Industry in Brazil

Iron Factory in Sorocaba, province of São Paulo, 1884.

Brazilian industry has its earliest origin in workshops dating from the beginning of the 19th century. Most of the country's industrial establishments appeared in the Brazilian southeast (mainly in the provinces of Rio de Janeiro, Minas Gerais and, later, São Paulo), and, according to the Commerce, Agriculture, Factories and Navigation Joint, 77 establishments registered between 1808 and 1840 were classified as “factories” or “manufacturers”. However, most, about 56 establishments, would be considered workshops by today's standards, directed toward the production of soap and candles of tallow, snuff, spinning and weaving, foods, melting of iron and metals, wool and silk, amongst others. They used both slaves and free laborers.

There were twenty establishments that could be considered in fact manufacturers, and of this total, thirteen were created between the years 1831 and 1840. All were, however, of small size and more resembled large workshops than proper factories. Still, the manufactured goods were quite diverse: hats, combs, farriery and sawmills, spinning and weaving, soap and candles, glasses, carpets, oil, etc. Probably because of the instability of the regency period, only nine of these establishments were still functioning in 1841, but these nine were of great size and could be considered to “presage a new era for manufactures”.

The advent of real manufacturing before the 1840s was extremely limited, due to the self-sufficiency of the regions of the country (mainly farms producing coffee and sugar cane, which produced their own food, clothes, equipment, etc.), the lack of capital, and high costs of production that made it impossible for national manufactures to compete with foreign products. Costs were high because most of the raw materials were imported, even though some of the plants already used machines.

1840s–1860s

Shipyard in the city of Rio de Janeiro, c.1862.

The promulgation of the Alves Branco tariff would modify this picture. This tariff succeeded in increasing State revenues and stimulating growth of national industry. The sudden proliferation of capital was directed to investments in the areas of urban services, transports, commerce, banks, industries, etc. Most of the capital invested in industries was directed toward textiles. With unprecedented industrial growth, multiple manufacturing establishments appeared, dedicated to such diverse products as melting of iron and metal, machinery, soap and candles, glasses, beer, vinegar, gallons of gold and silver, shoes, hats and cotton fabric.

One of the main establishments created at this period was the metallurgical factory Ponta da Areia (in English: Sand Tip), in the city of Niterói, that also constructed steamships. It is likely that the textile industry benefited most by the virtue of being the oldest in the country. It first appeared in 1830, with the founding of the Santo Antonio do Queimado plant in the city of Salvador, capital of the province of Bahia. The textile sector was quite dynamic in the monarchic period and received large investments until 1890, when it entered into decline. Various modernizations occurred, principally between 1840 and 1860, when factories with a high level of technological capability were created, able to compete with other major international centers. Other improvements came with the establishment of factories and forges geared for the production of equipment and pieces for textile manufacture. And now Brazil ranks second in the world’s largest producer of denim, the third – for the production of knitted fabrics, the fifth – for the manufacture of clothing and seventh – for the production of yarns and fibers. The concentration of industry that emerged in the province of Bahia considerably expanded its economic scope, reaching the south of Ceará, Piauí and even Minas Gerais.

The extinction of the traffic in African slaves in 1850, contrary to what many authors allege, did not "liberate" credit for industrial development. That claim has no documentary basis whatever. On the contrary, capital employed in the trade was had already been directed to sectors such as enterprises of urban services, transport, banking and trade. But it is possible that there was an indirect contribution to the growth of the industrial sector through banking loans. In 1850, there were 50 factories with a capital of at least Rs 7.000:000$000.

The imperial government created several incentives for the industrialization of the country. The earliest of these date from the reign of Dom Pedro I, through awards of government grants. The first establishment to receive such a grant was the Fábrica das Chitas (in English: Chitas Factory), devoted to paper and printing, by a decree of 26 June 1826. The practice was resumed in the 1840s, when new industrial establishments received subsidies. in 1857, seven factories benefited from this practice of incentives, among them, the Ponta da Areia mentioned above and that was owned by Irineu Evangelista de Sousa (later Viscount of Mauá). One of the criteria for the granting of these subsidies was the exclusive employment of free workers.

