TRELLEBORG, Sweden—Trelleborg Engineered Systems plans to invest about $23 million to launch a factory in Brazil to primarily manufacture products for the oil and gas extraction industry.
The company didn't estimate the project's completion date, but said the investment covered a two-year span.
Trelleborg Engineered Systems' customers have increased their production in Brazil, and it is important to have a manufacturing facility close to their sites on the Brazilian coast, said Lennart Johansson, business area president of Trelleborg Engineered Systems, a business unit of Trelleborg A.B.
“By establishing this plant, we will be the first to have local production in Brazil, thereby gaining an edge over our competitors,” he said, adding that the firm's high-tech products are well suited to the oil and gas industry because it is a sector that requires advanced technical equipment.
Trelleborg Engineered Systems derives 25 percent of its sales from the offshore oil and gas extraction industry, according to the company.
It said that in recent years, major discoveries have been made off the coast of Brazil, and in 2014 the country is expected to be the largest market globally for products offered by Trelleborg.
The plant will be located in the coastal city of Macae, which is north of Rio de Janeiro and known as Brazil's oil capital because virtually all major project engineering companies operate facilities there, the company said.
Trelleborg A.B. currently has extensive operations in the country, where it employs about 1,000. The company's automotive business has long been established in Brazil, with an organization that combines engineering, testing, production and sales. Trelleborg Wheel Systems has marketing and sales operations there while Trelleborg Sealing Solutions has production and sales units in the country.
Products manufactured at the factory will include specially designed subsea buoys, bend stiffeners and thermal insulation tape for deep-sea applications, a spokesman said.
A key component of the Trelleborg Engineered Systems operation's profitable growth strategy is to enhance its position in segments such as oil and gas, infrastructure and selected general business areas, the company said.
In addition, Trelleborg Engineered Systems is expanding in key growth areas globally. In recent years, for instance, its activities have included opening three production plants in China.
The business unit's parent has been focusing on emerging markets for some time. Since 2005, Trelleborg has phased out about 30 production units in North America and Western Europe while more than 15 manufacturing operations have been established or upgraded outside those regions.
The company has increased its sales outside the two regions to about 25 percent of Trelleborg Group's total sales, CEO Peter Nilsson said shortly before the firm's annual market day was held in Stockholm Nov. 24.