Analysis of The Plastic Product Sector in Brazil

Project EUROPEAID/ 11 9860/C/SV/multi
Network of Technological Centers

STUDY OF THE MARKET DYNAMICS
AND TECHNOLOGICAL INNOVATION,
AS WELL AS THE POTENTIAL FOR
COOPERATION BETWEEN THE EU AND
BRAZIL FOR PRODUCTS OF MUTUAL
INTEREST AND SIGNIFICANT
TECHNOLOGICAL CONTENT

PLASTICS MANUFACTURING SECTOR

PHASE III

FINAL REPORT

07/21/06

Report presented in the Seminar held 06/26/2006, prepared in July of 2006 by
the experts Afonso Henriques Neto and Antoni Viladomat Vers, selected in the
scope of the framework contract signed with the delegation of the European
Commission and the company ATOS ORIGIN.

EUROPEAID/119860/C/SV/multi Sectorial Study Final Version Plastic Manufacturing
2

Copyright

The present document cannot be
reproduced completely or partially, either
manually, mechanically or electronically
without the prior authorization from the
beneficiary entities.

3
Project EUROPEAID/ 119860/C/SV/multi

STUDY OF THE MARKET DYNAMICS AND TECHNOLOGICAL
INNOVATION, AS WELL AS THE POTENTIAL FOR COOPERATION
BETWEEN THE EU AND BRAZIL FOR PRODUCTS OF MUTUAL
INTEREST AND SIGNIFICANT TECHNOLOGICAL CONTENT IN THE
PLASTICS MANUFACTURING SECTOR

PHASE III- SECTOR STUDY FINAL VERSION

TABLE OF CONTENTS

PART 1 - INTRODUCTION ........................................................................................... 6

1.1. PRESENTATION............................................................................................. 6

1.1.1 Scope of the Study........................................................................................... 6
1.1.2 General and Specific Objectives ..................................................................... 6
1.1.3 Critical analysis of available data.................................................................... 7
1.1.4 Concepts and Methodology............................................................................. 7

1.1.4.1 Concepts ....................................................................................................... 7
1.1.4.2 Methodology .............................................................................................. 10

1.1.5 Execution....................................................................................................... 11

PART 2 ANALYSIS OF THE PLASTIC PRODUCTS SECTOR IN BRAZIL........ 12

2.1. MACROECONOMIC CHARACTERIZATION........................................... 12

2.1.1. Economic Indicators BRAZIL .................................................................. 12
2.1.2 Industrial Production in Brazil ...................................................................... 13
2.1.3. The Leading Sectors..................................................................................... 14
2.1.4 Level of Installed Capacity............................................................................ 16

2.2. THE PLASTICS PRODUCTION CHAIN IN BRAZIL................................. 16

2.2.1. General Overview......................................................................................... 16

2.2.1.1. The resins and compounds production industry........................................ 17
2.2.1.2. Engineering Plastics .................................................................................. 21
2.2.1.3. Special Plastics, Blends and Compounds.................................................. 21
2.2.1.4. Biopolymers and Nanocompounds ........................................................... 22

2.3. SEGMENTATION OF THE PLASTICS TRANSFORMATION
INDUSTRY............................................................................................................ 26

2.3.1 Breakdown by Market ................................................................................... 30

2.3.1.1 Packaging and Disposables ........................................................................ 31
2.3.1.2. Civil Construction ..................................................................................... 34
2.3.1.3. Technical Components.............................................................................. 35

4
2.3.1.4. Automotive and Auto parts Sector ........................................................... 35
2.3.1.5. Electric-Electronic Sector......................................................................... 38
2.3.1.6. Medical-Hospital equipment ..................................................................... 40
2.3.1.7. Agricultural ............................................................................................... 41
2.3.1.7. Shoes and Accessories............................................................................... 42

2.3.2. Breakdown by Production Process.............................................................. 44
2.3.3 Tools and Modeling....................................................................................... 47
2.3.4. Machinery and Equipment for the Plastics Industry .................................... 50
2.3.5. Recycling Industry ....................................................................................... 51

2.4. Criteria for evaluating the different segments in the Sector............................ 53

2.4.1. Description of the Indicators ........................................................................ 55
2.4.2. Scoring Criteria ............................................................................................ 56
2.4.3. Classification of the Priority Segments ........................................................ 57

2.5. Technological Centers for the Plastics Sector................................................. 57
2.6. Local Productive Arrangements LPAs....................................................... 58
2.7. Priority Segments for Cooperation.................................................................. 59

PART 3 ANALYSIS OF THE EU PLASTICS SECTOR.......................................... 62

3.1. MACROECONOMIC OVERVIEW IN THE EUROPEAN UNION ............ 62
3.2. THE EUROPEAN PLASTICS MANUFACTURING INDUSTRY.............. 63

3.2.1. Classifying Europe using geographic criteria ............................................. 67
3.2.2. Lines of work in accordance with the association PlasticsEurope............... 69

3.3. DETAILS ON THE SEGMENTS CONSIDERED....................................... 71
3.4. BILLING FOR THE DIFFERENT SEGMENTS.......................................... 73
3.5. NUMBER OF COMPANIES BY SEGMENT............................................... 74
3.6. VOLUME CONSUMED BY SEGMENT (tons)............................................ 75

3.6.1. Packaging ..................................................................................................... 75
3.6.2. Agriculture.................................................................................................... 75
3.6.3. Building and Construction (B&C) ............................................................... 76
3.6.4. Automotive................................................................................................... 76
3.6.5. Electrical and Electronic (E&E)................................................................... 76

3.7 MSC PARTICIPATION FOR EACH SEGMENT......................................... 78
3.8. GROWTH ....................................................................................................... 86
3.9.- MACHINES AND EQUIPMENT................................................................. 87
3.10. EVOLUTION OF THE MOLD SECTOR, ACCORDING TO THE
TYPES OF CLIENT COMPANIES ...................................................................... 88
3.11. RECYCLING................................................................................................ 90
3.12. INDUSTRIAL AND TECHNOLOGICAL PROCESSES............................ 96
3.13. TECHNOLOGICAL INVESTIGATION AND DEVELOPMENT IN THE
EU OF TECHNOLOGICAL SUPPORT NETWORKS....................................... 97

3.13.1. EU-ROPLAS.............................................................................................. 97
3.13.2. EARTO....................................................................................................... 98

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3.13.3. Details on the centers in Germany, Spain, France and Italy .................... 102

3.14. SEGMENTS WITH THE GREATEST POTENTIAL AND PRIORITY
SEGMENTS......................................................................................................... 111
3.15. EXAMPLES OF SUCCESS ....................................................................... 113
3.16 SUB-SEGMENTS AND PRIORITY MARKETS.................................... 114
3.16.1 Trends........................................................................................................ 114
3.17. AREAS OF OVERLAP WITH THE ELECTRIC-ELECTRONIC
SECTOR............................................................................................................... 116

PART 4 EU-BRAZIL COOPERATION.................................................................... 118

4.1 TECHNICAL PLASTICS FOR THE E&E AND MEDICAL-HOSPITAL
SECTORS ............................................................................................................ 118
4.2 WASTE MANAGEMENT TECHNOLOGIES.......................................... 118

PART 5 TRENDS AND CONCLUSIONS............................................................... 119

5.1. TRENDS ....................................................................................................... 119
5.2. CONCLUSIONS........................................................................................... 120
5.2.1. PROBLEMS FACED BY THE SECTOR................................................. 120
5.2.2. FIELDS OF DEVELOPMENT.................................................................. 121

PART 6 SUPPORT MATERIAL.............................................................................. 122

6.1. INFORMATION SOURCES........................................................................ 122
6.2. WEB SITES .................................................................................................. 123
6.3. OUR THANKS ............................................................................................. 126
6.4 CONSULTANTS........................................................................................... 127

PART 7 ANNEXES ................................................................................................. 128

7.1. LIST OF ANNEXES.................................................................................... 128
Annex 1: Examples of Success: Electronic Plastic ............................................. 129
Annex 2: Breakthrough in biodegradable cosmetics packaging .......................... 131
Annex 3: Rapid prototyping, the solution for people who need to make
decisions quickly and efficiently. ......................................................................... 132
Annex 4: Article about trends in the plastics sector, according to NPE 2006 ..... 133
Annex 5: Packaging for Electronics..................................................................... 135
Annex 6: Article about new technology to convert plastic waste into fuel.......... 137
Annex 7: Example of Technologies in the Plastic Manufacturing Sector
(ENGEL) .............................................................................................................. 140
Annex 8: Technological lines of Investigation for the ASCAMM
Technological Center ........................................................................................... 142
Annex 9: Scoring spreadsheet for the different Segments of the Plastics
Manufacturing Sector: .......................................................................................... 143
Annex 10: Structure and competition within the Brazilian Industry................... 144
Annex 11: CNI Special Opinion Poll Year 3, No. 3, Nov/2005 ...................... 146
Annex 12: Plastics Manufacturing Industry Commercial Trade Balance......... 147
Annex 13: Analysis of the Plastics Manufacturing Trade Balance (2005) ......... 148
Annex 14: LPA for the Santo Andr region SP / Plastic Thermoplastic
Injection................................................................................................................ 149

6
PART 1 - INTRODUCTION

1.1. PRESENTATION

1.1.1 Scope of the Study

This study covers the entire scope of Project BRA/B7-311/2000/0005 - Networks of
Technological Centers and Support for Small and Medium-Sized Companies in Brazil,
the Financing Convention for which was executed between the European Commission
and the Federative Republic of Brazil on January 13, 2004.

The project seeks to contribute towards the encouragement of the international
competitiveness of Brazilian small and medium-sized companies. To that end, it will
support Brazilian government efforts to foment the quality and technological innovation
of products and processes in the selected industrial sectors, specifically through the
promotion of larger and more dynamic technological and commercial interfaces
between Brazilian and European technological centers and companies.

The Brazilian Ministry of Development, Industry and Foreign Trade (MDIC) is the
direct beneficiary of the project, as well as the entity responsible for its execution. The
MDIC delegated current oversight of the project to the Financiadora de Estudos e
Projetos (FINEP Portuguese acronym for the Studies and Project Financing Agency),
which acts as the operational agency.

The Financing Convention for the project defines the Electric-Electronic and Plastics
Transformation sectors, generally, as the priority targets for its activities. However,
considering that the project has received rather limited funding, it became essential to
define even more specifically a reduced number of industrial segments/markets and the
themes that the project should focus on as priorities.

This study intends to define these industrial segments based upon the growth and
innovation dynamics analysis of various sector clusters and the recent evolution of
commercial and investment relationships between the EU and Brazil. This will allow,
within a general definition of the target sectors, to identify and select the specific areas
of mutual interest, where the accumulated experience in EU countries can contribute
with catalytic inputs that spur innovation, with high added value to the Brazilian
industrial fabric.

Additionally we must also consider the priorities of the Industrial, Technological and
Foreign Trade Policy developed for the Brazilian Government (PITCE), as well as the
existing potential to establish long lasting partnerships between Brazilian and European
technological companies and institutions.

1.1.2 General and Specific Objectives

The general objective of the study is to support MDIC and FINEP as they work to define
the priority areas for the projects intervention, as well as the identification of European
and Brazilian institutions and companies that are potentially interested in establishing
technological, production or commercial partnerships.

The specific objective is to perform an assessment of the market dynamics and
technological innovations in the Segments / Sub-segments selected from the plastics
manufacturing sector, identifying those where Brazil is potentially competitive, and
within these identifying which is most feasible and efficient for the development of

7
technological and business partnerships between Brazil and the European Union.

This document represents the Market Study, PHASE III, final version, concerning the
market dynamic and technological innovation for the Plastics Manufacturing sector.

1.1.3 Critical analysis of available data

A critical analysis was also performed on the available documentation, from which we
should highlight the following points:

Strong Points
o Defined and precise reach;
o Easy access to documentation;
o Existence of a previous Diagnostic on Technological Centers in Brazil.

Weak Points
o There is no pre-defined breakdown by market;
o There is no clear definition if this study covers Other Sector Segments
and has a significant technological and economic impact on the Plastic
Manufacturing Sector;
o There is no advance definition of the Sub-Segments of the Sector.
o We foundsome differences between the segmentation criteria
employed between the Brazilian and European Markets.

1.1.4 Concepts and Methodology

1.1.4.1 Concepts

With the objective of proposing a list of priority segments, within the two target sectors
of the project, which are relevant to the Brazilian industrial fabric and demonstrate
increased market dynamics and technological innovation, the team of experts performed
a critical analysis of the preliminary list, and in light of their knowledge, proposed to the
Project Director the adoption of the following Methodologies, which will allow them to
make selections in accordance with the projects objectives the industrial segments as
well as the clusters with the greatest potential for establishment partnerships with their
European counterparts.

An analysis has been performed on the various sources of domestic and international
information, selected based upon their relevance to the objectives of PHASE III of the
Project.

Based upon these sources of information, we are able to understand the priorities of the
Industrial, Technological and Foreign Trade Policy for the Brazilian Government,
and to assess the financial support structure for these Sectors.

Criteria for the Segmentation of the Plastic Manufacturing Sector

In order to determine a more refined selection of the Industrial Segments that present the
greatest cooperative potential with the EU, we consider the starting point to be the
highest number possible of industrial segments that are registered with the main
Business Association involved with the sector in question.

8
The starting point we considered for the Plastic Manufacturing Sector in Brazil is the
Segment criteria employed by ABIPLAST as well as a sub-segmentation proposal,
according to the final use criteria for the products with the intent of detailing, when
possible, the various segments of the Plastics Manufacturing Industry, also taking the
CNAE classification provided by the IBGE into consideration (25.2).

Definition of the MSCs Micro, Small and Medium-Sized Companies

We will muse the MDIC definition for the classification of Brazilian and European
companies, according to the criteria of the Number of Employees and Annual Billing
that serve as the basis for the publication Brazilian Exportation by Company Size,
as described below:

BRAZIL

In Brazil, in addition to Mercosur parameters, used in order to provide funding for
exports, we also have the definitions of the Statutes for the Micro and Small Sized
Company (Law no. 9.841/99) and the SIMPLES (Law no. 9.317/96), which use
annual gross revenue, in addition to the criteria used by RAIS/MTE (Annual List of
Social Information) and by SEBRAE, whereby the size is determined by the number of
employees:

Micro-Company Small Company Medium Company
MPE STATUTE R$ 244,000.00 R$ 1,200,000.00 ---
SIMPLES* R$ 120,000.00 R$ 1,200,000.00 ---
RAIS/MTE 0 - 19 20 - 99 100 - 499
SEBRAE 0 - 19 20 - 99 100 - 499
SEBRAE 0 - 9 10 - 49 50 - 99

* This is essentially a tax simplification system, and SIMPLES sets forth restrictions
to the inclusion of countless segments of MPEs, hence it does not apply to all MPEs in
Brazil. This fact should be taken into consideration when working with the statistics
obtained via this system.

Source: RAIS/MTE

Law no. 9.317/96 and IN SRF no. 034/01

Law no. 9.841/99

PUGA, Fernando Pimentel. Experincias de Apoio s Micro, Pequenas e
Mdias Empresas nos Estados Unidos, na Itlia e em Taiwan.
DEPEC/BNDES. Texts for Discussion no. 75. RJ, Feb/2000.

9
EUROPEAN UNION

The Recommendation of the European Commission, given on April 3, 1996, directed at
the member states, the European Investment Bank (EIB) and the European Investment
Fund (EIF), establishes the maximum limits for the definition of PMEs (described
below) to be used by community and national programs designed for PMEs, starting as
of January 1, 1998.

Micro company Small company Medium Company
Number of employees 0 - 9 10 - 49 50 - 249
Annual turn over
or
Annual balance sheet
---
---
7 million euros
5 million euros
40 million euros
27 million euros

Independence
% of the capital or the
rights to vote
held by one or more
companies that
are not PMEs
--- 25% 25%

Presently, the European Union Definitions are being altered to:
- Micro company: 2 million Euros for annual turnover or for the total annual
balance sheet;
- Small Company: 10 million euros for annual turnover or total annual balance
sheet;
- Medium-size Company: 50 million euros for annual turnover and 43 million
for the total annual balance sheet;
- Removal of the independence criteria.
More than 99% of the 18 million companies existing in the EU in the various
market sectors, except for the agricultural sector, are PMEs. These companies employ
66% of the work force and generate 55% of the total turnover.
Source: www.europa.eu.int (96/280/CE: Commission Recommendation, dated April
3, 1996, relative to the definition of small and mediumsized companies)
www.europa.eu.int/comm/enterprise/consultations/sme_definition/index.htm
Commissions Report to the Council. Brussels, 03.01.01.

MDIC/SDP/DMPME 12/05/02

INNOVATION

Introduction of a novelty or improvement that is either productive or social that
results in new products, processes or services.
(Source: Law no. 10.973 dated 12-02-04, Art. 2-IV).

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CNAE Classifications

CNAE Classification from the IBGE for Products in the Plastics Chain:

Section D: Manufacturing Industry

Division 24 : Manufacture of Chemical Products

Group 24.3 : Manufacture of Resins and Elastomers

24.31-7 : manufacture of thermoplastic resins

24.32-5 : manufacture of thermofixed resins

24.33-3 : manufacture of elastomers

Division 25 : Manufacture of Rubber and Plastic Articles

Group 25.2 : Manufacture of Plastic Material products

25.21-6 : manufacture of flat and tubular laminates made of plastic

25.22-4 : manufacture of plastic material

25.29-1 : manufacture of various plastic artifacts

2529-1/01 Manufacture of plastic artifacts for personal and at home use, reinforced or not with
fiberglass
2529-1/02 Manufacture of plastic artifacts for industrial use except for the civil construction
industry

2529-1/03 Manufacture of plastic artifacts for use in ci vil construction

2529-1/99 Manufacture of plastic artifacts for other uses

1.1.4.2 Methodology

In addition to the market segmentation criteria proposed by ABIPLAST and the
respective sub-segmentation proposed in this study, we also will evaluate the Plastic
Manufacturing Sector, according to its different productive processes. This
segmentation, in our opinion, makes it easier to identify the different expertise of the
Technological Centers.

Another important factor of TECHNOLOGICAL INNOVATION in the Plastics
Manufacturing Industry is Plastic Resins, especially Engineering Plastics, High
Performance Plastics, and most recently, the emerging technologies of Biopolymers
and Nanocompounds.

These important inputs for the Sector are considered in the analysis of the Sub-segments
of Compound Extrusion and Master Batches.

This study also considered the classification of the Technological Centers, identified in
the Specific Diagnostic, as well as relevant information contained in the Plastic Chain
Competitiveness Forum and Local Production Arrangements ( LPAs) for the Plastic
Products Sector.