The goal, then, was not only the transition from the old colonial economic system to that of the modern capitalist, but also from slave labor to free. Other incentives arose, such as the decree of 8 August 1846 that exempted manufactured products from certain transport taxes (internally as well as externally), shielded from military recruitament a determinate number of employees of industrial establishments and eliminated tariffs on parts and machinery imported for textile factories. The following year in June, a new decree stated that all industrial establishments on national soil would be free of taxes on imported raw materials. Thus, production costs of domestic industry dropped considerably, allowing it to compete with foreign products. The Alves Branco tariff underwent modification in 1857, reducing to 15% the tax on imported products. Later, under the Rio Branco cabinet at the beginning of the 1870s, the tariff on foreign products was newly raised to 40%, and new raw materials were exempted from import taxes.

1860s–1880s

Factory in Brazil, 1880.

At the end of the 1860s, came a new industrial surge caused by two armed conflicts: the American Civil War and the Paraguayan War. Because of the first, U.S. production of cotton was interrupted by the blockade of the Union forces against the Confederacy. The second resulted in the emission of currency and an increase in import tariffs to cover the costs of war. This resulted in a great stimulus not only for the textile industry, but also for other sector, such as chemicals, cigars, glass, paper, leather, and optical and nautical instruments.

During the 1870s, thanks to the decline of the coffee region of the Paraíba Valley and some areas of sugar production, many owners of plantations invested not only in the cotton textile industry, but also in other manufacturing sectors. Deployment of a railway network throughout the national territory also stimulated the emergence of new industrial activities, mainly in São Paulo. Industry also experienced a major impetus in this period. From the 1870s onward, the great expansion of industrialization became a constant in Brazil. In 1866, there were 9 textile factories with 795 workers. In 1881, there were 46 textile factories through the country: 12 in Bahia; 11 in Rio de Janeiro; 9 in São Paulo; 9 in Minas Gerais; and 5 in other provinces. The number of establishments diminished a little by 1885 to 42 textile factories with 3,172 workers. However, it did not harm the overall growth in the sector up to 1889.

In 1880 the Industrial Association was established, with its first board elected the following year. The Association supported new industrial incentives and propagandized against the defenders of an essentially agricultural Brazil. 9.6% of the capital of the Brazilian economy was directed toward industry by 1884, and by 1885, 11.2%. This figure dropped sharply during the republican period, falling to 5% between 1895 and 1899, and improving slightly to 6% between 1900 and 1904. Still, it would take many years to return to the level that prevailed during the Empire. At the time of its downfall in 1889, monarchical Brazil had 636 factories (representing an annual rate of increase of 6.74% from 1850) with a capital of Rs 401.630:600$000 (annual growth rate of 10.94% since 1850). Of this amount, 60% were employed in the textile sector, 15% in food, 10% in the chemical, 4% in timber, 3.5% in clothing and 3% in metallurgy.

Brazilian industrial sector

Most large industry is concentrated in the south and south east. The north east is traditionally the poorest part of Brazil, but it is beginning to attract new investment.

Brazil has the third most advanced industrial sector in The Americas. Accounting for one-third of GDP, Brazil's diverse industries range from automobiles, steel and petrochemicals to computers, aircraft, and consumer durables. With the increased economic stability provided by the Plano Real, Brazilian and multinational businesses have invested heavily in new equipment and technology, a large proportion of which has been purchased from U.S. firms.

Brazil has a diverse and sophisticated services industry as well. During the early 1990s, the banking sector accounted for as much as 16% of GDP. Although undergoing a major overhaul, Brazil's financial services industry provides local businesses with a wide range of products and is attracting numerous new entrants, including U.S. financial firms. The São Paulo and Rio de Janeiro stock exchanges are undergoing a consolidation and the reinsurance sector is about to be privatized.

The Brazilian government has undertaken an ambitious program to reduce dependence on imported oil. Imports previously accounted for more than 70% of the country's oil needs but in 2006 Brazil has achieved oil self-sufficiency. Brazil is one of the world's leading producers of hydroelectric power, with a current capacity of about 58,000 megawatts. Existing hydroelectric power provides 92% of the nation's electricity. Two large hydroelectric projects, the 12,600 megawatt Itaipu Dam on the Paraná River—the world's largest dam—and the Tucurui Dam in Para in northern Brazil, are in operation. Brazil's first commercial nuclear reactor, Angra I, located near Rio de Janeiro, has been in operation for more than 10 years. Angra II is under construction and, after years of delays, is about to come on line. An Angra III is planned. The three reactors would have combined capacity of 3,000 megawatts when completed.[www.ipardes.gov.br/anuario_2005/2infraestrutura/qdo2_1_1.xls]

Proven mineral resources are extensive. Large iron and manganese reserves are important sources of industrial raw materials and export earnings. Deposits of nickel, tin, chromite, bauxite, beryllium, copper, lead, tungsten, zinc, gold, and other minerals are exploited. High-quality coking-grade coal required in the steel industry is in short supply.

