“As part of the Volvo Group, we are investing further to leverage our established manufacturing operations,” says Ron Huibers, president of Volvo Penta of the Americas.
“One of Volvo Penta’s ambitions is to improve our global supply chain for our products with competitive lead times, at a competitive cost. By producing these industrial engines in Brazil, we’ll be offering an added benefit to our customers in South America.”
Gabriel Barsalini, head of Volvo Penta South America, confirms the growth of the division in the continent: “Localizing the production of industrial engines within the Volvo Group’s world-class manufacturing facility is part of Volvo Penta’s growth strategy in South America.
“We are recognized leaders in the marine leisure segment in Brazil and have recently been expanding our activities in the industrial sector, particularly in the power generation segment. This is a market with good potential.”
The power generation segment (stand-alone production) is growing in importance, particularly in Brazil, given that the demand for energy is higher than the supply.
According to the Energy Research Company - Empresa de Pesquisa Energética (EPE), of the Brazilian Ministry of Mines and Energy, the country’s current energy shortfall is around 50TWh.
This situation creates opportunities for power generation suppliers who offer gensets – systems that provide energy generated from diesel-powered engines – as facilities such as industrial plants, farming and livestock complexes, hospitals, commerce and services are increasingly using self-generation methods of power. In particular, at consumption peak times when energy is more expensive, companies disconnect from the power grid and use gensets as the technology offers a more economical approach.
Another advantage of producing the industrial 13-liter engine in Brazil is the eligibility for FINAME financing, a Brazilian Development (BNDES) program featuring lower interest rates than those available in the private sector market.
In the last two years, Volvo Penta has worked in structuring the after-market service delivery for the leading OEM genset builders in the region.
“Before beginning production of the engines in Brazil, we worked on establishing a support network for our customers, which is fundamental for the delivery of quality and for the success of our business,” says João Zarpelão, Volvo Penta South America industrial engine director. “Volvo Construction Equipment distributors Tracbel, Link and Entreposto have similarities with the Volvo Penta business, which will drive gains of scale for us.”
Volvo Penta’s business plan in South America addresses increased engagement with potential partners in the countries of Ecuador, Bolivia and Paraguay.
“These are markets with potential, both for both marine and industrial engines, but in which our presence is still very limited,” says Gabriel Barsalini. Currently, Volvo Penta’s main markets in South America outside of Brazil include Argentina, Peru and Chile.
The investment supports Volvo Penta’s growing business relations with the main genset manufacturers, a strategy that enables covering 70 per cent of the market based on partnerships.
“Our target is to become the preferred professional partner of companies operating in the segments of power, construction, agriculture, ports and mining,” adds João Zarpelão, in mentioning the main segments for Volvo Penta’s industrial engines.