Project will increase company’s production capacity of industrial engines by up to 25% in Jaraguá do Sul

09/28/2022

---

WEG’s factory in Brazil — Foto: Chan/Divulgação/WEG

Brazilian motor maker WEG will invest R$660 million (around $120 million) over the next three years to expand its production capacity of industrial motors and electric traction in Brazil. The reason, according to the company, is to serve the Brazilian market and the units abroad with components.

In addition to the expansion of the component factories and export logistics building, the Santa Catarina-based company will also build a new plant aimed at the production of industrial motors and, especially, motors to serve the electric mobility segment.

The project will be carried out at the company’s industrial site in Jaraguá do Sul and will increase its production capacity of industrial engines by up to 25%. Alberto Kuba, WEG’s managing director of industrial motors, told Valor that the investment expands the manufacturing capacity to meet the demands of assembly lines and commercial subsidiaries abroad, and provides strong capacity in Brazil to meet the growing demand for electric mobility.

“The worldwide scenario, with the pandemic, and more recently the war in Russia, brought some market instabilities in which WEG was able to capture a good number of new clients. The European market, for example, which is largely supplied by the Asian markets, had problems with the logistical crisis, lack of materials, and in Brazil, we were able to deal with this very well,” he said.

The company is now the largest manufacturer of electric motors in the world and produces about 2 million motors per year in Jaraguá do Sul. But the company reached the limit of its capacity in Jaraguá after expanding its market share. As a result, the company decided to expand production capacity to 2.5 million engines per year by 2025.

The plan is to prepare WEG Motors here in Brazil to meet the demand to be seen in the coming years for electric traction. The capital expenditure on components and industrial motors aims to serve both the local and the international markets.

“The project has two reasons. The first one is supplying units abroad with components, such as the new factory in India, the factory in Turkey, and Mexico, which buys part of the components from Brazil. In addition, WEG has been working in the electric mobility segment and we will increasingly focus on the bus, truck, and commercial vehicle business. We are seeing a growing demand and we understand that electrification will make this market grow even more,” he said.

Mr. Kuba said that the electric motor business has received important investments over the last 10 years. The company has already invested $125 million in China, $215 million in Mexico, and $20 million in India. Plus, a $23 million investment is in progress in Portugal.

Initially, the investment will be made with the company’s own capital because of rising interest rates and the cost of capital in Brazil, which is still very high, but the company considers the possibility of seeking financing if market conditions improve.

The project will generate around 800 jobs, and the new factory for industrial and traction motors is expected to be ready by the first quarter of 2024. The building will have nearly 18,000 square meters of built-up area and will be designed to allow for a gradual and continuous increase in production capacity and to meet the company’s expansion needs over the next few years.

The plan also includes the updating and modernization of the existing components and logistics plants, totaling an expansion of nearly 23,000 square meters of built-up area to support the projected demand.

*By Robson Rodrigues — São Paulo

Source: Valor International

https://valorinternational.globo.com/business