Cars

See also: Ethanol fuel in Brazil

Brazilian automobile production began in 1957, with an initial production of 1,166 units in the first year. Most of the production is concentrated in the states São Paulo, Minas Gerais and Paraná.

The Automotive Industry in Brazil has boomed after ex-president Fernando Collor de Mello opened up the market in 1990, but high production costs, high taxes and technology deficit are barriers that Brazil is still struggling to defeat.

Brazil’s automotive industry has been displaying an impressive growth of 2 digits over the last years, totaling revenues of over USD 100 billion by the end of 2010. These figures secured Brazil the fourth position amongst the largest car markets in the world (one position ahead of Germany), and generates 1.5 million jobs.

The perspective of a steady development of the industry is attracting billions in investments to the country. BMW announced in December 2011 plans to set up a plant in São Paulo, and by 2014 Chinese manufacturer JAC Motors will officially start the production in the assembly line that is being built in Bahia state.

Automobile production

Year	1960	1970	1980	1990	2000	2004	2005	2007	2008
Units (in millions)	0.042	0.306	0.933	0.663	1.36	1.86	2.50	2.61	2.97

Petroleum

The northeast shore of the Bay of All Saints was home to Brazil's first active oil fields. The municipality of São Francisco do Conde at the north of the bay remains a port serving the refineries at Mataripe. The bay is dredged from the port to the Atlantic Ocean to remain open to shipping.

Petroleum production

Year	1960	1970	1980	1990	2000	2006
Thousand barrels per day	83	169	189	653	1,271	1,809

Statistics

Electricity:

• production: 380 TWh (2004)
• consumption: 391 TWh (2004)

Electricity - production by source: (2004)

• other sources: 9%
• hydroelectric: 83%
• conventional thermal: 4%
• nuclear: 4%

Oil:

• production: 2.165 million barrel/day (2006)
• consumption: 2.216 million barrel/day (2006)
• imports: 0.051 million barrel/day (2006)
• proven reserves: 11.2 billion barrels (2006)
• refinery capacity: 1.908 million barrel/day (2006)

Natural gas:

• production: 9.88 billion cubic kilometers (2006)
• consumption: 19.34 billion cubic kilometers (2006)
• imports: 9.45 billion cubic kilometers (2006)
• proven reserves: 326 billion cubic kilometers (2006)

Bibliography

• Furtado, Celso. Formação econômica do Brasil. (http://www.afoiceeomartelo.com.br/posfsa/Autores/Furtado,%20Celso/Celso%20Furtado%20-%20Forma%C3%A7%C3%A3o%20Econ%C3%B4mica%20do%20Brasil.pdf)
• Prado Junior, Caio. História econômica do Brasil. (http://www.afoiceeomartelo.com.br/posfsa/Autores/Prado%20Jr,%20Caio/Historia%20Economica%20do%20Brasil.pdf)
• Graça Filho, Afonso de Alencastro. A economia do Império brasileiro. São Paulo: Atual, 2004. (Portuguese)
• Scantimburgo, João de. O Poder Moderador. São Paulo: Secretaria de Estado da Cultura, 1980. (Portuguese)
• Silva, Hélio. 1889 - A república não esperou o amanhecer. Porto Alegre: L&PM, 2005. (Portuguese)
• Sodré, Nelson Werneck. Panorama do Segundo Império, 2. ed. Rio de Janeiro: GRAPHIA, 2004. (Portuguese)
• Szmrecsány, Tamás and Lapa, José Roberto do Amaral. História Econômica da Independência e do Império, 2. ed. São Paulo: USP, 2002. (Portuguese)
• Vainfas, Ronaldo. Dicionário do Brasil Imperial. Rio de Janeiro: Objetiva, 2002. (Portuguese)
• 15. ed. São Paulo: Melhoramentos, 1994. (Portuguese)