other tools to help them succeed. We really want to help teach distributors how to sell to the fleets.
As for technicians, we are more than willing to provide as much technical information as they need. And down the line, we hope to partner with technicians.
What is Fras-le focusing on now for the future? Any new initiatives?
Oliveira: Fras-le has a vision to almost double the size of the company worldwide in the next five years. The North American market is one of the biggest markets in the world, and even though we already have a big chunk of that here on the heavy-duty side, we've put forth a lot of effort and investment here in the U.S. in order to grow. That is why we have invested heavily in our manufacturing plant in Prattville, Alabama.
Fras-le wants to continue being a global leader in brake technology and innovation.
About Zomar Oliveira
Oliveira brings 35 years of experience in the automotive industry to his role as Fras-le North America’s director of operations. His engineering, sales and business background help him guide Fras-le’s projects to fruition.
Working with Fras-le North America since 2008, Oliveira’s role is to steer the company on its course towards global growth. He oversees the day-to-day management of the administrative, financial and manufacturing segments of the North American operation.
Oliveira has been with the Randon organization since 2004. Before joining Fras-le’s North American operation he served as the director of technology, OE sales and quality at Fras-le S/A, the company headquarters in Rio Grande do Sul, Brazil. Prior to that he was the engineering and export sales manager at Master Sistemas Automotivos Ltda, also a Randon company, based in Rio Grande do Sul.
Fluent in English and Portuguese, and semi-fluent in Spanish, Oliveira has a multitude of experience in dealing with customers and suppliers worldwide. Prior to his role within the Randon organization, Oliveira developed his management career with companies such as Bendix of Brazil, Wabco, AlliedSignal Automotive and Robert Bosch Ltda. In these positions Oliveira learned to effectively manage business using the lean thinking process as well as the theory of constraints technique.
Oliveira has maintained membership with the Society of Automotive Engineers (SAE) since 1981. He served as director of the 150 person SAE regional section of Caxias do Sul, Brazil in 2007. In that role he aimed to promote knowledge throughout the chapter by encouraging members to exchange experiences. Serving as president of the SAE 8th International Brake Colloquium held in Gramado, Brazil in 2007, Oliveira oversaw the project management of an event that brought in over 400 people from around the globe.
A paper published by Oliveira and other SAE members led to the development of what became the most commonly used S-Cam brake used in Brazil since 1990. The brake they developed was smaller, which reduced brake temperature and increased the brake lining life-span.
Oliveira earned a Bachelor of Science degree in mechanical engineering from Campinas University in 1976. Previously a life-long resident of Brazil, Oliveira currently resides in Novi, Michigan.