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Roberto Iacovella, CEO, Redelease "Civil Construction and Transportation Will Drive Composites Consumption in Brazil"

Founded in 1990, Redelease is one of the biggest Brazilian distributors of chemical products consumed by the composites and thermoplastic sectors. Its portfolio has more than 300 kinds of products, such as release agents from Chem-Trend, polyester and vinyl ester resins from Ara Ashland, fiberglass from Owens Corning, organic peroxides from Akzo Nobel, adhesives from Lord and phenolics resins from Georgia-Pacific. In an exclusive interview CEO Redelease, Roberto Iacovella shares his experience with Editor, Lucintel, K. Venkateshwar. Rao. Excerpts:

1. What are the key drivers for composite consumption in Brazil?

Roberto Iacovella: Brazil still has a very meaningful housing deficit of around 8 million houses. Therefore, civil construction shall be, for a long period, one of the main composites consumption propellers in the country. In 2008, according to Abmaco - Brazilian Association of Composites -, this segment indicated 27% of the 184,000 tons of composites consumed, ranked as second, following transportation segment (30%). In 2009, with the automotive industry crisis, civil construction is expected to lead the Brazilian market again.

Transportation-wise, Brazil is a road country. Therefore, despite of the crisis, the country is and will be in need of more trucks and buses. Lastly, another key factor in local demand is the creation of wind power. Though Brazil utilizes little of such power, it has two blades and nacelles manufacturers living almost exclusively from exportation - representing 16% of the domestic consumption of composites in 2008.

2. What are some of the key challenges faced by your company in the composites market?

Roberto Iacovella: In Brazil, raw material distribution policy is not very clear because of the excessive number of players against the local composites demand. Thus, manufacturers usually participate in markets which, theoretically, should be supplied by distributors, only. This is the key challenge faced by Redelease since its foundation, in 1992.

3. Tell us about the impact of government policies on composite industry?

Roberto Iacovella: Brazilian tax policy does not stimulate the development of the composites industry, since almost 30% of the sales value of any product relate to tax payment. In addition, there are differences in taxation of some composites and competitor materials artifacts, such as aluminum, for tiles. In view of this, Abmaco has been working with governmental organizations to balance such situation. On the other hand, federal government has recently created stimulation programs to build popular houses, and reduced taxes on vehicles and home appliances, which indirectly benefited the composites industry.

4. Key challenges faced by composite end-users?

Roberto Iacovella: Key challenges faced by end-users relate to the quality of some products, which still lack rulings, and to the recycling matter. Many companies, especially some automaker ones, are establishing some barriers to composite materials in case suppliers do not have ecologically friendly alternatives. The concern with such issue led Redelease to participate in the group of companies sponsoring National Recycling Program, created in 2008 by Abmaco.

5. Government support and policies change that is required to encourage exports of composite components?

Roberto Iacovella: Except for wind blades, Brazil exports little amount of composites components. In order to change such scenario, government would have to reduce taxes. Then, general local industry shall have some competitiveness level to fight for the foreign market. Another issue temporarily related to this is the appreciation of Brazilian currency compared to US Dollar, which makes our products way more expensive than those manufactured in Asia, for example.

6. Emerging applications that you foresee to have a significant bearing on the composite consumption?

Roberto Iacovella: There are consolidated composites applications throughout the world still not seen in Brazil, such as pultruded profiles for bridges and cross arms for electric posts, among others. Still, I believe local manufacturers, supported by raw material suppliers and distributors will soon develop it.

7. How has global slowdown affected the market? How has been your organization's growth in the last 2-3 years and how do your foresee the growth forward?

Roberto Iacovella: Unquestionably, the global economic crisis affected Brazilian composites industry, especially in the automotive segment. According to Abmaco projections, consumption arising out of transportation segment must decrease 12% in 2009. In Redelease's case, we equalized the 18% decrease in reinforced plastic sales in the first quarter by participating in new markets, such as rotomolding, foundry and furniture. Anyway, we believe in the retake of such segment, which is why we expect a 10% increase in the company's sales within the period, repeating our 2008 evolution rate.

8. Do you see high-potential for composites in the market? If yes, what are some of reasons for the same?

Roberto Iacovella: Yes, absolutely. In addition to widely known advantages provided by composites - lightness, resistance, versatility, etc. - such material may be considered environmental friendly, a key point for its sustainable growth within the next few years. In Brazil, we had a recent usage example in Petrobras, which reflects what I am saying. The company, third largest oil company in the world, selected composites - to the detriment of materials such as steel and aluminum - to build part of a new building used for researches. According to studies performed by Petrobras, composites had less environmental impact than metallic materials.

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