11
1.1.5 Execution

Each industrial segment was evaluated using a set of indicators that express, either
jointly or individually, the dynamics of the respective markets with respect to
technological innovation, in an analytical perspective of the potential interest in
collaborating with industrial sectors and industrial support entities for the European
Union, as described in the Terms of Reference for this Study.

Schedule for the Study:

The stage following the holding of the Seminar (June 26, 2006) will serve to consolidate
this report and present the study and the issuance of the Sector Study Plastic
Manufacturing Final Version.

The depth of the analysis varied from segment to segment, owing to a lack of a data on a
number of the segments researched.

Many indicators were obtained through an analysis of secondary and tertiary data.

We found that the problems associated to obtaining data on the different segments are
due to the fact that the Plastics Manufacturing Sector is quite diffuse throughout the
Manufacturing Industry.

Generally the indices that are presented are comprised of consolidated data.

EXPERT
ACTIVITIES
WEEKENDS
Phase I
Brazil (Cat. I+II)
Phase I I
Brazil (Cat. II)
UE (cat. II)
Phase I II
Brazil (Cat. II)
UE (cat. I)

Approval

of the

Reports

Approval

of the

Reports

Approval

of the

Reports

Plan of Action
Methodology
04/26/06 MDIC
EU and Brazil
Intermediary
Reports

Draft
Version of
the Sector
Study
06/26/06 Seminary
MDIC
Conclusions
Recommendations
Final Version fo
the Sector Study

12
PART 2 ANALYSIS OF THE PLASTIC PRODUCTS SECTOR IN BRAZIL

2.1. MACROECONOMIC CHARACTERIZATION

2.1.1. Economic Indicators BRAZIL

In 2005, we saw a slow down in Brazilian economic activity, and GDP growth slowed
to 2.3% in comparison with the 4.9% experienced the previous year, caused by high
interest rates and increased commodity pricing, notably in petroleum and its derivatives.

On the other hand, the commercial trade balance hit a record high, strongly influenced
by growth in exports to the tune of US$ 118.3 billion, against imports of US$ 73.5
billion, despite the valuation of 17% in the Real over the US dollar.

Table 1 BRAZIL- NATIONAL ACCOUNTS - 2000 / 2005
2000 2001 2002 2003 2004 2005
Population (millions/inhabitants)
Population Growth Rate (%)
PEA Economically active pop.
(Million)
PEA / Population (%)
170
-

-
-
172
1.2

83.95
48.8
175
1.7

86.92
49.7
177
1.1

88.8
50.2
181
2.3

92.86
51.3
184
1.7

nd
nd
Unemployment (%) 7.14 6.23 7.1 12.3 11.5 9.83
GDP on current prices (R$ billion)
GDP per capita ( R$ )
1101
6476
1199
6971
1346
7691
1556
8791
1767
9762
1938
10533
GDP on current prices (US$ billion)
GDP per capital ( US$ )
605
3559
510
2965
459
2623
507
2864
605
3343
796
4326
Variation rate of the real GDP (%) 4.36 1.31 1.92 0.55 4.94 2.3
Inflation rate - IPCA (%) 5.97 7.67 12.53 9.3 7.6 5.69
Average exchange rate (US$ - R$) 1.82 2.35 2.93 3.07 2.92 2.43
Exchange rate variation (%) - 29.1 24.7 4.8 -4.9 -16.8
Exports (US$ billion) 55.1 55.2 60.3 73.1 96.5 118.3
Imports (US$ billion) 55.8 55.6 47.2 48.3 62.8 73.5
Commercial trade balance (US$
billion)

-0.7

-0.4

13.1

24.8

33.7

44.8
Export evolution (%)
Source: ABIPLAST Profile 2005,
MDIC Brazilian Commercial
Trade Balance Sheet 2005
- 0.2 9.2 21.2 32.0 22.6

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2.1.2 Industrial Production in Brazil

Brazil is one of the Latin American countries that has the most potential for sustained
growth over the next few decades. It has a solid and advanced industrial sector, and it
even has its hand in cutting edge technology, as is the case in the Aerospace Sector.

In order for this forecasted growth to take place, most specifically in the Industrial
Sector, Brazil needs to adopt new growth standards.

According to the CNI (Strategic Map of the Industry 2005), there was strong growth
in the past decade in the importance of New Technologies based on the Information
and Communication Technologies ICT, and a significant increase in high
technology product exports

Between 1971 and 2000, Agriculture and Heavy Industry played increasingly smaller
roles in the global GDP, as demonstrated in the following graphic:

Graphic 1
Populational Growth Rate (%)
Real GDP variation rate (%)
Open unemployment (%)
Inflation Rate IPCA (%)
Agriculture Industry Service

14
Structure of product exports manufactured in OECD countries

INDUSTRY

1990 1999

High technology

18.8% 25.3%

Medium/high technology

38.7% 39.1%

Medium/low technology

24.3% 21.3%

Low technology

18.2% 14.3%

Summarizing, less than 15% of exports of products manufactured in OECD countries
are produced with low technological value.

The same thing is happening in Brazil. Despite the fact that the agricultural sector has
twice the participation in the GDP, in comparison with OECD countries, the service
sector has already exceeded 50% of the Brazilian GDP.

Participation (%) of the Classes and Activities in the GDP (Added Value) at Basic
Prices

Source: IBGE National Accounts Department
Fonte: IBGE Departamento de Contas
Nacionais
(*) Preliminary Data

2.1.3. The Leading Sectors

The sector distribution for the industry in 2003 indicates that the manufacturing
industry represents approximately of the Brazilian GDP and more than 62% of the
industrial sector.
Service
Industry
Agriculture

15
The most significant segment in the manufacturing industry is Food and Beverages,
which holds more than 16% of the GDP for the sector, followed by Oil
Refinery/Alcohol Production (15%), Electric-Electronic (14%) and Automotive (7.5%).

The segment of Rubber and Plastics represents a little less than 4% of the sectors
GDP.

Public Util. Ind. Serv.
Civil Construction
Transformation
Mining
Industrial Sector
Industry Sector Distribution (2003)
Sources: (BGE (PIA 2003), BACEN and CNI
Auto/Transp.
Others
Recycling Mining Industry
Food/Beverage
Textile/Clothing
Leather/Footwear
Cellulose/Paper/
Wood Celul.
Petroleum/Alcohol
Chemical
Machinery
Rubber/Plastic
Metallurgy
E&E

16
2.1.4 Level of Installed Capacity

According to data provided by FIESP, industrial sectors generally have maintained
stable levels of installed capacity over the past two years, with an average free capacity
of 15% to 25%, depending on the sector.

In December of 2005, the following values were registered for the level of use of
installed capacity (without seasonal adjustments) in the industry of So Paulo:

Food and beverage = 74.5%
Chemical and pharmaceutical products = 75.7%
Rubber and plastic articles = 77.1%
Paper and cellulose = 88.0%
Automotive Vehicles = 79.6%
Aggregate for the sector = 78.4%

Below is historical data from the Getlio Vargas Foundation concerning the variation of
the installed capacity in the Brazilian industrial sector:

2.2. THE PLASTICS PRODUCTION CHAIN IN BRAZIL

2.2.1. General Overview

In productive terms, the plastics manufacturing industry is characterized by the
transformation of synthetic resins (polymers), produced by the petrochemical industry,
into articles that are destined for final consumption (plastic utensils, for example), or for
the demand of other industrial sectors, which incorporates the plastic manufacturing
into products for final consumption (packaging, automotive, E&E, etc). Therefore, this
is a rather diffuse sector within the nations industrial fabric.
In the Plastic production chain, which uses petrochemical resins as inputs and final
consumption goods as products, other activities and agents are involved.
Use of industrial capacity ANNUAL average (%)
Source: FGB/Conjuntura Econmica 05/02//06

17
In addition to resin manufacturers and companies that transform plastic artifacts, other
important sectors to the technological dynamics and innovation in the plastics chain are
the sectors of machinery and equipment for plastics, molds and tools, in addition to the
plastic mechanical recycling sector, which has experienced significant growth
worldwide.

Below we present a table that explains the importance of the transformation industry
in the Plastics Chain in numbers:

1
st
generation

(gas) (1)
2
nd
generation

(resins) (2)
3
rd
generation

( manufacturing)
Installed capacity (thousand ton/year) 5,770 5,975 5,240
Number of companies 4 14 8,500
Number of employees 2,000 5.660 258,000
Value added to the product 1 PB 2.5 PB 10 PB
(1), (2) = includes RioPol (2) = PE, PP, EVA, PVC, PET, PS PB = Basic Petrochemicals Source: ABIQUIM and ABIPLAST

2.2.1.1. The resins and compounds production industry

The final products market is rather diverse, which leads to a rather dispersed supply
chain. Despite the fact that there are niches controlled by oligopolies, generally parties
demanding products with higher added values, free competition rules in most segments,
oftentimes in regionally delimited markets, with low requirements and qualifications,
where price is the most important competitive factor, such as is the case in the plastic
bag sector, disposables, domestic utilities, shoes and others. In this case, conditions for
accessing raw materials are fundamental for the competitiveness of the transformer.

In general, the development of applications concerns an activity primarily performed by
resin manufacturers, since it is rather technical, and consists of research of the ways to
modify the resin so that it can be used in certain applications (as well as final
consumption or another sectors demand), or so that its performance, via the
transformation process, may be improved. This activity requires the availability of
laboratorial and industrial resources, at a pilot scale that requires, in addition to capital,
specialized human resources as well.

These products are sold to distributors, compound manufacturers or directly to
manufacturing companies.

Distributors basically meet the demand of small manufacturers, whose needs are too
small to be met by resin manufacturers. Through them, the resins reach a high number of
small manufacturers who, generally, serve diversified market segments.

The distributors resin price is more expensive, and can even reach 30%, and we see
growth in distributor activities, both in Brazil as well as in other countries, since resin
producers prefer to just deal directly with large clients.

Normally the MSCs have a limited contract with large resin manufacturers, which are
important players in the technological innovation process for the sector.

18
Therefore, the supply of technical services, which is extremely important for the MSCs
in the sector, has to be supplied through other sources. It is within this context that the
supply of technical services to MSCs by the Technological Centers takes on more
relevance.

The following graphics refer to the main resins consumed by the sector, not including
Engineering, Special and Compound Plastics:

Apparent Consumption of Thermoplastic Resins 2000/2005

Volume ( x 1.000 ton ) Variation ( % )

Source: Production -ABIQUIM SDI Annual Report; Imports and Exports - ALICE System J an/2006 MDIC

Industrial use chemical products
Faturamento lquido em 2005
Thermoplastic
resins
Chlorine and
alkalis
Intermediaries for
fertilizers
Industrial
gases
Other
organic
chemical
products
4 | Annual report | 2005 |
Basic
petrochemicals Other
inorganics
Intermediaries
for resins and
fibers
Elastomers
Thermofixed
resins
Various
chemical
products and
preparations

19
Commercial Balance Sheet for the Plastics Chain Forum Products
Manufactured Plastics US$ millions
Imports
Exports
Balance
Imports
Exports
Balance
Thermoplastic Resins (1*) US$ millions
Intermediary Products (2)* - US$ millions
Imports
Exports
Balance
Basic Products (3)* - US$ millions
Imports
Exports
Balance
(3)* includes ethane, propane, benzene and p-xylene
Naphtha (4*) US$ millions
Imports
Exports
Balance
(4*) includes other chains in the petrochemical industry, but the resin chain is the one with the highest participation
Imports
Exports
Balance
Total for the chain Forum
Other resins (5*) US$ millions
General total for the chain (6*)
Imports
Exports
Balance
Imports
Exports
Balance
(5*) includes Engineering Plastics, thermofixed resins and other polymers
(6*) excludes intermediaries for other products that are not the focus of the Forum
Ilgible
Ilgible

20

Apparent Consumption of Thermoplastic Resins 2005

(4.213 millionstons)

This graphic serves to demonstrate the significant volume of polyethylenes, with
roughly 38% of the resin consumption in Brazil, which is to say, approximately 1.6
million tons. The majority of this consumption is earmarked for PET type packaging,
which has approximately 506,000 tons consumed.

Meanwhile the PP has shown to be a more versatile resin, whereby 1.1 million tons have
been consumed by a variety of different sectors, and it is the main thermoplastic resin
consumed by the automotive sector, through a special PP compounds.

National Demand for Plastic Resins

The new demand projections for the main thermoplastic resins anticipated by the
Plastics Chain Competitiveness Forum were obtained through a study performed by
UFRJ at the request of ABIQUIM / ABIPLAST, detailed below:
Plastics Chain - production (x1000 t.)
Source: ABIQUIM/ABIPLAST (Profile 2005)
Consumption ITP Production Resins Export ITP Export Resins

21

Year EVA PEAD PEBD PEBDL PP PET PVC PS TOTAL
2004 52,121 671,120 555,929 347,738 1,030,430 439,832 631,345 283,427 4,011,941
2005 55,524 729,746 586,341 386,379 1,135,158 481,527 679,996 301,176 4,355,847
2006 59,149 793,493 618,417 429,314 1,250,231 527,176 732,176 320,037 4,730,512
2007 62,766 858,608 650,198 474,128 1,369,926 572,904 785,414 338,863 5,112,819
2008 66,627 929,066 683,612 523,621 1,500,722 622,599 842,269 358,798 5,527,314
2009 70,713 1,005,306 718,743 578,280 1,644,004 676,605 903,241 903,905 5,976,798
2010 75,050 1,087,803 755,679 638,645 1,800,967 735,296 968,626 402,254 6,464,319
2011 79,652 1,177,069 794,513 705,311 1,972,917 799,077 1,038,744 425,917 6,993,201
2012 84,538 1,273,661 835,344 778,936 2,161,283 868,391 1,113,938 450,973 7,567,063
2013 89,722 1,378,179 878,272 778,936 2,367,634 943,718 1,194,575 477,502 8,189,849
Source: ABIQUIM/ABIPLAST

2.2.1.2. Engineering Plastics

According to this definition, engineering plastics and their blends are: polycarbonates
(PC), polyacetal (POM), thermoplastic polyesters (PET and PBT), polyamides (PA)
and phenyl polyoxide (PPO).
The special PP compounds, thermoplastic elastomers (TPE) and ABS compete in
performance with engineering plastics.

The Brazilian Engineering Plastics and Special Plastics markets are estimated to be on
the order of 130 to 140 thousand tons/year (3.2% of total resin consumption) and
more than 50% of this volume results from importations.

The leading segments in consumption of engineered plastics are the automotive and
electric-electronic markets, which are responsible for 60% of the consumption.

Despite the insignificant volume, engineered plastics have an average growth rate and
added value that are higher than commodity resins.

The most important resins in this segment are Polyamides (PA) and the ABS that, in the
EU statistics, are considered a commodity. However, for the purposes of the Brazilian
market statistics, they are considered engineering plastics.

2.2.1.3. Special Plastics, Blends and Compounds

Special polymers, on the Brazilian market, represent less than 1000 ton/year and are
completely imported, and often for economic reasons, the resins are imported directly by
the manufacturers.
Owing to these logistical difficulties, allied with processing difficulties and a high price,
special polymer applications tend to be restricted to the large manufacturers.

The main special resins consumed on the Brazilian market are Polyphtalamides (PPA),
Phenyl polysulfate (PPS), Polysulfone (PSU) and Polyether sulphone (PES).

The main market segments that use these products are the automotive, E&E and
medical-hospital equipment sectors.

Since these products have high mechanical and thermal performance and elevated
chemical resistance, the applications of these resins are associated to products with high
technological content, as for example, sensors in engine compartments, flasks and
ampoules for medical-hospital equipment, supports for hemodialysis membranes, boxes
for sterilizing dental equipment, supports and integrated circuit boards, among others.

22

2.2.1.4. Biopolymers and Nanocompounds

The principal emerging technologies in the polymers sector are biopolymers and
nanocompounds, which at an international level, are growing quickly, and as in Brazil,
are part of the strategic policy for technological and industrial development in many
different countries.

Biopolymers

Industrial biotechnology, given that it is a horizontal technology, contains application
opportunities in industrial sectors undergoing profound restructuring, like textiles,
chemical, packaging, biomedical and sanitary products and automotive parts, based on
biopolymers, for example.

National alliances between pharmaceuticals and "biostart-ups" is another path
commonly practiced in the USA and in European "Bio Valleys" and "Medicon
Valleys" - recommended particularly in the segment of biomarkers (diagnosis and
monitoring of illnesses) and trials by order or high tech. This is the line of
biotechnology that over the long term will see the most growth". (source:
www.inteli.pt)

Biodegradable polymers today have an installed capacity of approximately 500.000
ton/year and a demand of 250.000 ton/year with a tendency of occupying more specific
market niches, owing to costs that are still higher than those of commodities.

Today, biodegradable products generally are sold at prices between US$ 4/kg and US$
6/kg. In biomedical applications, these polymers can even reach US$ 3.000/kg.

Table that summarizes the main biopolymers found on the international market:

Polymer Manufacturer Trade Name Installed
Capacity
Remarks
Polyhydroxyalkanoates
P(3HB), PHA
PHB Brasil S/A Biocycle 60 ton/year Expansion to 2,000
t/year in 2007/08
PBAT/PBST/PTMAT BASF Ecoflex, Ecovio 14,000 ton/year Blends w/ PHB,
contact with/
---
---
DuPONT Biomax 110,000 ton/year Films, blown,
Brazilian manu.
Cellulose ester Novamont EasterBio 15,000 ton/year Blends with starch
PLA, Lactic Polyacid NatureWorks Pla. 160,000 ton/year Biomedical
PLA, Lactic Polyacid DuPONT Ecochem 45,000 ton/year

PLA, Lactic Polyacid Arkke Group Lacea 500 ton/year

PCL, Polycaprolactone Solvay Cappa 5,000 ton/year

PCL, Polycaprolactone Dow / U. Carbide 5,000 ton/year

Compostable blends Novamont MaterBi 80,000 ton/year PCL Blend,
starch,
PVOH DuPONT Hidroplast,
Idrolene
50,000 ton/year Water soluble
packaging
Pro-degradable additives Ciba Envirocare -------- PE agricultural films
Pro-degradable additives Symphony D2W ------- Res-Brazil
distributor in
Source: Prof. Telmo Ojeda
(ULBRA)

23
The table above shows us that the major players in this market are the large resin
manufacturers and companies affiliated with agri-business.

Main applications of biopolymers:

PLA: fibers for surgical sutures, parts for bone implants, capsules for controlled release
of drugs, fabrics (Ingeo Santista Txtil), blends with starch and olefins for film
extrusion.

PHAs, PHB: plasticulture (greenhouses, mulch), bio-medical, pharmaceutical,
packaging and disposables

Ecoflex: because this is a synthetic biodegradable polymer, it has better thermal
stability. Development of blends with cellulose, starch, PHB and PLA to improve the
processing of these materials.

