RIO DE JANEIRO, BRAZIL – A survey conducted by the National Confederation of Industry (CNI) shows that 82% of large companies intend to invest this year. It is expected that 35% of these investments will be directed to improvements in the production process and 33% to increase production capacity, through the purchase of new machinery and technology.
“This indication suggests that a strong recovery in industrial activity is expected to be consolidated after the most critical period of the pandemic,” says the survey. For another 15%, the main goal is to maintain production capacity and, in 11% of them, to introduce new products.
In 66% of the cases, irrespective of the purpose of the planned investment, machinery is expected to be purchased. In addition, the percentage of investment directed mainly to the domestic market increased from 36% to 39%, but, according to CNI, it is still below the historical 42% average.
Among the companies that do not intend to invest, 35% said there is no need, 33% chose not to do so, and 33% are unable to invest.
Investments in 2020
The 2020-2021 Investment in Industry document also shows that last year began and ended out of the curve. In 2020, 84% of companies intended to invest, in a percentage higher than in previous years. However, only 69% actually managed to invest due to the pandemic, one of the lowest records in the survey’s history, exceeding only the 2016 percentage, which stood at 67%.
According to CNI, the reduction in investments last year occurred largely due to the high cost of supplies and the reevaluation of the domestic market as a destination for products. “Both are directly influenced by the covid-19 pandemic, which restricted demand for industrial products, caused exchange rate fluctuations and pressured costs,” says the survey.
More than three-quarters (76%) of large companies that invested in 2020 purchased machinery or equipment; of those, 23% purchased used machinery. Just over two-thirds, 68%, carried out maintenance or machine upgrades in 2020. Meanwhile, 33% invested in research and development, 30% in staff training, and 24% in improving business management. The percentages are close to those observed in 2019.
In addition, the lack of third-party financing alternatives has impacted investments. Over the past six years, about 70% of the resources employed in investments are companies’ own resources. In 2020, the percentage stood at 72%, identical to 2019.
In 2020, the share of private commercial banks stood at 13%, one percentage point lower than in 2019. The share of official development banks was only 7%. Other financing sources, such as public commercial banks, external financing and building partnerships or joint ventures totaled 8%.
The full survey is available on CNI’s website.