Volvo CE invests 65 million SEK in Brazilian excavator manufacturing capability

Volvo Construction Equipment’s executive management team (EMT) has approved a 65 million SEK investment in an Excavator Remote Assembly and Manufacturing (RAM) set up in its Pederneiras factory in Brazil. The project consists of localizing assembly and components in order to achieve 50% local content on the four most important models in the Latin American market: the EC140C, EC160C, EC210B and EC240B excavators, beginning with EC210B. It will involve extending the building in São Paulo state by 8,500 m2 as well as specific investments in welding, machining and assembly equipment.

“Volvo Construction Equipment is committed to supporting the capacity and product offering in Brazil and throughout the growing BRIC markets,” said Volvo CE President & CEO Olof Persson.

The benefits of localizing production of excavators in Brazil are manifold. It will significantly reduce the amount of inventory being shipped from Korea, dramatically cut import taxes and currency exposure. Building Volvo excavators locally will also allow customers to utilize government-backed low interest rate financing, which is currently unavailable on Korean produced machines. It is expected that these benefits combined will lead both to substantially improved profitability and a significant increase in the Volvo share of the Brazilian excavator market by 2015.

It is intended that the first Pederneiras-built excavators will be delivered to customers in March 2011.