PLA: owing to its high production scale, its prices (US$ 2.50/kg) are already
competitive with Polyolefins on the packaging and heat shaped films market.

Brazilian Institutions studying biopolymers (CNPq/Lattes)

IBU Microesferas e Lipossomas
IPT Produo de Polmeros Biodegradveis por Via Biotecnolgicas
UCS Grupo de Polmeros
UDESC Desenvolvimento de Materiais Polimricos
UFPE Simulao e Controle de Processos Qumicos
UFPR Laboratrio de Polmeros Paulo Scarpa
UFPR Polmeros Naturais para Biotecnologia
UFPR Sntese e caracterizao de polmeros
UFRR Engenheria de Polmeros Biodegradveis
UFSCar Engenharia de Materiais
Ulbra Engenharia Qumica
Unicamp Dep. de Tecnologia de Polmeros / Engenharia Qumica
Unicamp Laboratrio de Engenharia de Processos
UNIFEST Medicamentos Oftlmicos
UNIMEP Cincia e Tecnologia de Alimentos
Univille Materiais Polmeros
USF Engenharia e Cincia dos Materias

Nanocompounds

We should cite some recent developments in this innovative area. First, the additives
industry, one of the fine chemicals segments, has been offering increasingly advanced
and sophisticated products, with the objective of expanding the plastics market through
the incorporation of new characteristics to the final product. Additives that provide the
plastic product with the appearance of a natural product (wood, for example), is one of
the innovations available. Another novelty is the use of new materials as filler, for
example wood chips, substituting talc, calcium carbonate, fiberglass, etc. This area also
sees the application of nanotechnology to the formulation of resins, through
nanofillers.

Polymer compounds containing approximately 5% nanoclays, for example, are used in
automotive applications, barrier films for food packaging, electrical wires and cables,
and many other applications.

24
The global market of polymeric nanocompounds, nanoparticles, nanoclays and
nanotubes has seen an annual growth rate of approximately 18.4% and may exceed US$
211 million in billing in the year 2008. In 2003, 11,120 tons of nanocompounds were
consumed with billing of US$ 90.8 million, which is to say, US$ 8,166.00 / ton.

25

Main applications on the global nanocompound market in 2004/2005:

Supplier & Tradename Matrix Resin Nano-filler Target Market
Bayer AG (Durethan
LPDU)
Nylon 6 Organo-clay Barrier films
Clariant PP Organo-clay Packaging
Creanova (Vestamid) Nylon 12 Nano-tubes Electrically
conductive
GE Plastics (Noryl
GTX)
PPO/Nylon Nano-tubes Automotive
painted parts
Nylon 6 Organo-clay Multi-purpose
Honeywell (Aegis)
Barrier Nylon Organo-clay Bottles and Film
Hyperion PETG, PBT, PPS, PC,
PP
Nano-tubes Electrically
conductive
Kabelwerk Eupen of
Belgium
EVA Organo-clay Wire & Cable
Nylon 6 Organo-clay Multi-purpose
PP Organo-clay Molding
Nanocor (Imperm)
Nylon MDX6 Organo-clay PET beer
bottles
Pol ymeric Supply Unsaturated polyester Organo-clay Marine
transportation
RTP Nylon 6, PP Organo-clay Multi-purpose,
Electrically
conductive
Nylon 6 Clay, Mica Flame
Retardant
Showa Denko
(Systemer)
Acetal Clay, Mica Multi-purpose
Nylon 6, 12 Organo-clay Multi-purpose
Ube (Ecobesta)
Nylon 6, 66 Organo-clay Auto-fuel
systems
Unitika Nylon 6 Organo-clay Multi-purpose
Yantai Haili Ind. &
Commerce of China
UHMWPE Organo-clay

Table 1: Partial Listing of Nanocomposite Suppliers
Source: Bins & Associates, Sheboygan, Wis., Report on the prospects for nanocomposites

Soure: www.omnexus.com

VacuoFlex Tecnologias Refletivas, affiliated to the Unicamp Technological Incubation
Center, created an innovative nanotechnology solution, specifically for industrial
development: a plastic film covered in nanoarticles, transparent to sunlight, but capable
of blocking the passage of almost all of the solar radiation in the infrared spectrum,

26
which is responsible for heat. For decades, the major plastics manufacturers, through the
use of additives, have tried unsuccessfully to produce this type of plastic, called cold
plastic by agronomists.
The most widely publicized use of the cold plastic film produced by VacuoFlex is
agricultural greenhouses, in countries with hot climates like Brazils, wherein the
increase of temperature is almost always undesirable, since it reduces crop yields.

2.3. SEGMENTATION OF THE PLASTICS TRANSFORMATION INDUSTRY

The Plastics Transformation Industry is a particularly important sector for the economy,
for a variety of different reasons:
It uses a great deal of labor, mainly when compared to other capital intensive sectors, for
example the petrochemical sector, which are its suppliers.

It is a sector where micro and small companies are the rule, and approximately 94.1% of
the companies have less than 100 employees, productivity is on the order of 16.5
tons/employee with an annual production of 500.2 tons/company.

Owing to these characteristics, it is an industry that, in Brazil, still has low levels of
technological qualification and workforce training.

However, technological and organizational changes are having, albeit slowly, an effect
on the sector, requiring increased training of workers, in order for these changes to
translate into effective competitiveness.

Plastic manufacturing companies are rather different with respect to size, technological
qualification, as well as the markets they serve. Entry barriers, like technological and
capital barriers, are not high, and the market supports a high number of companies, with
a relatively small average size and with a production volume that is concentrated highly
in medium and large companies (6% of the total, which is to say, little more than five
hundred companies).

The inter-sector market in general requires qualifications both of a technical order as
well as scale. Sectors that work with final products with a reduced margin for the
tolerance of errors (like the car industry and E&E, for example), impose norms on the
entire supply chain. Not only the product manufactured (part or component) but the
production process itself need to be certified by the proper authorities, and this includes
equipment and raw materials as well.

In the case of the car industry, assembly plants tend to deal with a small number of
suppliers, who have high production scales, which create economic and technological
barriers to micro and small sized companies.

The plastics manufacturing sector known as the 3
rd
generation includes more than
8,500 companies who employee approximately 258,000 people.

The average rate of employment growth in the sector between 2000-2005 was 5%.

27

Distribution of companies according to the number of employees (ABIPLAST 2005)

Studies show that employee productivity has been growing over the past few years,
although it suffered a significant drop in 2005 owing to currency valuation issues, but
there was also a continuous drop in production volume for the sector. This may be an
indication that the sector is not adopting technological advances in a uniform manner.

Comparing 2005 with 2000, productivity in the sector fell from 21 tons/employee to
16.5 tons/employee.

Without a doubt, one of the factors that led to this drop was the fact that per capital
consumption of plastics in Brazil held steady for six years, which is to say, the sector is
expanding in accordance with the vegetative growth of the population.

The following graphics show the evolution of the productivity indices for the sector over
the past few years:

No active
relationship
From 5
to 9
From 10
to 19
Up to 4 From 20
to 49
From 50
to 99
From 100
to 249
From 250
to 499
From 500
to 999

28

Exports

Despite exchange issues, Exports for the sector have performed well, both from a sales
as well as a volume standpoint, thanks to programs like Export Plastic.

Plastic manufacturing exports grew in volume approximately 150% over the past ten
years, demonstrating that the sector is evolving in terms of competitiveness. The main
items exported are packaging, disposables and semi-finished products.

However, there are indirect exports for plastic manufacturing that are hard to
measure, since they are indirectly exported through other industrialized products, as is
the case with food products (meat and poultry), E&E (portable electronics and white
products), Automotive (90 kg of plastic per vehicle) and auto parts.
V
a
l
u
e

(
2
0
0
0
=
1
0
0
)

Plastic Manufacturing Industry
Productivity Rates
R$ 150 mi / func.
258,353 func.
16,5 ton/func.
Per capital consumption of plastic
resins (kg/inhabitant)
Number of
Employees
Tons per
employee
R$ thousand
per employee
Source: Perfil 2005 - ABIPLAST

(
k
g
/
i
n
h
a
b
i
t
a
n
t
)

29

Plastics Manufacturing
Industry Commercial Trade
T
h
o
u
s
a
n
d
s

o
f

t
o
n
s

U
S
$

M
i
l
l
i
o
n
s

Plastics Manufacturing
Industry Commercial Trade
IMPORTATIONS
(thousands of tons)
EXPORTATIONS
(thousands fo tons)
IMPORTATIONS (US$)
EXPORTATIONS (US$)
Per product plastics exportation percentage
(percentage by value)
Exportations - Plastics Manufacturing
Volume (thousands of tons)
Chapter 39 Others (Except39 Total
Plates, sheets Packaging Tubes Domestic Utilities Others
Source: Abiplast/MDIC/SECEX
Elaboration: Austin Asis

30
2.3.1 Breakdown by Market

According to ABIPLAST, the Brazilian Plastics Manufacturing Sector in 2005 did
approximately R$ 38.754 billion in business and consumed 4.263 million tons of resin.

Below we present a table according to the segmentation criteria proposed by
ABIPLAST and the proposed sub-segmentation by sector in the creation of this report.

S-1 PACKAGING

Food and beverage

Drugs (blisters, flasks, bags, ampoules.....)

Personal Care, Hygiene and Cleaning

Chemical products (including agrotoxins)

Industrial (pallets, containers, films, etc.)

Others (biopolymers, special packaging, etc.)
S-2 CIVIL CONSTRUCTION

Tubes and Fittings

Hydraulic and sanitation equipment

Flooring and coverings

Industrial (frames, tools and accessories, electric-technical)
S-3 DISPOSABLE

Food (cups, plates, trays,......)

Personal Care, Hygiene and Cleaning

Medical-hospital (syringes, catheters, speculums, ....)
S-4 TECHNICAL COMPONENTS

Automotive

Electric-electronic

Other (medical-hospital, aeronautic, technical parts)
S-5 AGRICULTURE

Irrigation

Agricultural machinery and equipment

Others (biodegradable, plasticulture, etc.)
S-6 DOMESTIC USES

Domestic utensils, furniture and plastic accessories
S-7 SHOES

Plastic shoes and soles
Disposables
11%
Packaging
42%
Comp. Tcnicos
11%
Ci vil Construction
10%
Agrcultural
9%
Other
7%
Domestic Utilities
5%
Foot Wear
3%
Toys
1%
sheets
1%

31
S-8 LAMINATES

Fabrics impregnated/covered with plastic resins

Paper/cards coated with plastic resins
S-9 TOYS
S-10 OTHER SEGMENTS

Compound extrusion (biopolymers, nanocompounds)

Master Batches and additives for plastics

Office and school supplies, lighters, cases and plastic
folders
S-11 MACH. & ACC. FOR THE PLASTICS IND.

Injectors

Extruders

Blowers

Heat shapers

Peripherals and accessories

Equipment and accessories for recycling
S-12 TOOLS AND MOLDERS

Injection molds

Blowing molds

Extrusion shapers

Fast prototyping
S-13 RECYCLING

Mechanical plastics recycling

Note: Segments S-11, S-12 and S-13 are not computed in the sales and in the volume
for the sector, however they are economically and technologically significant. Therefore,
these segments will be considered in this study.

2.3.1.1 Packaging and Disposables

Jointly, these segments represent 53% of the billing for the Plastics Sector, and roughly
50% of this volume is used by the Food and Beverage segment, in other words, this
segment represents 26% of Brazilian plastics consumption.

According to the study performed by FGVRJ for ABRE, the Brazilian packaging
industry netted R$ 31.338 billion in sales in 2005, R$ 2.492 billion more than in 2004,
with growth of 7.6% in sales, which is much higher than the growth in the industrial
sector. Plastics packaging presented practically a third of the sectors billing.

32

Production value: R$ 31,337.83

In 2005, the growth of formal employment was 4.6% in relation to 2004 and
productivity for the sector was R$ 183,350.00/employee, and the plastic packaging
segment represents 53% of the labor for the sector.

Source: Prepared specifically based upon Datamark 2005
Expressed in millions
Glass
6.2 %
R$ 1,939,71
Metalic
21,2 %
R$ 6,633.17
Wood
2,1%
R$ 655,92
Paper
7.4%
R$ 2.334,03
Paper
30.9%
R$ 9,681.50
Plastic
32,3%
R$ 10,093.51
Source: IBGE
Glass
2.6 %
(4,476)
Metalic
10.1 %
R$ 10,093.51
Wood
6,6%
R$ 1,939.71
Paper
17.8%
(30,418)
Plastic
52,9%
(90,424)
Source: Labor Ministry
Paper
10.0
(17,059)
FOOD
BEVERAGES
NOT FOOD RELATED
Positions in 12.31.2005
Total: 170,917

33
The main uses for plastics in the rigid and flexible packaging sector are as follows:

Packaging
Share
FOOD
Meat and vegetables
Cereals and grains
Candies and sweets
Dairy and fat
R$ 3,030 million
18%
30%
15%
37%
BEVERAGES
Alcoholic Beverages
NON-Alcoholic Bevs.
R$ 3,430 million
5%
95%
NOT FOOD
Electric & Automotive
Hygiene and beauty
Leisure and personal
Home cleaning
Chemical and agr.
R$ 3,630 million
1%
31%
5%
29%
34%
Specifically prepared based upon Datamark data (2004)

The global flexible packaging industry between 1996 and 2002 grew on average by
3.2%, which is only just behind the plastic bottling industry, which presented growth of
4.2% during this period.

According to data provided by the ABIEF, North Americans are estimated to consume
36% of the worlds production of flexible packaging, followed by Europe with 24%.

In the flexible packaging sector, exports represent 20% of the production in 2004, with
the expectation that this will draw near 30% in 2005.

The sector is made up of 750 companies who did US$ 3.2 billion in business in 2005, at
a volume of 698,500 tons, representing US$ 4,582.00/ton.

Development tendencies for the flexible packaging sector:

Since 2004, large companies like Natura, Boticrio and Po de Acar have
been working on pilot projects with biodegradable packaging.

Stand-up pouches packaging on the food market, which in addition to
increasing the shelf life of the product, allow better drainage of moist products.

Intelligent packaging, which can be tracked and identified through an RFID
(radio frequency identification) system. The pharmaceutical industry has
demonstrated a special interest in this type of packaging, since it allows the
Flexible packaging Billing
Flexible packaging Volume
U
S
$

B
i
l
l
i
o
n
s

T
h
o
u
s
a
n
d

o
f

T
o
n
s

34
user to identify when and how many pills they have taken.

Specific packaging making use of modified atmosphere technology (MAP) for
the exportation of fresh fruit.

Retortables packaging, which allows frozen food to be prepared right in the
packaging itself. Meat and fish for the microwave are the main final uses of
these products.

Disposable products for medical-hospital use demonstrate increased growth.

Containers of 500, 750 and 1000 liters for bulk liquids. The rigid packaging is
blown or rotary molded and flexible packaging is made from a multi-layered
film.

Presentation packaging design, specifically for the cosmetics and personal care
areas tend to be the big competitive differential.

2.3.1.2. Civil Construction

The lack of government investments in basic sanitation and civil construction, high
interest rates, poor credit conditions and the low purchasing power of the Brazilian
population have reflected in the consumption of PVC, since more than 60% of the
production is used by civil construction.

Barriers that restrict potential plastics consumption have been known for quite some
time by producers, and these unfavorable aspects have not changed much over the past
few years.

Once again, 2005 was not a good year for PVC and compound producers, but the belief
is that the country will resolve its long term housing and sanitation deficits, by making
more short term investment funds available, caused optimism to rise in 2006.

Over the past three years, PVC compound manufacturers focused their efforts on the
footwear and extruded profiles sectors, in addition to increasing exports.

T
h
o
u
s
a
n
d

o
f

T
o
n
s

Apparent PVC consumption
Source: AIPLAST

35

As such, participation held by Civil Construction in the Plastic Products industry fell
from 12% in 2004 to 10% in 2005 and billing fell from R$ 4.9 billion to something
around R$ 3.9 billion which represents a 20% drop.

The pipes and fittings segment, which is dominated by large companies, has been
dealing with the problem of the drop in internal demand, by increasing exports.

2.3.1.3. Technical Components

The technical components segment increased significantly in 2005, brought on by
positive results in the automotive and electric-electronic industries.
Its share of the Plastics Manufacturing sector rose from 10% in 2004 to 11% in 2005,
and sales jumped from R$ 4,04 billion to R$ 4.27 billion with an increase of 5.7% in
sales and 9.7% in volume.

2.3.1.4. Automotive and Auto parts Sector

The auto parts sector grew quite a bit in 2005, leveraged by the record performance of
the Brazilian automotive industry, which represents 55% of the production for the
sector.
Over the past ten years, the sector has undergone profound technological and structural
changes, which caused many traditional companies, unable to adapt, to disappear or
merge with larger multinationals.

Source: Sindipeas / Anfavea

90 kg plastic per vehicle (projection for 2004/2008 models)

2,447,000 vehicles = 220,230 tons of plastic resins

The ever-growing participation of companies in the supply chain, as modular assembly
models have increased, has led to the plastics industry to perform assembly activities
themselves, which was previously only performed by the final assembly plants. The
need to work on the integration between the design and the tools (molds and shapes) and
the production process is quite important, requiring that companies make investments in
technological improvements and worker training.

With the growing need to increase productivity, through automation of production
processes and outsourcing of support services, we find that over the past ten years, the
sector has lost 20.4% of its formal jobs.
T
h
o
u
s
a
n
d
s

Automotive industry Production Ind.

36

In 1994, 486 companies employed 235,000 people (483 employees/company), but in
2004, the number of companies fell to 468, which employed 187,000 people (400
employees/company), and just 35% of the companies had less than 100 employees.

Micro and small companies in the sector work on the replacement market and as
suppliers of technical services (tools, modeling), and components for the medium and
large companies in the sector.

The main technological developments in the sector are related to processing and
assembly techniques for automotive components, and therefore, those which require a
higher degree of technological specialty and labor training for workers:

Multi-material and gas injection processes, injections onto fabric, in mold
decoration

Automated production cells of components with injection processes, insert
placement, welding and final inspection of the product

Development of new processes and blowing materials, especially for fuel
reservoirs

Development of integrated OEM / System / Transformer projects.

Increase of productivity, quality and logistical efficiency of the production
process.

Auto parts Employmetn Distribution Auto-peas
1994 2004

Source: Sindipeas / Anfavea
235 thousand employees
187 thousand employees
S.P-Town
S.P-Interior
ABCD
Others Estates
Remaining
Grade SP

37

Billing distribution (US$ 16.5 billion)

Inter-sector
7%
Replacements
14%
Exports
14%
Assembl y
plants
14%
Auto parts industry
(1) : Investments / Billing Investimentos / Faturamento (%)
(2) : Billing (US$ billions) Faturamento (US$ bilhes)
(3) : Billing/employment Faturamento / empregado

38

2.3.1.5. Electric-Electronic Sector

Sales in the electric-electronic sector in 2005 were R$ 92.8 billion, which was a 14%
improvement over 2004.
This growth may be attributed to the performance of the telecommunications,
information technology and industrial equipment areas.

Exports in the sector grew by approximately 9% in relation to 2004, which is generally
attributed to cell phones.

The return to activities in sectors that had been practically shut down in 2003, like fixed
telephone lines, GTD (Generation, Transmission and Distribution of Energy) and
Electrical Installation Material were also important.

Total sales by segment (R$ million)
2003 2004 2005 2005/2004
Industrial Automation 1.721 2.090 2.330 11%
Electrical and Electronic Components 6.876 8.697 8.653 -1%
Industrial Equipment 8.426 10.319 11.814 14%
GTD 4.449 5.581 6.557 17%
Information Technology 16.701 20.624 24.437 18%
Electrical Installation Material 4.593 5.947 6.392 7%
Telecommunications 8.760 13.006 16.451 26%
Electric-Electronic Domestic Utilities 12.421 15.338 16.180 5%
Total 63.948 81.601 92.814 14%

Source: MDIC, Secex, Abinee

Commercial trade balance for the auto parts sector
US$ 6.057 billion
US$ 5.595 billion
US$ 462 billion

39

Renewed production growth for domestic electric-electronic products in 2004 and 2005
significantly contributed towards increasing the consumption of plastic products.

As is already the case with the automotive industry, this is a sector that is modularizing
quickly, the MSCs that supply plastic parts to the sector will have to adapt their
production and management processes to new needs, which is to say, supplying
assembled subsets.

Commercial trade balance for the electric-electronic sector (US$ billion)

Source: ABINEE

The sector has also been improving its international competitiveness by gradually
increasing exports, although the trade balance for the sector is still in a deficit.

Emerging technologies in the sector that integrate plastics and electric-electronic
components and add value to transformed plastics products:

Smart cards and smart labels, the use of which is growing in the banking and
Industrial Production Produo Industrial
Source: Datamark
U
n
i
t
s

(
x
1
0
0
0
)

Refrigerators (x1000) Tvs (x1000)
Imports
Exports
* Projection
Imports Exports

40
services system.

Intelligent packaging, which use RFID (radio-frequency identification)
technology.

Industrial design development of innovative solutions for cases in general,
mainly in the portable electronics and information technology fields.
Manufactured plastic products are being integrated into the production process
even at the project phase, and is, often times, jointly responsible for executing
all phases of the project.

Plastic compounds with special requirements to meet safety and functioning
norms for electric-electronic equipment that are increasingly demanding. In
this case, we cite engineering plastics, flame retardant compounds and special
polymers that meet mechanical, thermal and flammability resistance criteria.

2.3.1.6. Medical-Hospital equipment

Today, companies that represent this industrial segment are in full expansion, with 269
affiliated companies.

These associated companies total 80% of the domestic sales. The medical hospital sector
has a general capacity for installation in a hospital in 90 to 95% of equipment and
consumption materials, under current standards.

Lines of work:

Implant and Medical Hospital Consumption Material Sector
Companies that manufacture implantable products, like orthopedic, cardiac,
neurological, breast and other types of prosthetics, and companies that manufacture
medical-hospital consumption materials and hypodermics, such as: textiles, adhesives,
and others that are for a single use.

Medical-Hospital Equipment Sector
Companies that manufacture electro-medical devices, hospital furniture, surgical
instruments, physiotherapy equipment, hospital kitchens and laundries.

Dental Sector
Companies that manufacture dental equipment (complete consults), consumption
materials (resins, amalgams and others) and Dental Implants.

Radiology and Image Diagnostic Sector
Companies that manufacture X-ray equipment, process films (diagnostics) and
consumables.

Laboratorial Sector
Companies that manufacture equipment for laboratories, reagents and others.

41

Plastics are becoming increasingly important in the sector, especially for hospital
consumption materials, like blood bags, flasks and IV bags, syringes and sterilizable
plastic materials.

The development of biocompatible polymers in the implants sector is of vital
importance. This is the sector with the greatest potential for innovation in the plastics
manufacturing industry in the medical-hospital sector.

The medical hospital equipment sector has been experiencing growth in the
consumption in special plastics, such as Sulfopolymers (PSU, PES, PPS) which require,
on the part of the manufacturer, technologically cutting edge molds and equipment.

There is also an interface in this sector with the E&E Sector in the sensor systems that
require special resins.

2.3.1.7. Agricultural

The volume of plastics used in the agricultural sector was approximately 380,000 tons
and sales of around R$ 3.5 billion, representing an increase of 11.8% in volume and
7.8% in sales.
The agricultural use plastics market over the past few years has grown at a rate above
the sectors average. This jump in the use of plastics is due to the benefits of technology
that is generally known as plasticulture.

Thermoplastic pipes, tarps and films are used in important areas, like the irrigation of
the semi-arid So Francisco Valley, the increase in the quantity and quality of fruit and
vegetable harvests, increased productivity of poultry and swine, and further in scale
production of fish and shrimp.

In addition to directly improving production conditions, plastic is present in the drying
and conservation of products, forage silos (animal feed), irrigation by ditches, channels
using non-traditional ditches, mulching, water storage tanks, fish tanks and water
proofing of dams for fish farming, vegetation houses and drip irrigation, low tunnels,
Billing for the sector (2004): R$ 5.360 billion (US$ 1.9 billion)
Exports (2004) (FOB): US$ 318 million (16.7% of billing)
Importation (2004) (FOB): US$ 980 million
Number of companies (2004): 269 associates
Direct employment in the sector(2004): 35,786
Labor productivity: R$ 149,800.00 / employee
31.9%
9.9%
58.2%
44%
8%
48%
20.36%
79.5%
Medium
Large
Small
National
Foreigner
Exports
Private
Government
Fonte: ABIMO

42
shade in the field (for cattle), irrigation pipes, liners and curtains for bird houses, ceiling
liners for stalls (lowered ceiling) for the creation of swine, greenhouse films and tarps,
screens for greenhouses, nets for fish tanks, diffusion hoses, tarps for grain trucks,
plastic boxes for fruits and vegetables.

Plastics comprise 90% of the localized irrigation system. They are used on adduction
pipes and water distribution networks, joints and accessories, hoses, drippers and micro-
aspersion, containers and rotary molded cisterns.

In the polymers area, we would like to point out the rise in new formulations to improve
the efficiency of plastics in agriculture:

- Photo-selective films, also called cold films (they are being developed at an
incubator at Unicamp)
- Antivirus films
- Photo-degradable films
- Multi-layer films for mulching
- Biodegradable films for use mainly in planting areas.

2.3.1.7. Shoes and Accessories

According to ABICALADOS, despite the concentration of large companies located in
the state of Rio Grande do Sul (70% of exports on sales and 56% on volume), Brazilian
footwear production has been gradually spreading to other production centers, located in
the Southeast and Northeast regions of the country, especially within the state of So
Paulo (cities of Ja, Franca and Birigui) and emerging states, like Cear and Bahia.
There is also footwear production growth in the state of Santa Catarina (region of So
Joo Batista), neighbor to Rio Grande do Sul and in Minas Gerais (Nova Serrana
region).

The Brazilian footwear industry today employees more than 8.4 thousand factories,
Main techniques and plastic products used
in cultivation
Protected
cultivation
Irrigation
GREENHOUSES
TUNNELS
MULCHING
PROTECTIVE SCREENS
SHADE SCREENS
ADDUCTION AND WATER
DISTRIBUTION TUBES
CONNECTIONS AND ACCESSORIES
SPRAYERS
MICRO-SPRAYS
HOSES
Source:

43
which produce approximately 725 million pairs per year, of which 189 million are
exported, with sales of approximately US$ 1.9 billion. This sector is one of the ones that
generates the most employment throughout Brazil. In 2004, approximately 313,000
workers worked directly in the industry.

The wide variety of suppliers of raw materials, machinery and components, in
conjunction with product and innovation technology (especially design), has made
the Brazilian footwear sector into one of the most important in the world. More than
1500 factories are installed in the country, and more than 400 companies specialized in
leather tanning and finishing, annually processing more than 30 million skins and
approximately one hundred machinery and equipment factories.

The Brazilian footwear industry makes use of this highly qualified structure to produce
shoes, and today it exports to more than 100 countries, employing modern production
administration and manufacture management concepts, with just in time and other
international quality processes. This industry is highly specialized in all types of
footwear: womens, mens and childrens, in addition to specialty shoes, like orthopedic
and worker safety shoes.

2000 2001 2002 2003 2004 2005
Production (million of pairs)
Exports (million of pairs)
Exports (US$ billion)
Growth rate - Exports
(%)
Imports (million of pairs)
Imports (US$ billion)
Export./Production (%)
Growth rate - Sector (%)
Number of companies
Number of employees (thousands)
Employees/Company
-
163
1.55

-
-
-
-
6.8
-
-
-
-
171
1.62

4.5
-
-
-
-7
-
-
-
-
164
1.45

-10.5
-
-
-
-1.1
7562
262.1
34.7
665
189
1.55

6.9
5
0.05
28.4
-12.5
7908
272.1
34.4
755
212
1.81

16.8
9
0.07
28.1
37.7
8433
312.6
37.1
725
189
1.89

4.4
17
0.12
26.1
-3.3
-
-
-

Source: ABICALADOS - Resenha Estatstica 2006

The participation of the plastic footwear and accessories market on exports for the sector
has been growing gradually.

In 2003, they represented 31% of the total number of pairs exported, and in 2005 this
number jumped to 38%.

However, when you compare billing, the percentage that plastic footwear represents
falls to just 14.2% while leather articles represent 80% of all exports, and the unit value
is just 30% for leather footwear.

Brazilian exports of shoes by type - 2005
Source: Abicalados
TYPE US$

million
Billing
(%)
PAIRS

million
Vol.
(%)
US$
( PM )
INJ ECTED
ASSEMBLED PLASTICS
LEATHER UPPER
FABRIC UPPER
OTHERS
23
245
1,504
100
15
1.2
13.0
79.7
5.3
0.8
14
58
103
12
2
7.4
30.7
54.5
6.3
1.1
1.66
4.24
14.44
8.33
9.28
TOTALS 1,887 100 189 100.0 9.98

44
Economic instabilities and an unfavorable exchange rate have led these recovery trends
to reverse, which a much steeper drop on the domestic market.

2.3.2. Breakdown by Production Process

Below we present a table, according to the segmentation criteria proposed by
ABIPLAST and a proposal for sub-segmentation for the sector, according to the main
production processes for the year of 2005:

The main production processes in the plastics industry are based on the process of
extrusion, which is responsible for 50% of the production in the sector, where 31%
are flat and tubular films and another 19% for rigid and flexible tubes, plates, profiles
and compounds.

The values described below were obtained through statistical research expansion
performed by the Magazine Revista Plstico Industrial (Oct/2004) in the plastics
manufacturing sector, which involved sending questionnaires to 7,111 companies, from
which responses were obtained from 927 respondents (13%).

Footwear industry Indstria de Calados
Abicalados Statistical Overview 2006
Growth rate - Exports Growth rate- Sector %

45
According to research performed, in 2004 the sector had an estimated total of 63,439
machines, distributed among 8,523 companies (7.44 machines per company).

Of this total, 57.6% are injectors, 23.2% extruders and 12.3% blowers, and
approximately 37% of the equipment has been in use for more than 10 years.

This percentage is high, if we take other competitive markets into consideration, given
the high number of technological and productivity advances for plastic processing
equipment over the past ten years, mainly on fast cycle injectors for injection, for
example, preforms or disposables.

Other important technological advances in the machinery and equipment sector are in
the reduction of the noise level and the sharp reduction in electricity, which is the main
input of the plastics manufacturing industry.

The sectors that have the highest number of transformers are packaging (44%),
automotive (24%) and domestic utilities (19%).
Type of machines
N
u
m
b
e
r

o
f

m
a
c
h
i
n
e
s

Figure 12 Absolute and relative distribution of equipment
available to the Brazilian plastics manufacturing industry.
Data obtained from the 2004 PI Inventory (base of 63.439
machines
Casting
machines 0%
Celandras
(extrusion coating) 1%
Thermal shapers
4%
Roto-shapers 1%
EPS shapers 1%
Injectors 58% Blowers 12%
Balloon
extruders 10%
Extruders
(films andplates) 4%
Extruders (tubes
and fittings) 9%
[
ile
g
ib
le
]

[
ile
g
ib
le
]

[
ile
g
ib
le
]

[
ile
g
ib
le
]

[
ile
g
ib
le
]

[
ile
g
ib
le
]

[
ile
g
ib
le
]

[
ile
g
ib
le
]

[
ile
g
ib
le
]

[
ile
g
ib
le
]

46

Figure 4 Absolute and relative distribution of the number of transformers, according to the market
segment in which they are employed. The total number of responses exceeds the questionnaires (655 in
2000, 735 in 2002 and 927 in 2004), since each transformer generally works for more than one market
segment. Data obtained from 2000, 2002 and 2004 PI inventories

Sector research performed by the Revista Plstico Industrial on 255 companies that
extrude films, plates, tubes and profiles, performed between December of 2005 and
February of 2006, shows that the segment is essentially comprised of small companies
with up to 50 workers, and that these represent 62.7% of all of the companies.

The sector has recently undergone profound technological advances, under which 62%
of companies acquired equipment between 2004 and 2005. Just 31% of the equipment
was acquired using financing. The remaining 69% were acquired using specific funds,
which could signal that there are credit difficulties faced in the sector, especially by
micro and small sized companies.

Approximately 82% of the equipment is used to increase production capacity, and only
18% was to substitute obsolete equipment.

The extrusion segment has shown itself to be one of the most up to date machinery
sectors for the plastics industry, with 31% of the equipment that has been in use for
more than 10 years.

The main motives for acquiring the equipment were as follows:

49% improvement to the quality of the product

31% expansion in capacity and productivity and diversification of the product
line

20% reduction of production costs

The main difficulties presented were as follows

32% difficulties in post-processing, especially with printing

28% difficulties with the extrusion process

21% logistics and administrative aspects
Packaging
Automotive
Domestic utilities
Electric-Electronic
Civil Construciton
Machinery and
equipment
Furniture
Appliances
Toys
Agriculture
Wires and cables
Foot wear
Others
Packaging
Automotive
Domestic utilities
Electric-Electronic
Civil Construciton
Machinery and
equipment
Furniture
Appliances
Toys
Agriculture
Wires and cables
Foot wear
Others
C
o
m
p
a
n
i
e
s

C
o
m
p
a
n
i
e
s

47
These factors demonstrate the likely need to train workers so they obtain better technical
know-how.

Therefore, it is evident that there is a need to provide better credit mechanisms, mainly
to micro and small sized companies, to apply toward improving technology and
management systems, which are fundamental to the sector, so that it can improve its
productivity indicators.

Source: Industrial Plastics Magazine April of 2006

2.3.3 Tools and Modeling

The factory itself may produce molds and matrices, an activity known as tool and dye
making, or they may be produced by specialized companies that belong to the metal-
mechanical line.
Access to competitively made molds and tools make it possible for new product projects
to be manufactured quickly and with the quality demanded by the market, and it is
therefore an important competitive factor in the sector.

According to information provided by MaxiQuim, in 2003, there were three clusters
where the majority of the approximately 2000 mold factories in Brazil were
concentrated: So Paulo, Joinville and Caxias do Sul. In addition to these clusters, there
is a center growing in the state of Bahia.

Of the 2000 factories, approximately 1,200 are directly related to plastic manufacturing
that in large part involve micro or small companies.

With increased international competition in the sector, companies have to adapt to new
methods for project development in order to simulate and manufacture molds more
efficiently in production, and increasingly with much shorter lead times between the
project and its execution.

Therefore, increased computerization of the project and mold manufacturing process,
combines processes of Industrial Design, Fast Prototyping to validate designs, and
CAD/CAM systems for manufacturing. This technological and qualification
modernization process for tools is a slow process that demands heavy investments that
generally are not available to micro and small companies.

Therefore, the importance of technological support to CTs involved in these regions is
important, both on the supply of design, simulation and fast prototyping technological
services, as well as in the training of workers.
Research on 255 extrusion sector companies
Average age of the equipment in years
Research on 255 extrusion sector companies
Number of employees by company
0 to 4 5 to 9 10 to 19 20 or more 501 or more 0 to 50 51 to 100 101 to 500

48

Figure 7 Computerization of the Project and Mold Manufacturing Processes

Below we transcribe some of the conclusions of the Prospective study on plastic
injection mold manufacturing technologies performed in 2002 by DEMa/UFSCar
and EQ/UFRJ with the help of FINEP, the intent of which was to develop a
technological prospecting study that focuses on technological innovations and
tendencies relevant to the competitiveness of the Brazilian plastic injection molds
industry.

Simplified schematics for the production chain and the mold manufacturing process for
plastic injection:

Indicators of competitiveness and the technology on the mold industry (Vidossich, 1997)

The main recommendations for strengthening the Brazilian mold industry, in light of
competitive challenges provided by existing importations and increased exporting
capacities, are presented below:

Creation of a National Mold Technological Center

This is an aspect that needs to be prioritized to technologically strengthen the
mold industry, given its impact on the competitive boost experienced by
countries that are more advanced in this matter, with special emphasis on
Germany and Portugal (CEFAMOL - Marinha Grande).

Creation of a network of technological service units

To strengthen existing technological agents located in the main Brazilian mold
production centers (mainly the CTs affiliated to the PLAs of Caxias do Sul,
Joinville and So Paulo), integrating them within the National Mold
Technological Center, to work together locally on company needs with respect
to services, training and other activities intended to improve the
competitiveness of the industry;
Technological Services
(CAD/CAE/CAM, final product design for the sequence, mold project, rapid and virtual
prototyping, simulation, etc.)
Sectors

Metallurgy

Aluminum

Copper

Polymers

Lubricants

Others
Brazilian
Molds
Industry
CNAE 29 69 6
Plastics

Manufacturing

Industry

(Injection, etc.)
Sectors

Automotive

Domestic appliances

Electric-Electronic

Civil construction

Hygiene/cleaning

Footwear

Others
Machinery and
components industry (machinery, mold frames,
channels, etc.)
Finishing and
treatment services
(Polishing, engraving, texturizing, etc.)
Final
consumer
Inputs

Metallurgy

Aluminum

Copper

Polymers

Lubricants

Others
Mold
Project

Mold/Part design
Material Selection
Process Selection
- CAD/CAE
-Simulation
-Prototyping
-Modeling

Manufac-
turing
process

Electroerosion
Turning,
Milling, ect
-CNC,
-Manual
-CAM
Technical
handling
Finishing
and
handling

Engraving
Texturizing
Polishing
Surface treatment

Mold
Project
Adjustments
Tests
Prototyping
Simulation
Manufacture
Adjustments
CAE
CAD CAM Mold

49

Creation of a program or higher level specialty on mold engineering

Education of workers who specialize in the mold technology area, creating
specific professionals based on materials, mechanics, mechanical electronics
and computer sciences. Countries that were cited by the study as examples in
the educational area are: Germany, Portugal, Spain, Japan and France;

Creation of a high school or technical college course for mold projects

Investment incentives

Creation of government sponsored lines of financing, as well as the
implementation of complementary actions, focusing on the mold industry, with
the intent of encouraging modernization and technological innovation, increase
of the installed capacity, development of human resources, and promotion on
foreign markets.
Tools for packing, stamping and welding metal and glass molds are also included in the
export and import statistics provided by the Sectors Chamber for machinery and
equipment for the tools and modeling industry described below. We were unable to
obtain the specific data or total sales for the sector.

NCM 8207.30.00 8480 2002 2003 2004 2005
EXPORTS (US million) 32.0 50.8 62.0 106.2
IMPORTS (US million) 223.1 112.9 111.8 136.4
COM. TRADE (US million) (191.1) (62.1) (49.8) (30.2)
Source: DEEE / ABIMAQ (based on data provided by SECEX)

The main export destinations were Argentina (18.2%), Spain (16.1%), China (11.5%)
and Mexico (11.1%).

The main countries where imports originated were Japan (18%), United States
(13.8%),Germany (12.6%) and China (9.6%).

50

2.3.4. Machinery and Equipment for the Plastics Industry

The sector is comprised of approximately 190 companies who produce locally. A good
number of these companies belong to multinational groups that build factories locally to
better meet the local markets demands. This demand is estimated at between 1500 and
1600 injectors/year, 350 to 400 blowers a year and 150 to 180 flexographs a year.

Despite instabilities in the economy and an unfavorable exchange rate, the sector has
increased sales and productivity over the past few years, with the incorporation of new
products into its portfolio.

Importations by country of origin
Machinery and equipment for the plastics industry
US$ millions
Country FOB 2005/2004 2005
2004 2005 % %
Germany 33,7 99,1 194,1 32,6
Italy 21,5 48,9 127,1 16,1
USA 14,9 21,2 42,3 7,0
China 5,7 19,3 238,6 6,4
Switzerland 8,6 16,5 91,6 5,4
J apan 10,6 15,8 48,1 5,2
Canada 5,1 13,2 158,8 4,3
France 8,5 11,9 40,0 3,9
Austria 13 10,6 -18,5 3,5
Taiwan 6,8 9,7 42,6 3,2
Others (37) 21 37,4 78,1 12,3
Total 149,4 303,6 103,2 100,0
Source: DEEE/ABIMAQ-SINDIMAQ April of 2006
Year
US$ million FOB
Export Import
Export/Billing

%
Installed

capacity
Apparent cons.

R$ million
Plastics machinery and accessories industry
Invoicing (R$ million)
Productivity
(R$ thousand/employee)

51
The increase of apparent consumption in the sector of 41% in 2005 has demonstrated
that investments are being made again in the plastics industry. Owing to the current
exchange policy, importations increased 103.2% in 2005 and exports fell 6%, which
constitutes a serious threat to the sector.

Germany and Italy were responsible for 48.7% of all importations, and Chinese imports
grew by almost 240% (basically injectors).

Exports were made in large part to Mexico, Argentina and Angola, and represented
35.2% of the total.

2.3.5. Recycling Industry

The mechanical plastics recycling rate (transformation of plastic waste into pellets for
manufacturing new products) in Brazil is 16.5%, only falling behind Germany (31.1%)
and Austria (19.1%). This information is provided to us by Plastivida Instituto Scio-
Ambiental dos Plsticos, after it performed a never-before national study, prepared by
MaxiQuim in 2004, based on results obtained in 2003, and the methodology comes to us
from the Brazilian Geographic and Statistical Institute IBGE.

The research shows that the plastics recycling industry in Brazil is comprised by
approximately 492 recycling companies, 80% of which are concentrated in the
southeastern region of the country. Sales were on the order of R$ 1.23 billion,
employing 11,500 people directly. The industry has an installed capacity to recycle
1.055 million tons a year, and consumes 777,000 tons and produces 703,000 tons of
recycled plastic. The southeastern region leads post-consumption plastics recycling, at
58%, followed by the southern (24.9%) and northeastern (14.5%) regions.

Below the table presents the final destination of recycled products, according to the
study performed by MaxiQuim:

Total Market Segments
(ton) %
Domestic utilities 166,245 23.6
Civil construction 97,860 13.9
Textile 74,957 10.7
Disposable 63,084 9.0
Agriculture 55,389 7.9
Footwear 41,510 5.9
Electric-Electronic 37,224 5.3
Domestic cleaning 31,455 4.5
Industrial 30,694 4.4
Automotive 19,168 2.7
Furniture 12,649 1.8
Others 72,761 10.3
TOTAL 702,997 100.0

According to ABEPET, PET recycling in Brazil reached a level of 48% of packaging
consumed in 2004, totaling 173,000 tons. Bottles are generally recovered by individual
recyclers, as well as by factories and selective collection operations performed by
certain municipalities.

52
Post consumption PET generation (in ton/year)

Source: MaxiQuim Assessoria de Mercado (2004)

YEAR RECYCLING RATE
thousand/ton %
2001 8 33
2002 10 35
2003 141. 43
2004 17 48

The IRMP (plastics recycling industry) has been growing at a rate of 20% a year,
and is mostly comprised of micro and small sized companies (23.4 employees per
company) and requires appropriate investments and equipment in order to improve
productivity.

On the other hand, the quality and productivity for the sector also depends on the quality
of the post consumption waste. Therefore, actions to improve the competitiveness of the
sector should include activities surrounding selective collection programs.

Recycling of empty cleaning supply receptacles has been under development through
the inpEV (National Institute for the Processing of Empty Receptacles) since
2002.

This program is responsible for collecting empty bottles and packages, recycling them
and sending the waste generated in the processing to its final destination.

In 2004, there were 6 recyclers who had been accredited by the institute to directly
process empty packaging and to produce plastic artifacts, providing more than 2500
jobs.

Approximately 18,000 tons of empty agrotoxin bottles were recycled in 2005,
representing more than 65% of the packaging sold. Roughly 5% of the packaging
collected cannot be recycled, and is incinerated at the appropriate units (Clariant and
BASF).

Source: InpEV- Oct/2005
Last 12 months

53
2.4. Criteria for evaluating the different segments in the Sector

Each industrial segment was individually submitted to an evaluation of some of the
indicators that jointly or individually express the dynamics of the respective markets,
technological innovation and the level of technological content, within the context of
analyzing the potential interest in collaboration with industrial sectors and industrial
support for the European Union.

The level of innovation for the different segments was established through an analysis of
PINTEC 2003 and articles on the subject published in the Brazilian Innovation
Magazine (Revista Brasileira de Inovao).

The table below demonstrates the level of innovation and patents for the Brazilian
transformation industry.
Although the numbers indicate that the plastics and rubber manufacturing sector are
above the international transformation industry, they are in actuality below the average.

THAT IMPLEMENTED INNOVATION
Patent pend. Patent in force ACTIVITIES IN THE TRANSFORMATION INDUSTRY
TOTAL
of
companies
TOTAL %
TOTAL % TOTAL %

Manufacturing Industry
Food and beverage products manufacturing
Creation of Clothing and Accessory articles
Textile product manufacturing
Prep. of Leathers, leather artifacts, travel articles and footwear
Wood product manufacturing
Man. of cellulose, paper and paper products (including pack.)
Chemical and pharmaceutical drug manufacturing
Rubber and plastic product manufacturing
Machinery and equipment manufacturing
Manufacture of machinery for offices and computer equipment
Manufacture of machinery, electrical devices and material
Manufacture of electronic material and communication equipment
Man. of medical-hospital instrum., precision and optics, Auto
Man. and assem. of automotive vehicles and auto parts
Manufacture of furniture and miscellaneous industries
RECYCLING

82374
10606
11726
3173
3843
5102
1593
3509
5049
5411
201
1705
614
845
1947
6707
312

27621
3563
3782
1111
1143
1609
490
1529
1828
2354
143
699
348
384
772
2264
43

33.5
33.6
32.3
35.0
29.7
31.5
30.8
43.6
36.2
43.5
71.1
41.0
56.7
45.4
39.7
33.8
13.8

1713
173
12
16
38
58
34
212
108
355
22
80
37
80
75
117
0

2.08
1.63
0.10
0.50
0.99
1.14
2.13
6.04
2.14
6.56
10.95
4.69
6.03
9.47
3.85
1.74
0.00

1391
116
11
40
35
15
37
167
152
254
22
42
18
97
96
85
0

1.69
1.09
0.09
1.26
0.91
0.29
2.32
4.76
3.01
4.69
10.95
2.46
2.93
11.48
4.93
1.27
0.00

Note: companies with 10 or more people working were considered.
Source: analysis of Pintec 2003 data

The weight of the strategic alignment was based on the governmental priorities for the
sector: PITCE, Plastics Competitiveness Forum, Renai Plastic and on the Brazilian
industrial policy.

The depth of the analysis varied from segment to segment, owing to a lack of data in
many of the segments researched, and the large dispersion of companies throughout
practically every sector of the manufacturing industry.
Brazilian industrial policy
Horizontal actions
Sector priorities
Software
Semiconductors
Capital assets
Drugs and medications
Areas with future potential
Biotechnology Nanotechnology Biomass

54
o Export Plastic Program 2006

RENAI - National Investments Informational Network

The document from the MDIC / SDP concerning the distribution of investments in the
plastics industry for the 1
st
half of 2005 indicates that the plastics and rubber products
sector played a very small role in the volume of investments, as well as in the number of
projects.

The table below demonstrates that the plastics transformation sector represented just
1.2% of the value invested, and 5.7% of the projects total for the transformation
industry.

Sector Value (US$ millions) (%) N Projetos
Industry total 28800 100,00 565
Product/distribution Energy/gas/water 7900 27,43 -
Transportation/storage/communication 1015 3,52 -
Trade/services/health 857 2,98 -
Extraction industry 315 1,09 -
Civil construction 138 0,48 -
Agriculture ranching 75 0,26 -
Manufacturing industry 18500 64,24 -
Rubber and plastic articles 540 1,88 36
Rubber (Michelin tires =MUS 2000) 202,0 37,41 4
Packaging 189,7 35,13 13
Resins 64,0 11,85 1
Electric-Electronic 38,2 7,07 2
Laminates 17,5 3,24 2
Domestic Utilities 10,4 1,93 2
Civil Construction / PVC comp. 9,4 1,74 3
Disposables 2,9 0,54 3
Recycling 1 0,19 1
Others 4,9 0,91 5

Of the US$ 540 million invested in the sector, 62.6% was earmarked for the plastic
manufacturing sector, and the packaging sector has the highest amount of investments,
with 35.1% of the total amount invested.
Target products (priority)

55

With respect to the origin of the capitalization, except for a US$ 200 million investment
made by Michelin in a tire factor, 28 of the 36 projects were capitalized domestically.

2.4.1. Description of the Indicators

The choice of indicators sought to determine the market dynamic for various sectors and
the respective alignment with the projects directives.

Description of the Indicators
Ref.
Designation Objective

I1

Level of Sales ($)
Understand the level of importance of the sector,
within the contexts of the Manufacturing Industry
and the Plastic manufacturing sector

I2
Annual growth rate (%)
(weight 2)
Understand the dynamic nature of the segment with
respect to the consumer public

I3

Level of added value ($/ton)
Understand the level of involvement on the
international market that the segment demonstrates

I4

Export level (%)
Understand the importance/experience of the
relationships established with the foreign market

I5

Innovation level (weight 2)
Understand the technological development and
production dynamics for the segment (PINTEC 2003

I6

Strategic alignment
Understand the importance of the segment/product
in the value chain for the sector and/or in the
respective cluster (PITCE/Industrial Policy)

I7
Integration with Technological
Centers
Understand the level of the existing relationships with
the respective Technological Centers and MSCs.

I8

Level of MSCs Participation (%)
Understand the diffusion and weight of the
participation of the
MSCs in the Segment.

Classification (weighted values)
Final result of the sum of the indicator values,
after the application of the weight (level of
importance) for each indicator.

Plastics manufacturing 1st semester of 2005
US$ 540 million in 36 projects
F
r
a
n
c
e

B
r
a
z
i
l

I
t
a
l
y

U
S
A

G
e
r
m
a
n
y

F
i
n
l
a
n
d

C
a
n
a
d

Number of projects Investments (US$)

56

2.4.2. Scoring Criteria

The main purpose of scoring the segments in the plastics manufacturing industry sector
was to identify that segments present a market dynamic that is above the average for the
Sector.

Ref. Scoring criteria 1 2 3 4 5
I1 US$ billion < 1
billion
1 to 10
billion
10 to 15
billion
15 to 20
billion
above
20
billion
I2 % Negative
growth
Between 0%
and the
GDP
GDP value up to 20%
above
up to
21%
above
I3 US$ / ton <2600 2601 to
4600
4601 to
6600
6601 to
8600
above
8600
I4 Exports/production
(%)
Less
than 6%
6 to 8% 8 to 10% 10 to 15% > 15%
I5 % innovation
(Pintec 2003)
Less
than
20%
21 to 30% 31 to 40% 41 to 50%
I6 PITCE Sector
Chamber
LOW Average/low LOW Average/low high
I7 Level of
Integration
LOW Average/low LOW Average/low high
I8 % PMEs in the
sector
Less
than
50%
51 to 80% 61 to 70% 71 to 80% above
81%

It is also worth noting that although these indicators are dynamic, they accurately reflect
the current situation of the segments analyzed.

Many indicators were obtained through an analysis of secondary and tertiary data.

It was very hard to obtain segmented data, owing to the fact that the plastic
manufacturing sector is rather spread out throughout the manufacturing industry.

Generally the indices presented provide consolidated data. This obliged up to adopt
some qualitative values, based upon sector and market information, as well as upon our
own research.

57
2.4.3. Classification of the Priority Segments

After the description of the indicators and the choice of the scoring criteria, scores were
assessed for the segments, pursuant to what is set forth in the table below.

Indicator: Total

Code
Designation
S- PACKAGING 38
Food / beverages 37
Pharmaceutical 33
S-
2
CIVIL CONSTRUCTION 23
S- DISPOSABLE 34
S- TECHNICAL COMPONENTS 41
Automotive (Auto-parts) 40
E&E 44
Medical-hospital... 39
S- AGRICULTURAL 34
S- DOMESTIC UTILITIES 28
S- SHOES 27
S- LAMINATES 28
S- TOYS 29
S-10 OTHER SEGMENTS 24
Component Extrusion and Masters 29
Biopolymers, Nanocompounds 42
I T
P
PLASTICS MANUFACTURING (ton) 28
I T
P
PLASTICS MANUFACTURING (US$) 36
S-11 MACHINERY AND ACCESSORIES FOR THE
PLASTICS INDUSTRY
38
S-12 TOOLS AND MODELING 36
S-13 RECYCLING 26

NOTE: The scoring spreadsheet for the segment is located in Chapter 7. ANNEXES.

We think that it is necessary to maintain some sub-sectors out of this study, because they
maintain technical characteristics and market dynamics that are different, as is the case
of the technical components segment, which covers the automotive, electric-electronic
and medical-hospital equipment sectors.

2.5. Technological Centers for the Plastics Sector

The technological institutions in Brazil are rather diverse in relation to criteria such as:
organizational set up, scope of activities, legal status, training and infrastructure.
The country maintains rather advanced technological institutional infrastructure, such
as: institutions affiliated with the Brazilian Ministry of Science and Technology
(MCT), including institutions affiliated to the National Nuclear Energy Commission
(CNEN); state public technological institutes; technology centers of SENAI System;
business incubation institutions; institutions affiliated to the Ministry of Health and the
Ministry of Defense; institutions affiliated to universities; private technological
institutes and new organizational models for institutions, such as social organizations
and executive agencies.

58
The publication Cincia, Tecnologia e Inovao: desafio para a sociedade brasileira
(2001) o Livro Verde da CT&I no Brasil, makes it quite clear that ...the country
maintains a rather well-defined and well-founded set of scientific and technological
research institutions, which rest upon reasonably solid bases..., although it also
acknowledges that there is uneven geographic distribution of these CT&I institutions.

On this point, we should take into consideration the fact that the technological research
environments in Brazil have always been linked to the government in one way or
another at different levels (federal and state) which shape and support the national
science and technology system, and most recently, technological innovation as well.

It has been suggested that the definition on the types of CTs in Brazil should be
classified in the following manner: they are public/private in nature, accredited by the
MCT, that fulfill a specific mission with respect to scientific and technological
research and development, in addition to maintaining the capacity to offer technological
and innovative services on the development and preparation of products and/or
processes, on technological education and training, as well as scientific production and
the dissemination of knowledge.

The Technological Centers for the Plastics Sector were listed and classified based upon a
diagnosis of the difficulties and weak spots in the infrastructure in technological centers and in
business associations within the plastics sector in Brazil, which is part of the Brazilian
Technological Center and MSC Support Network Project, described in the following table.

Table 9 - CT scores for the plastics sector

CT CIDADE UF REGIO PONTIAO
COPPE/PEQ RIO DE J ANEIRO RJ SE 35
INT RIO DE J ANEIRO RJ SE 35
ITAL CAMPINAS SP SE 35
SOCIESC PL J OINVILLE SC SU 34
CCDM/UFSCar SO CARLOS SP SE 33
IPT-LAPB SO PAULO SP SE 33
CIMATEC SALVADOR BA NE 32
CETEBO SO LEOPOLDO RS SU 28
IMA/UFRJ RIO DE J ANEIRO RJ SE 27
TECPAR CURITIBA PR SU 25
EQ/UFRJ RIO DE J ANEIRO RJ SE 22
ULBRA CANOAS RS SU 21
SENAI SP S.B. DO CAMPO SP SE 21
FIEMTEC CUIAB MT CO 18

In a specific meeting, according to the minutes dated 07/10/06, ELETROS cited the CTs at
UFRS materials department, and UNICAMP department of polymers technology, as the
Institutions important to this study, since they demonstrate special interest in the sector.

2.6. Local Productive Arrangements LPAs.

The LPAs can be defined as agglomerations of companies located in the same region,
which work in the same production activity, and that maintain relationships involving
articulation, interaction, cooperation and apprenticeships with one another and with
other local players, like the government, credit institutions, education and research, as
well as business associations.

Below we provide a list of the LPAs in the Plastics manufacturing sector published by
the MDIC on 05/03/06.

59

State Name of the APL Central city Institution Instituio

POLYMERS
AL MANUFACTURED PLASTICS MACEI CNI
IEL
MDIC
BA PLASTICS MANUFACTURING SALVADOR SISTEMA C e T
MEC
CNI
IEL
SECTI BA
GO MANUFACTURED PLASTICS GOINIA MDIC
MG MANUFACTURED PLASTICS BELO HORIZONTE MDIC
PE MANUFACTURED PLASTICS RECIFE MDIC
PR MANUFACTURED PLASTICS S CURITIBA MDIC
RJ MANUFACTURED PLASTICS DUQUE DE CAXIAS SEDE RJ
RJ MANUFACTURED PLASTICS RIO DE J ANEIRO MDIC
RS MANUFACTURED PLASTICS CAXIAS DO SUL MDIC
RS MANUFACTURED PLASTICS PORTO ALEGRE MDIC
SC MANUFACTURED PLASTICS CRICIMA MDIC
SC MANUFACTURED PLASTICS J OINVILLE MDIC
SEBRAE
SP MANUFACTURED PLASTICS SANTO ANDR MDIC
SISTEMA C e T
SEBRAE
SP MANUFACTURED PLASTICS SO PAULO MDIC

With the objective of creating incentives to increase the international competitiveness of
Brazilian MSCs, through the promotion of larger and more dynamic technological and
commercial interfaces between companies and Brazilian and European technological
sectors, we recommend that at the next stage of the project, a correlation be made
between the LPAs, the CTs listed, as well as the priority segments and applications,
with the intent of identifying possible opportunities for establishing partnerships.

Based upon this premise, a project is being developed for the LPA (Local Productive
Arrangement) in the region of Santo Andr SP, with the intent of promoting technical
and administrative training for plastics manufacturing companies that comprise the LPA
of the Greater ABC region (Tools, Auto parts and Plastics).

This project will be developed under the coordination of SENAI/DN, through the
Industrial Technology Unit UNITEC, with technical coordination provided by the
School Escola SENAI Mario Amato, and services will be provided through an
agreement executed between SENAI/DN and the Ministry of Development, Industry and
Foreign Trade MDIC. Details of the project are described in annex 14 (Item 7.1)

2.7. Priority Segments for Cooperation

Based upon an analysis of the spreadsheet, the priority segments for cooperation projects are:
Biopolymers and nanocomposites

o Packaging: plastic bags, disposables, film.

o Fibers for surgical sutures, parts for bone implants, capsules for the
controlled release of medications.

o Plasticulture (greenhouses, mulch), agricultural (small replanting pipes).

Electric-Electronic Sector

o Applications in industrial design, prototyping in the areas of portable
electronic devices, white line.
o Special compounds: flame retardant compounds, conductive compounds,
high thermal resistance, high energy saving devices, electromagnetic
armoring, etc.

60

o Packaging with low environmental impact and structural
nanocompounds.
o Smart cards and smart labels.

Automotive and auto parts segment

o Applications on industrial design, prototyping and project management.

o Structural nanocompounds.

o Quality management system and productivity increases.

Packaging and disposables

o Multilayered films to create a barrier effect.

o Stand-up pouches.

o Retortables packaging.

o Packaging identifiable using RFID technology.

o Packaging design presentation especially in the cosmetics and personal
care segments.

Medical-hospital and dental equipment

o Special plastics

o Biocompatible polymers compatible with orthopedic, cardiac,
neurological, breast and other types of prosthetics.

o Materials for medical-hospital consumption, hypodermics and others for
a single use.

Tools and Modeling

o Industrial design, fast prototyping to validate the design and CAD/CAM
systems for manufacturing.

o Programs for technical training and technical improvements.

o LPAs and CTs integration for the sector through the creation of a
network of technological service units, both for the supply of
technological design services, simulation and fast prototyping, as well as
worker training.

o Characterization tests of domestic resins, to create a database for
simulation software for injection/extrusion.

Machinery and Equipment for the Plastics Industry

o Development of automated production cells for components with

61
injection processes, insert placement, welding and the final inspection
of the product

o Development of integrated industrial design products, productivity and
quality increases.

o Program for improving energy efficiency for equipment and industrial
facilities

o Programs to encourage modernization of machinery for the MSCs.
(Modermaq, for exemple).

Recycling: although it does not have a high score, the recycling is of
fundamental importance in the plastics chain.

o Programs supporting technological improvements, increased
productivity and worker training for the IRMP.

o Development and characterization of compounds with the incorporation
of recycled polymers

o Development of applications that incorporate recycled materials, as for
example, plastic wood

o Development of chemical and energy dispensing recycling processes of
plastic materials after consumption.

Note: we think that the list of priority segments and applications presented above should
not exclude possible partnership projects that are proven to present innovative aspects
and that have not been considered in this study.

62
PART 3 ANALYSIS OF THE EU PLASTICS SECTOR

3.1. MACROECONOMIC OVERVIEW IN THE EUROPEAN UNION

The Euros economic community grew by approximately 1.6% within the year of 2004.
With respect to performance by country, Germany and Italy were noteworthy for their
slow economic growth, which did not allow the average growth of the region. On this
point, the countries that are not in the Euro zone, and in particular the United Kingdom,
are benefiting from a much higher growth rate.

PRINCIPAL MACROECONOMIC INDICATORS IN THE EURO AREA

(% inter-annual variation)

2001 2002 2003 2004
DEMAND AND PRODUCT
Gross domestic product 1.4 0.9 0.6 2.0
Domestic demand 0.9 0.2 0.8 0.8
Private consumption 1.8 0.1 1.0 1.3
Public consumption 2.1 2.9 1.9 1.9
Gross fixed capital composition -0.6 -2.4 -0.5 2.1
Exports 2.8 1.5 0.1 0.1
Imports 1.5 -0.1 1.8 1.8
PRICES AND COSTS
Consumption prices (annual average) 2.4 2.3 2.1 2.1
Unit work costs 2.6 2.4 2.4 2.4
Work production 0.0 0.2 0.4 0.4
LABOR MARKET
Total employment 1.4 0.5 0.1 0.1
Unemployment (%/ active population) 8.0 8.4 8.7 8.8
Source: CEP Studio (2005)

63

3.2. THE EUROPEAN PLASTICS MANUFACTURING INDUSTRY

Study of the European plastics manufacturing market.

Summary of significant points:

Total plastics consumption, including virgin polymer and recycled pellets,
continued to grow, increasing by 5.6% between 2001 and 2003. The bulk of
the growth took place between 2001 and 2002 (3.7%), in comparison with
1.9% growth between 2002 and 2003.

Western Europe consumption in 2003: 39,706,000 tons (Brazil 4,263,000
tons).

Per capital consumption of virgin plastics in Western Europe increased to 96.6
kilograms in 2002, increasing to 98.1 kilograms before 2003.

Mechanical recycling of plastic waste increased by 11.3% tons between 2001
and 2002, with a similar increase in 2002, maintaining the mechanical
recycling rate at approximately 14% in 2003.

The energy was recovered from 4,678,000 tons of plastic waste in 2002, an
increase of 2.1% in 2001, as represented in the figure below.

23% of the recovery of the total collectable plastics waste. This increase was
due to a growth in the expansion of the energy recovery capacity and new
factories.

Generally, the increase in the recovery capacity meant that the amount of
plastics ending up in landfills only slightly increased between 2001 and 2003,
and it is effectively separated from the rise in consumption and associated to
waste generation.

Plastics raw materials only consume a small fraction (four percent) of the
worlds petroleum.

There are innovations in plastic, with the latest technological applications and
manufacturing solutions to minimize environmental impact. For example, we see an
increasingly higher amount of plastic components in cars. The use of plastic instead of
metal causes the weight of the car to decrease, thus leading to a subsequent reduction in
fuel consumption, and as a result, this reduces fuel consumption as well as
contamination rates. Increased consumption reflects the acknowledgement of plastics
capacity: strength, flexibility, in addition to the acquisition capacity and durability which
make it convenient for a variety of applications, ranging from packaging to construction,
in addition to telecommunications and electronic equipment.

64

Plastic is one of the most efficient and versatile material resources we have, and as such,
it plays a significant role in achieving sustainable development. The European plastics
industry is committed to facilitating the efficiency of these resources, as well as to make
prevention techniques available through technological developments and the
understanding and implementation of various recovery and recycling options.

This first section indicates to us that the European plastics sector has experienced
continuous growth rates, despite some unfavorable times (2002 and 2003).

Note:
Plastics consumption value generally refers to the plastic products market as consumed
by final users in Western Europe. This includes recycled polymers but excludes
applications that are not plastic. These data do not take into consideration the flows of
imports/exports of either full or empty packaging.

65

Consumption for 15 countries and Europe and expansion.

66
From these tables we cite the consumption values (x1000 tons/year) for the countries
expressly mentioned in the TdR:

The information about the countries noted is requested explicitly
by the TdR.

67

3.2.1. Classifying Europe using geographic criteria
1

The European association of the manufacturers of PlasticsEurope plastics groups the
European market into the following zones of interest:

Source: www.plasticseurope.org

1
Source: PlasticsEurope, Association of Plastics Manufacturers. Annual report (2005)

68
Detail of each zone defined:

Central Region

In 2005, the Central Region began to position plastics as the material for the 21
st

century. Covering the countries of Austria, the Czech Republic, Germany, Hungary,
Poland, Slovakia, Slovenia and Switzerland, the Central Region covers more than a
third of the European production and demand for plastics.

Communications and opinion making, along with edition management, provide the backbone
for the activities in the Central Region. In Germany, plastics and the plastics industry obtained
a principal position in the publics opinion in 2005, when compared to other materials.

2005 was the year that saw the creation of PlasticsEurope Polska and PlasticsEurope
Austria, and cooperation agreements were reached with the Swiss association KVS
plastics and the Slovenian Plast Technics Cluster.

Conferences and congresses were part of the work to position the industry as a
trustworthy partner in its relationships with policy makers, governments, NGOs,
universities, as well as other parties responsible for decision making in the industry.

Iberian Region

The Iberian Region, which covers Portugal and Spain, has four groups that work on the
environment, the consumer, standardization and communications. One of the main
activities in the Iberian Region is plastics used in agricultural projects. The growing use
of plastics in agriculture in southern Europe creates plastic waste at the end of the life
cycle that needs to be controlled. Very little of the plastic waste is collected and this
leads to a considerable loss of resources.

A European project including France, Italy, Spain and the United Kingdom was
negotiated, to promote the administration of plastic waste in agriculture.

The Iberian region is also discussing the possibility of recovering energy from plastic rich
waste in Catalonia with local authorities, with technical assistance provided by Tecpol.

Mediterranean Region

The regional consulting committee considers developments in the plastics industry in
Croatia, Cyprus, Greece, Italy, Malta and Turkey. PlasticsEurope published a position
paper on Green Public Procurement (GPP) and was active in plastic cables.

Another study was performed on plastics and environmental policy in Italy, and the
recovery of energy was the subject of significant communication. The Mediterranean
Region has also addressed the question of plastic bags and tarps. The Regional also
continues to work on the plastics value sequence chain, in large part with COREPLA, a
national plastic packaging recycling consortium, where communication and
announcements also played a significant role in the activities of the Mediterranean
region.

69
North Region

The countries in the North Region Denmark, Estonia, Finland, Ireland, Latvia,
Lithuania, Norway, Sweden and the United Kingdom were fully integrated into the
Pan-European network through a regional office in London in the British Plastics
Federation. Cooperation agreements were signed with Denmark, Finland, Sweden and
the United Kingdom.

Important work was performed on plastic pipes, realized in cooperation with TEPPFA
(The Plastic Pipes and Fittings Association), the Danish Federation of Plastics and
DEPA, the Danish Environmental Protection Agency.

Using waste as an energy source was also promoted in the North Region, aided by the
introduction of better recovery practices, including recycling. The region took part in
plastics fairs in Birmingham, United Kingdom, and in Lahti, Finland. Relationships with
the media began to increase the Regions visibility.

West Region

The Western Region covers France and Benelux, and included a variety of
communication efforts, which include domestic news bulletins, announcements, project
competitions and educational games

France focused on communications through various compartments and a campaign
announced on the radio in the summertime, talking about reusing and recycling plastic bags.
A subsequent examination indicated that the ad campaign had been very successful in
promoting the message of plastics and the environment. The idea that plastic bags can
be reused and recycled to produce energy was well transmitted by the campaign.

3.2.2. Lines of work in accordance with the association PlasticsEurope

The association PlasticsEurope defined the work groups that group activities or projects
that mark the tendencies or lines of interest in Europe for the plastics sector. The main
work groups are listed below:

Energy - saving

The study of energy saving materials concluded that increased use of energy saving
plastic materials would significantly aid in the management of sustainable resources in
Europe. Total liquid energy the saving of isolation plates from the plastics sold in
2004, improving energy saving standards for exterior walls in Europe, is estimated at
5,150 million GJ throughout a 50 year lifetime. If sales in 2004 of plastic energy saving
devices took place over the twenty-two year period for the Kyoto accord (1990 - 2012)
approximately one-third of the EU1 Kyoto target would be reached.

Solid Waste Administration

In order to contribute to the waste debate in Europe, the experts at PlasticsEurope
focused more on the definition and development of different techniques to recover
plastics at the end of their life cycle. In doing so, they focused not just on innovation in

70
close cooperation with partner industries, but they also seek to identify the best
practices, and recommend and contribute towards the presence of sustainable waste
administration systems throughout all of Europe. A special attempt to introduce the
accumulated knowledge gathered over the past 15 years was made.

In specific guidelines for the end of the life cycle for products, PlasticsEurope was
actively involved in the consultation of the interested party with the European
Commission on targets for End-of-Life-Vehicles. The guidelines from the European
Commission (2000/53/OEC) for end of life vehicles sets ambitious goals for reuse,
recovery, recycling and energy. According to a 2003 estimate, 12 million vehicles were
junked, with a plastics return rate of approximately one million tons. This is a sufficient
reason for highlighting the most eco-efficient means of recovery, and to assure a
favorable legislative structure. That structure would examine the whole life cycle of the
product for the client, reducing the focus on specific targets, but in order to insure a
reduced impact on the environment.

Exposure matrix (contact with food)

The exposure matrix is a project to emphasize plastic packaging in contact with food for
the consumer. PlasticsEurope has undertaken this project in conjunction with other
associations, within the context of European regulations on matters related to food
contact, and creating tools to analyze risk and create databases about food contact, in
order to insure greater confidence on the protective benefits of using plastic as food
packaging.

71
3.3. DETAILS ON THE SEGMENTS CONSIDERED

Table Based upon ABIPLAST (Brazil)

Ref. Sector Designation
S-1 PACKAGING
S-2 CIVIL CONSTRUCTION
S-3 DISPOSABLES
S-4 TECHNICAL COMPONENTS
S-5 AGRICULTURE
S-6 DOMESTIC UTILITIES
S-7 FOOTWEAR
S-8 LAMINATES
S-9 TOYS
S-10 OTHER SEGMENTS

Ref. Sector Designation
S-11 MACHINES & ACCESSORIES FOR THE PLASTICS
INDUSTRY
S-12 TOOLS AND MODELING
S-13 RECYCLING

Segments taken based upon the study in Brazil. Adaptation of the classification
according to the sector criteria provided by ABIPLAST.

For the European study, product or utility categories were developed that were different
than those previously defined for Brazil.

The data provided for the study were taken from different company databases:
Dun & Bradstreet, Kompass, SABI and Europages. The most available data only
went through 2003.

The classification of different companies in sectors previously defined in Brazil took
place in accordance with the following conversion tables, as agreed to with the experts
from the European Union and Brazil.

For some graphics, some criteria for associations were considered.

72
Table relating European segments with Brazilian segments.

It shows details of the segments for those based in Europe, with their corresponding
segment defined for Brazil.

Segment-BR

Databases segments
S-1 Plastic fittings and joints
S-1 Plastic tanks and storage
S-1 Plastic bottles, according to the material
S-1 Plastic casks, cans and boxes: packaging storage, food and transportation containers
S-1 Plastic pipes and bottles for filling
S-1 Plastic sacks and bags
S-1 Plastic closures and lids
S-1 Plastic articles for the food and beverage industry
S-1 Plastic articles for the chemical, pharmaceutical and cosmetics industries
S-1 Plastic articles for tents and supermarkets
S-2 Semi-finished plastic products: bars, joints, profiles and pre-formed
S-2 Plastic tubes, hoses, pipes and channels
S-2 Plastic valves, plugs and accessories
S-2 Plastic articles for construction
S-2 Plastic doors and windows
S-2 Plastic blinds, curtains and sheets
S-2 Plastic sanitary installations
S-3 Semi-finished plastic product: bars, joints, profiles and pre-shaped (part 2)
S-3 Plastic articles for the bathroom
S-3 Plastic baby articles
S-4 Fiberglass reinforced plastic articles
S-4 Plastic articles for transportation infrastructure
S-4 Plastic articles for the mechanical industry
S-4 Plastic articles for the electric-electronic industry
S-4 Plastic articles for laboratories
S-4 Plastic articles for metered devices
S-4 Plastic articles for optics, photography and film
S-5 Plastic articles for agriculture, cattle and animal husbandry
S-6 Plastic articles for domestic use
S-6 Plastic articles for kitchen and table
S-6 Plastic accessories for decorating
S-6 Plastic articles for the furniture industry
S-8 Semi-finished plastic products: Laminates, sheets, films and belts
S-8 Plastic laminated sheets
S-10 Preprocessed plastics
S-10 Plastic articles for grooming
S-10 Plastic merchandising accessories
S-10 Miscellaneous plastic articles
S-10 Plastic accessories for textile machinery
S-13 Plastic recycling

Source: Kompass (2003)

Note: The economic activity code (CNAE) were not used, since the company data that
only include this information in their databases have a cost, and are not included in the
budget for this project.

73

3.4. BILLING FOR THE DIFFERENT SEGMENTS

2003 BILLING (Plastic Sector Segments, EU-15)

Segments

The sector of the companies that have proportionally higher sales in the plastics industry
is the segment of Civil construction, at 28.5%, followed by the Packaging segment,
with 21.8%. If we add technical components and other segments to these two, we
would cover more than 80% of the market.

%

o
f

t
h
e

t
o
t
a
l

p
l
a
s
t
i
c
s

i
n
d
u
s
t
r
y

b
i
l
l
i
n
g

74
3.5. NUMBER OF COMPANIES BY SEGMENT

Plastics Manufacturing Sector 2003 (EU-15)

33% S-1 Packaging
24% S-2 Civil construction
15% S-4 Technical components
12% S-10 Other segments
5% S-3 Disposables
5% S-8 Laminates
4% S-6 Domestic utilities

1% S-5 Agricultural
1% S-13 Recycling
n.d S-7 Footwear
n.d. S-9 Toys
n.d. S-11 Machinery and accessories for
the plastics industry
n.d. S-12 Tools and modeling
n.d. S-13 Recycling

With respect to the number of companies on the European market (EU-15), the main
segment is that of packaging, with 33% of the companies in the sector, followed by the
civil construction segment (24% of companies), and technical components is in third
place, with 15%.

We note that recycling companies and companies that handle disposable material for
products, are directly quite involved in waste management (of plastic). These segments,
despite the fact that they are not quantitatively significant at the present time for the
plastic manufacturing sector, they are in expansion, owing to increasing awareness of
environmental protection and concepts of sustainability.

Market share
- Europe -
(number of companies)

75
3.6. VOLUME CONSUMED BY SEGMENT (tons)

The segmentation criteria used for the following graphics does not agree with what was
previously used to analyze billing and the number of companies in the sector. This
graphic was taken from the annual report of the PlasticsEurope association (2002-2003),
and consequently makes use of the segmentation criteria employed by this organization.

Source: PlasticsEurope (2003)

3.6.1. Packaging

Packaging was still the greatest plastics consumer in 2003, the equivalent of 14,764,000
tons, or 37.2% of all plastics consumed. Packaging experienced a growth of 1.3% on
consumption rates between 2002 and 2003, despite economic declines. The reason for
this is that plastics continue to be the material of choice for packaging, and it is always
substituting other more traditional materials because it is light, flexible and easy to
process. Continued technological development in the plastics industry means that
currently the large family of plastics continues to do more with less, helping to save
valuable resources. In fact, although more than 50% of the merchandise throughout all
of Europe is packed in plastics, the weight of plastic only equals 17% of all packaging.

3.6.2. Agriculture

Agricultural plastics equal 1.9%, 744,000 tons, of all the plastics consumed in Europe in
2003. Despite the fact that there was no growth in this sector between 2002 and 2003,
they continue to play an important role. Agricultural irrigation and drainage systems
based on plastics supply effective solutions for crop expansion. For example, in arid
regions, plastic tubes and drainage systems may cut irrigation costs by one or two-thirds,
and it can equally double the harvest.

76
3.6.3. Building and Construction (B&C)

The building and construction industry (B&C) uses plastics in a wide variety of tube
wrapping applications, in window frames and interior design. It is the durability of
plastic, its strength, resistance to corrosion, low maintenance cost and final aesthetic
result that assures its continued popularity in the sector. This is reflected in the data that
demonstrate that despite an economic decline, B&C consumed 7,350,000 tons of plastic
in 2003, the equivalent of 18.5% of the total plastics consumption for Western Europe,
making it the third largest consumer, after packaging and domestic sectors. The
relatively low growth, of two percent, in the plastic consumption between 2002 and
2003 is an indication of the negative impact that the larger economic recession has had,
as well as the drop in new home starts.

3.6.4. Automotive

The demands of the automotive industry are a challenge for current designers. The
solution to balance high performance, competitive prices, style, comfort, safety, fuel
economy and minimum environmental impact, often times can be found in a new
generation of light plastics. This is reflected in the plastics volumes that are used in the
automotive sector. The automotive sector challenged the stagnant economic climate and
experienced relatively high growth rates between 2002 and 2003 5.7%. The volume of
plastics consumed by the automotive sector reached 3,170,000 tons, which is to say,
eight percent of total plastics applications in 2003.
Plastics are at the vanguard of automotive innovation, with designs like the smart car
from Daimler Benz and the development of light fuel cells are among the example of
light materials that perform an essential role in the future of the automotive sector and
efficient energy consumption. Actually, it is
forecast that light plastics will contribute to the reduction of 10% per year on the fuel
consumption for passenger cars in Europe.

3.6.5. Electrical and Electronic (E&E)

Despite a global economic decline, electrical and electronic plastics consumption (E&E)
increased 3.4% to 3,360,000 tons in 2003, in comparison with the 3,250,000 tons in
2002. This confirms that plastic is an essential material for the E&E sector. It is a fact
that many new technological developments take advantage of cutting edge plastics
consequently, the devices are getting smaller and lighter. This means that while the
amount of E&E applications continue to grow, the weight of the plastic used in each
unit, as in the packaging, goes down. This is a perfect example of plastics that make
more with fewer resources.

77
Segmentation differences existing between Brazil and Europe:

Packaging
42%
Disposables
11%
Technical comp.
11%
Civil Construction
10%
Agriculture
9%
Others
7%
Domestic utilities
5%
Foot wear
3%
Toys
1%
Laminates
1%
Brazil (2005)

4.263 million tons

Source: ABIPLAST (2005)
Western Europe (2003)

4.263 million tons

Source: ABIPLAST (2005)
Agriculture 1,9% Packaging
37,2
Civil Construction
18,5
Domestic Utilities/Others
20,1
E&E; 8,5
Automotive 8
Industrial 5,8

78

3.7 MSC PARTICIPATION FOR EACH SEGMENT

With respect to this section, it studies companies that produce plastics by the number of
employees. Given that this is an important part of this study of MSCs, we think it is
important to characterize the size of the company by segment.

In order to facilitate the presentation of this data, the analysis tool was EXCEL for
program data used in the histogram, with a graphic representation of the frequencies and
accumulated frequencies by class, along with two tables that support the data origin for
the graphics.

The two tables that appear for the sector and for each particular segment (which is data
held) represent the following:

- Table located on the left: Table of frequencies required in the form,
taken from the field Class.
- Table located to the right: Table of frequency, with the preceding data,
required from the form taken from the field frequency.

The table then shows the entire sector plus a key concerning how each number of the
class should be interpreted (example: class 200 groups all companies that have between
51 and 200 employees).

The criteria for the definition of classes to study.

The values of the classes were grouped, defining the companies in the range of
employees that allow a definition of companies that are considered MSCs and those that
are not. Some values at times have apparently been defined as follows, like 200 and 250,
with the objective of verifying which companies might be in this range. This fact is
important, since the criteria for MSCs vary in accordance with the agency or association
setting the rules (the criteria noted at the start of this study). We found that the
percentage of companies that are located in the range of 200-250 is minimal: less than
1.5% of the companies. What this means that there are not many companies that can
challenge this based upon the criteria adopted for the MSC, and that is completely
different if that value leads to a higher value.

These companies may be willing to consider MSCs, according to this criteria, and a
non- MSC, in accordance with another, which in the subsequent phase of the project
may imply assistance from the EU or not.

79

Class Frequency % accumulated Class Frequency % accumulated
10 4.743 21.91% 50 9.715 44.88%
50 9.715 66.79% 200 5.407 69.85%
200 5.407 91.76% 10 4.743 91.76%
250 278 93.05% 500 853 95.70%
500 853 96.99% above 652 98.72%
above 652 100.00% 250 278 100.00%

Plastics Sector Histogram

Class Employees
10 0-10
50 11-50
200 51-200
250 201-250
500 251-500
above >500

Source: Specifically prepared based upon Kompass-2003

F
r
e
q
u
e
n
c
y

Class (according number of employees)
Frequency % accumulated

80
On the tables and histograms for each segment below, we can see that he participation of
MSCs in Europe is quite important, representing approximately 90% of the companies
in the sector.

S-1 (EU-15)

10
50
200
250
500
above
1.383
2.854
1.728
96
281
184
21,19%
64,92%
91,40%
92,87%
97,18%
100,00%
50
200
10
500
above
250
2.854
1.728
1.383
281
184
96
43,73%
70,21%
91,40%
95,71%
98,53%
100,00%

S-2 (EU-15)

10
50
200
250
500
above

909
2.031
1.186
64
235
187

19,71%
63,75%
89,46%
90,85%
95,95%
100,00%

50
200
10
500
above
250

2.031
1.186
909
235
187
64

44,04%
69,75%
89,46%
94,56%
98,61%
100,00%

S-3 (EU-15)

10
50
200
250
500
above...

212
476
281
16
42
44

19,79%
64,24%
90,48%
91,97%
95,89%
100,00%

50
200
10
acbove...
500
250

476
281
212
44
42
16

44,44%
70,68%
90,48%
94,58%
98,51%
100,00%

S-4 (EU-15)

10
50
200
250
500
above

628
1.304
117
112
681
37

21,81%
67,11%
96,11%
100,00%
90,76%
92,05%

50
200
above
250
10
500

1.304
681
112
37
628
117

45,29%
68,95%
90,76%
94,82%
98,71%
100,00%


81

S-5 (EU-15)

10
50
200
250
500
above
62
120
52
2
7
7
24,80%
72,80%
93,60%
94,40%
97,20%
100,00%
50
10
200
500
above
250
120
62
52
7
7
2
48,00%
72,80%
93,60%
96,40%
99,20%
100,00%

S-6 (EU-15)

10
50
200
250
500
above...
189
364
198
12
28
20

23,30%
68,19%
92,60%
94,08%
97,53%
100,00%

50
200
10
500
above
250

364
198
189
28
20
12

44,88%
69,30%
92,60%
96,05%
98,52%
100,00%

S-7 (EU-15)

n.d.

S-8 (EU-15)

10
50
200
250
500
above

194
379
273
15
49
35

20,53%
60,63%
89,52%
91,11%
96,30%
100,00%

50
200
10
500
above
250

379
273
194
49
35
15

40,11%
68,99%
89,52%
94,71%
98,41%
100,00%

S-9 (EU-15)

n.d.


82

S-10 (EU-15)

10
50
200
250
500
above

559
1.054
502
31
83
59

24,43%
70,50%
92,44%
93,79%
97,42%
100,00%

50
10
200
500
above
250

1.054
559
502
83
59
31

46,07%
70,50%
92,44%
96,07%
98,65%
100,00%

S-11 (EU-15)

n.d.

S-12 (EU-15)

n.d.

S-13 (EU-15)

10
50
200
250
500
above

607
1.133
506
5
11
4

26,79%
76,79%
99,12%
99,34%
99,82%
100,00%

50
10
200
500
250
above

1.133
607
506
11
5
4

50,00%
76,79%
99,12%
99,60%
99,82%
100,00%


83

Source: prepared based upon Kompass-2003
Histogram S-1
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above
Histogram S-2
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above
Histogram S-3
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above

84

Source: prepared based upon Kompass-2003

Histogram S-4
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above
Histogram S-5
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above
Histogram S-6
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above

85

Source: prepared based upon Kompass-2003Source: prepared based upon Kompass-2003

Of the graphs and data explained, one is beyond all of the segments studied for
approximately 90% of the companies that have less than 20 employees Dos grficos e
dos dados expostos um est para fora aquele para todos os segmentos estudados em
torno de 90% das companhias que tm menos de 20 empregados.

Histogram S-8
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above
Histogram S-10
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above
Histogram S-10
Frequency
% accumulated
F
r
e
q
u
e
n
c
y

Class
above

86

Special emphasis for the recycling sector (S-13) for 99.1% of the companies who have
less than 200 employees and 76.8% thereof who have less than 50. Emfatiza
especialmente o setor da reciclagem (S-13) para que 99.1% das companhias tm menos
de 200 empregados e 76.8% do mesmos tm menos de 50.

3.8. GROWTH

The billing data for 2003 with the data for 2004 were compared for this indicator, for
companies that made these amounts available.

There was notable growth in plastics for application in the IT electronic industry.

Additionally, we note the trend to reduce the weight of vehicles, with the intent of
consuming less fuel and therefore reducing emissions. This evolution is based on a
variety of things, including the incorporation of more plastic components within the
vehicle. We also detect an increase in the electrical cabling used on electronic
components in the vehicle. The cables, in turn, are protected by plastic materials.

EVOLUTION OF THE TRANSFORMATION, FOREIGN TRADE AND DOMESTIC
SALES OF THERMOSTABLE DEVICES (Spain)

In millions of Euros. Base year = 1994

Source: CEP (2005)

87
3.9.- MACHINES AND EQUIPMENT

List of the main machinery manufacturers for the plastic manufacturing sector that
operate in Europe.

Company
Sumitomo
Battenfeld
Cincinnati
Netstal
Nikon
Engel
Arburg
Sandretto
Negri Bossi
Source: www.eppm.com

There is a detailed example attached of a company in the machinery manufacturing
sector for the ENGEL plastics manufacturing industry.

88
3.10. EVOLUTION OF THE MOLD SECTOR, ACCORDING TO THE TYPES
OF CLIENT COMPANIES

The molds sector in Portugal has approximately 300 companies that are typically sized
MSCs (Small and Medium Sized Companies), located in large part in Marinha Grande
and in Oliveira de Azemis, employing roughly 7500 people.

The graphics below represent the main industries served using molds manufactured in
Portugal, and show the evolution of the sector over the past few years (according to
Cefamol).

PRINCIPAL INDUSTRIAL CLIENTS

Source: CEFAMOL (2004)
Appliances
Automotive industry
Electrical materials
Electrical/Telecommunications
Toys
Packaging
Office material
Others
Automotive
Domestic utensils
Packaging
Electrical/Computer/Telecommunications
Outdoor furnishings
Agriculture/Irrigation
Construction Material
Electrical material
Pediatrics
Appliances
Others

89

We can discern from these graphics that there is an important growth in molds for
automotive parts, rising from 14% in 1991 to 60% in 2003. Even so, we notice a drop in
domestic appliance molds, dropping from 34% to 7%.

The increasing importance acquired by packaging has to be noted. In this mold use
classification, it was nonexistent in 1991, and now represents 7% in 2003.

Below we present details on the main molds market (manufactured in Portugal).

1999 2000 2001 2002 2003 2004
1
st
France France France France Germany France
2
st
United
States
United
States
Germany Germany France Germany
3
st
Germany Germany United
States
Spain United
States
Spain
4
st
Spain Spain Spain United
States
Spain United
Kingdom
5
st
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
States

90
3.11. RECYCLING

This sub-segment is becoming increasingly more important.
European legislation is moving in the direction of providing broader protection to
sustaining the environment. There are various directives working toward that end:

The European Directive of Packaging Plastics and Waste (P&PW) was revised in 2003.

For the end of life cycle for a vehicle (ELV) and Waste Electrical and Electronic
Equipment (WEEE), the Directives were finalized and are being written into domestic
legislation and the industry has begun to concentrate on its implementation.

Fig. Solid Waste Management and Disposal

Since there is a growing trend to use plastic materials, the problem arises of how to
recycle it after the useful life of the products has expired.

91

According to the study Solid Waste Management and Disposal from UNLV (Darren
Divine), an increase in plastic waste was detected, and this fact means that it is
increasingly important to handle the disposal thereof.

92

93

Forecasts about plastic recycling volumes (estimated data for 2003).


94
Plastics waste recovery in 2002 breakdown by recovery route
(x 1 000 tonnes/year) 2003 data shown in italics


95

Applications for recycled plastics in Europe:


Recycled plastics have notable application with respect to the packaging sub-segment
(40%), within which the largest part, some 74%, is employed for films & bags.

96
3.12. INDUSTRIAL AND TECHNOLOGICAL PROCESSES

Below we present a list of the main technologies employed in the plastic transformation
production processes.

Injection molding
Blown molding Extrusion
Fiber
Film
Heat shaped plates
Profile
Tube
Wires and cables
Compounds and master
Calandering
Compression molding
Rotomolding
Other processes

We would like to point out the growing importance of roto-molding technology, and it is
a successful example of innovative processes used in Europe by the company Allibert.

97
3.13. TECHNOLOGICAL INVESTIGATION AND DEVELOPMENT IN THE
EU OF TECHNOLOGICAL SUPPORT NETWORKS

Technological Centers / Technological Clusters

3.13.1. EU-ROPLAS

Full Members

Research Technical Organisation (RTOs) from EU countries. (only one Centre each Country).

Source: http://www.eu-roplas.com/members.html

OFI Oesterreichisches Forschungsinstitut fr Chemie & Technik (Austrian Reasearch

Institute for Chemistry and Technology)

CRIF-WTCM - Centre de Recherches scientifiques et techniques del'Industrie des
Fabrications mtalliques. Engineering des Matriaux Polimeric

ELKEDE Technology & Design Centre S.A.

Laboratorio di Impresa

INEGI - Instituto de Engenharia Mecnica e Gestao Industrial Portugal

AIMPLAS - Plastic Technologic Institute

IFP Research AB - The Swedish Institute for Fibre and Polymer Research

NPL - The National Physical Laboratory

98
3.13.2. EARTO

EUROPEAN ASSOCIATION OF RESEARCH AND TECHNOLOGY ORGANISATIONS

Austria
Austrian Cooperative Research - ACR

Austrian Research Centres Seibersdorf - ARCS

JOANNEUM RESEARCH Forschungsgesellschaft mbH - JOANNEUM RESEARCH

Belgium
The Association of Geological Surveys of the European Union - EuroGeoSurveys

VITO - Flemish Institute for Technological Research

Denmark
Danish Technological Institute - DTI

Finland
Finnish Pulp and Paper Research Institute - KCL
VTT - Technical Research Centre of Finland
France
ADEPRINA
ADERSA
ADIV. Developpement
ARCHIMEX ARMINES
ASRC - Association des Structures de Recherche Contractuelle (French Association of Contract
Research Organisations)

B+ Development

Bertin Technologies - Bertin

Bourgogne Tecnologies - Bourgogne Tech

Commissariat lnergie atomique - CEA CEDRAT TECHNOLOGIES S.A.
CIRTEM

CIRTES

Centrale Recherche SA - CRSA

Cyberntix

Direction des centres d expertises et d essais - DGA/DCE

EZUS Lyon 1

GRADIENT

Hydromcanique et Frottement -
HEF INSAVALOR S.A.
IREPA-LASER - IREPA-
LASER Le Moteur Moderne
- LMM

99
Microondes Energie Systmes

MV2

NEXYAD - Nexyad

PRINCIPIA R&D Rseau CTI
SERA

SERAM
SESO
SINA
PTEC
SIREHNA
VIBRATEC
Germany
Arbeitsgemeinschaft industrieller Forschungsvereinigungen - AIF

Center of Logistics and Expert Systems GmbH

DFKI GmbH

Deutsches Textilforschungszentrum Nord West - DTF

European Food Institutes - EFI

Fraunhofer Gesellschaft zur Frderung der Angewandten Forschung e.V. - FHG

Research Institute for Operations Management at Aachen University of Technology (RWTH) - FIR

IABG - IABG

KIST Forschungs GmbH - KIST

Papiertechnische Stiftung - PTS

Greece
Ceramics and Refractories Technological Development Company - CERECO

Clothing Textile and Fiber Technological Development Company - CLOTEFI

Shoe and Leather Research Institute - Technology and Design Centre - ELKEDE

Hungary
Bay Zoltan Foundation for Applied Research - Bay Zoltan

VEIKI - Institute for Electric Power Research

Ireland
Hyperion Energy Systems Ltd - Hyperion

Italy
Associazione Italiana per la Ricerca Industriale - AIRI

Biostrands Srl

Chemiricerche SRL

D Appolonia S.p.A. - D Appolonia S.p.A.

Ricerca Sviluppo Documentazione S.p.A. - EIDON

EniTecnologie

100
Technobiochip S.c.a.r.l.

Tecnoalimenti S.C.p.A.

Netherlands
Delft Hydraulics - Delft Hydraulics

Energy Research Center of the Netherlands - ECN

GeoDelft - GeoDelft

Sino-Europe Technology Promotion Center - SETPC

Netherlands Organisation for Applied Scientific Research - TNO

Zeton B.V.

Norway
Norwegian Geotechnical Institute - NGI
SINTEF
Poland
TPC - Technology Partners Consortium

Portugal
Association for the Institute of Biomedical Research on Light and Image - AIBILI

Instituto de Engenharia Mecanica e Gestao Industrial - INEGI

National Institute of Engineering and Industrial Technology - INETI

Instituto Pedro Nunes

Romania
The Research-Development National Institute for Textile and Leather -

Executive Agency For Higher Education and Research Funding - Executive Agency

Spain
Association of Research and Industrial Cooperation of Andalusia - AICIA Asociacion Vasca de
Centros de Investigacion Tecnologica - EITE
Federacin Espaola de Entidades de Innovacin y Tecnologa - FEDIT
Fundacion Tecnalia - TECNALIA

UNITEC - Asociacin Unitec

Sweden
ACREO AB - ACREO ECOFIN Invest AB - ECOFIN
Swedish Defence Research Agency - FOI

The Imego Institute - IMEGO
IRECO Holding AB - IRECO
Industrial Research Institutes in Sweden - IRIS

MEFOS - The Foundation for Metallurgical Research - MEFOS

Swedish National Testing and Research Institute - SP

101
United Kingdom
British Marine Technology Ltd - BMT

Canesis Limited - Canesis

PERA QinetiQ Ltd
Smith Institute

TWI - World Centre for Materials Joining Technology

102
3.13.3. Details on the centers in Germany, Spain, France and Italy

According to the TdR, we must request a more detailed study for the countries indicated.
Below we present the technological centers (indicating their areas of expertise), and
institutions directly providing quality and innovation support in the plastics sector.

The matrices initially proposed that would have to relate the different segments of the
plastics sector to the different existing technological centers in Europe, in consideration
of the expertise of each one, are not included in this study, since the information
available on the European centers is generally rather generic, and we could not make a
sufficiently grounded estimate, without first verifying in situ with the technological
centers to insure that the examinations are correct.

Of the four countries that according to the TdR require a more detailed analysis, only in
France there is information that once established could be related to the technological
centers located in that country. This information was provided to us by EARTO
(European Association of Research and Technology Organisations).

103
Germany

Arbeitsgemeinschaft industrieller Forschungsvereinigungen - AIF

Information concerning its expertise is only available in German, at the site: www.aif.de

Center of Logistics and Expert Systems GmbH

Research and development planning focuses on the following key areas: material flow
and logistics, quality and technology and expert environmental systems

DFKI GmbH

Currently there are five centers of the Competence, and this package of knowledge,
skills and technologies held by DFKI is used to tackle important questions in:
computational culture, e-learning, language technology, semantic photo-receptor
currents as well as virtual offices of the future.

Deutsches Textilforschungszentrum Nord West - DTF

Areas of Expertise: Supercritical means and coatings for textiles, textile measures,
products, new biotechnology, Electrochemistry
within textile coatings, physical technologies.

European Food Institutes - EFI

The main focus is on the following topics: Professional training, courses accredited
Europe-wide, food quality guarantee, pharmaceuticals and cosmetics, technical school,
state approved instruction, food processing, food concepts.

Fraunhofer Gesellschaft zur Frderung der Angewandten Forschung e.V. FHG

Adaptronics, Energy, information and communication technology, materials and
components, Nanotechnology, polymer surfaces, surface and Photonics technology,
safety and defense, High-Performance ceramics, life sciences, Micro-electronics,
numeric simulation, production, traffic and transportation.

Research Institute for Operations Management at Aachen University of
Technology
(RWTH) FIR

Research Institute for Operations Management (Forschungsinstitut fr Rationalisierung;
FIR): Application operational systems, customer relations, ebusiness, systems control,
product structuring, Numeration and classification, engineering maintenance services,
source current management, Management knowledge.

IABG - IABG

Automotive, InfoCom, Transportation & environment, Aeronautics, Space.

104
KIST Forschungs GmbH - KIST

The KIST Europe research institution was established in Saarbrucken, Germany, as an
affiliate to KIST (South Korean Institute of Science and Technology) in Seoul, South
Korea.
Areas: Environmental Technology, Human Engineering, Medtronics, Innovative
Research.

Papiertechnische Stiftung - PTS

Area: Paper technology, and more information is available on the web at:
http://www.ptspaper.de

105
Spain

CENTRE CATALA DEL

PLASTIC
Colom, n 114

08022 TERRASSA (Barcelona)
Tel. 93 783 70 22

Fax. 93 784 18 27
FUNDACIO ASCAMM
CENTRE TECNOLOGIC
Avd. Universitat Autnoma, n 23

08290 CERDANYOLA (Barcelona)
Tel. 93 594 47 00

Fax. 93 580 11 02
FUNDACION GAIKER Parque Tecnolgico Zamudio - Edif.
202

48170 ZAMUDIO (Bizkaia)
Tel. 94 452 22 36

Fax. 94 452 23 23
FUNDACION INASMET Camino de Portuetxe, n 12

20009 SAN SEBASTIAN
Tel. 94 321 75 60

Fax. 94 331 66 22
TIIP

Centro Politcnico Superior
Mara de Luna, n 3

50015 ZARAGOZA
Tel. 976 76 19 70

Fax. 976 76 19 69
AIMPLAS Parque Tecnolgico, s/n

46980 PATERNA (VALENCIA)
Tel. 961.36 60 40

Fax. 961.31 80 13
INSTITUTO DE CIENCIA Y
TECNOLOGIA DE LOS
POLIMEROS
J uan de la Cierva, 3

28006 MADRID
Tel. 912.26 29 00

Fax. 915.64 48 53
APPLUS+ Campus UAB

Aparat de Correos, 18

08193 BELLATERRA (BCN)
Tel. 93. 567 20 00

Fax.93. 567 20 01

There are other research centers, like the CSIC (Consejo Superior de Investigaciones
Cientficas), but they do not focus on plastics.

106
France

List of centers, according to their area of expertise.
On this list, there is no one entity that acts as an expert in plastics manufacturing, and
for that purpose, according to the area of knowledge that the concrete project extends to,
or the final application thereof, another type of center should be sought. For that
purpose, we should point out that there is a category of centers that specialize in
packaging.

107

Aronautique, Espace :
ARMINES, BERTIN TECHNOLOGIES, CENTRALE RECHERCHE S.A., CIRTEM, CIRTES, CYBERNETIX, GRADIENT, HEF
R&D, INSAVALOR, MV2, SESO, VIBRATEC, SERAM, IREPA LASER
Agroalimentaire :
ARMINES, M.E.S. TECHNOLOGIES, ADEPRINA, ADIV, ARCHIMEX, B+DEVELOPMENT, BERTIN TECHNOLOGIES,
CYBERNETIX, EZUS LYON 1, GRADIENT, MV2, SINAPTEC, SERAM, BOURGOGNE TECHNOLOGIES, IREPA LASER
Ameublement :
CIRTES
Art et Dcoration :
CIRTES
Automobile :
SERA, ARMINES, BERTIN TECHNOLOGIES, CENTRALE RECHERCHE S.A., CIRTEM, CIRTES, GRADIENT, HEF R&D,
INSAVALOR, LE MOTEUR MODERNE, SINAPTEC, SIREHNA, VIBRATEC, SERAM, ADERA, IREPA LASER
Bancaire :
ARMINES, BERTIN TECHNOLOGIES, MV2, SERAM
Biologie, biotechnologie, gntique :
ARMINES, M.E.S. TECHNOLOGIES, ADEPRINA, ADIV, ARCHIMEX, BERTIN TECHNOLOGIES, CYBERNETIX, EZUS LYON
1, GRADIENT, INSAVALOR, ADERA, BOURGOGNE TECHNOLOGIES
Cartes puce, semi-conducteurs :
B+DEVELOPMENT, CYBERNETIX, EZUS LYON 1, GRADIENT, INSAVALOR
Cramique :
M.E.S. TECHNOLOGIES, CENTRALE RECHERCHE S.A., CIRTES, HEF R&D, INSAVALOR
Chimie :
M.E.S. TECHNOLOGIES, ARCHIMEX, BERTIN TECHNOLOGIES, CENTRALE RECHERCHE S.A., EZUS LYON 1,
GRADIENT, INSAVALOR, SINAPTEC, SERAM
Cosmtique :
ARCHIMEX, BERTIN TECHNOLOGIES, EZUS LYON 1, HEF R&D, MV2, SINAPTEC
Dfense :
SERA, ARMINES, B+DEVELOPMENT, BERTIN TECHNOLOGIES, CENTRALE RECHERCHE S.A., CIRTEM, CIRTES,
CYBERNETIX, EZUS LYON 1, GRADIENT, HEF R&D, INSAVALOR, LE MOTEUR MODERNE, MV2, PRINCIPIA R&D,
SESO, SIREHNA, VIBRATEC
Distribution, logistique, tri :
ARMINES, B+DEVELOPMENT, BERTIN TECHNOLOGIES, CYBERNETIX, MV2
Electromnager :
BERTIN TECHNOLOGIES, CIRTES, MV2, VIBRATEC
Energie :
ARMINES, BERTIN TECHNOLOGIES, CIRTEM, GRADIENT, INSAVALOR, LE MOTEUR MODERNE, MV2, VIBRATEC,
SERAM, IREPA LASER
Environnement :
ARMINES, M.E.S. TECHNOLOGIES, ADEPRINA, ADIV, BERTIN TECHNOLOGIES, CENTRALE RECHERCHE S.A.,
CIRTEM, CYBERNETIX, EZUS LYON 1, GRADIENT, INSAVALOR, SINAPTEC, SIREHNA, SERAM, ADERA, IREPA
Fonderie :
ARMINES
Mtallurgie :
ARMINES, CENTRALE RECHERCHE S.A., CIRTES, GRADIENT, INSAVALOR, LE MOTEUR MODERNE, MV2,
VIBRATEC, IREPA LASER
Nuclaire :
ARMINES, CENTRALE RECHERCHE S.A., CIRTEM, CYBERNETIX, EZUS LYON 1, INSAVALOR, LE MOTEUR
MODERNE, SESO
Offshore :
B+DEVELOPMENT, CYBERNETIX, MV2, PRINCIPIA R&D, SIREHNA
Ptrole :
PRINCIPIA R&D
Pharmacie :
M.E.S. TECHNOLOGIES, ARCHIMEX, CYBERNETIX, EZUS LYON 1, INSAVALOR, LE MOTEUR MODERNE, MV2
Plastiques, Plasturgie :
CIRTES, EZUS LYON 1, HEF R&D, LE MOTEUR MODERNE, SINAPTEC, SERAM
Sidrurgie :
CENTRALE RECHERCHE S.A., HEF R&D, SERAM
Textile :
SINAPTEC
Transport :
SERA, CENTRALE RECHERCHE S.A., CIRTEM, HEF R&D, LE MOTEUR MODERNE, SIREHNA, VIBRATEC, SERAM,
Nutrition :
ADIV
Embalage :
B+DEVELOPMENT
http://www.earto.org/get_url.asp?url=/home/nexus/memberlist.asp

108

Italy

Associazione Italiana per la Ricerca Industriale - AIRI

1-AIRI
Italian association for industrial research. NANOTEC IT Members:

A.P.E. Research

BREMBO

CNR - I.E.I.I.T. (Institute of Electronics, Computer and Telecommunication
Engineering)

CNR - IFN (Institute for photonics and nanotechnologies)

CNR - ISMAC (Institute for the study of macromolecules)

CNR - ISMN (Institute of nanostructured materials)

CNR - ISTM (Institute of molecular science and technologies)

CNR ITIA (Institute of Industrial Technologies and Automation)

CRF - Centro Ricerche FIAT

CSM - Centro Sviluppo Materiali

CTG Centro Tecnico di Gruppo ItalCementi

DE NORA Tecnologie Elettrochimiche

GRINP S.r.l.

INSTM (Italian Inter-University Consortium for Material, Sciences and
Technologies)

ENEA (Italian National Agency of New Technologies, energy and the
Environment)

ENITECNOLOGIE

INFN (Italian National Institute for Nuclear Physics)

ITC-IRST- Center for Scientific and Technological Research

PIRELLI LABS

SAES GETTERS

SCUOLA SUPERIORE SANT'ANNA CRIM (Center of Research in
Micro engineering)

SALIX SISTEMI INTEGRATI

SERVITEC

STMICROELECTRONICS

TEXCLUBTEC

VENETO NANOTECH

109

2- NAoMTEC

Small and medium-sized companies that sustain NAoMITEC services, by undertaking
the most appropriate projects for micro and nano technologies involving R&D, jointly
financed by the European Commission. On the one hand, thanks to NAoMITEC, large
companies, research centers, universities and research consortia have the opportunity of
selecting the SMEs that meet their R&D needs to move forward or enter into preparation
projects.
NAoMITEC is focused on five select sectors: Aerospace, Automotive, Environmental,
Health, Information Technology and Communication.

Countries partnered with NAoMITEC are as follows: Austria, Belgium, Finland, France,
Germany, Greece, Israel, Italy, Poland, Switzerland, the Netherlands and the United
Kingdom.

Biostrands Srl

See the page: http://com.area.trieste.it/biostrands/

D Appolonia S.p.A. - D Appolonia S.p.A.

Areas: Energy, Environment and Infrastructures, Industry and Transportation.

Chemiricerche SRL

No website

Ricerca Sviluppo Documentazione S.p.A. EIDON

Eidon develops original ICT products and services, providing assistance and aid,
helping companies who seek to overhaul or modernize their products, processes or
services, using the most technologically advanced tools in information technology and
communication. Areas: computer vision, Internet and advanced software solutions,
system processing and engineering.

Technobiochip S.c.a.r.l.

Research and Development on electronics and biology.

RESEARCH FOR SMEs: The constant challenges presented by the market, and
technological development require companies to invest in more advanced product
innovation and basic research. Technobiochip has vast experience in supplying basic
research and technology, which may improve the performance and competitiveness of
the SMEs and their products in the field of biology and electronics. Technobiochip
belongs to the MIUR (Italian Ministry of Education, University and Research), working
to perform third party research, upholding confidential research for the industry.

110

Tecnoalimenti S.C.p.A.

As a non-profit research consortium that specializes in food research, Tecnoalimenti
S.C.p.A. is comprised of 26 factories in the food sector, and one financial institution,
San Paolo IMI, which acts as the trusty of ministerial funds. Its factories respond for
12% of Italian food sales.
Tecnoalimentis activities:
Based upon its research initiatives, investments in strategic research, projects,
installation and organization of industrial research, research project management,
technology transfers to the MSC, as well as professional training for the food industry.

111
3.14. SEGMENTS WITH THE GREATEST POTENTIAL AND PRIORITY
SEGMENTS

In order to establish which areas have the greatest potential, analyses were performed
upon the information existing in Europe about the plastics sector, considering the
opinions of the main business associations and technological centers directly related
thereto.

We should add quantitative aspects to this qualitative analysis, which did not find any
important differences within the different segments (according to the division made in
Brazil, according to Abiplast). The percentage of MSC was approximately the same for
the different segments.

There is no detailed export data for the segments defined, only consolidated information
for the sector, available through Eurostat.

The value added criteria is completely subjective, and we complement it with the aspect
of competition from countries with cheaper labor, like China, we think that it should be
substituted by an assessment of the degree of technology incorporated into the product,
more than by the segment to which we say it belongs.

With the aforementioned consideration, we have to emphasize the high performance
priority areas to be those that include the following:

- Technical plastics (medical applications, engineering, electric-electronic, etc.)

- Environmental sustainability (recycling, energy recovery, etc.)

Technical plastics:

Despite the fact that Abiplast has a specific technological components category, here we
consider how those products have important value added due to its development,
including in this segment medical-hospital plastic, plastics for the automotive industry
and plastics with engineering demands and those requiring special efforts.

The automotive sector increasingly emphasizes the incorporation of plastic parts and
sets, and this has had an added effect as a second high priority area to the one previously
mentioned. The substitution of metallic parts existing on a vehicle using plastic parts has
the effect of reducing the vehicles weight, which means less fuel to travel, and lower
consumption implies a lower subsequent degree of contamination and greater
environmental protection.

Many of the plastics considered herein have a direct application in the electric-electronic
sector (plastic with electric properties to face static electricity problems,
semiconductors, etc.). It is possible to emphasize the important correlation between the
evolution of the electric-electronic sector and the volume of plastic materials used
therein.

Technical plastics applied to the medical-hospital sector.

There is a growing trend to use applications resulting from micro-fusion (micro-molds)
in the medical-hospital sector.

112

Solid waste management

Although part of Brazil has established a Recycling segment, we should adopt a more
generic point of view, in order to establish which MSCs have the most potential,
irrespective of what segment they belong to.

We should consider that the entire sector that is dedicated to managing waste and
maintaining the environment as high-priority, not just for social purposes, but also due
to the growth that it has experienced and the attention it has commanded in the past few
years. This directly overlaps with the economic sector of plastic packaging (reusable,
single use, materials that act as plastic substitutes, etc.).

Projects are also beginning to obtain a larger benefit from remnant or recycled plastics,
or to obtain energy in fuel formulations.

113
3.15. EXAMPLES OF SUCCESS

Allibert and its molding technology applications.

See more examples in the annexes.

114

3.16 SUB-SEGMENTS AND PRIORITY MARKETS
3.16.1 Trends

Recycling:
- To improve recovery options at the end of a products life cycle.
- To uncover realistic quantitative objectives to legislate on this subject.

Plastics:
Energy conservation is the key of this project. Plastics can reach this objective in a
variety of different ways:

1. Saving energy during manufacturing.

2. Saving energy during the life cycle of a product.

3. Saving energy at the end of a products life cycle: reuse, recycling and recovery
of energy.

Flame retardant plastics

115
Plastics waste management


As a possible solution for part of the problem that is generated with the increase of
plastic remnants, we could also possibly consider the new technology that is being
developed by the Australian OsmoTech company, which manages this waste energy.
The potential fuel lost: Please see the article on the company OsmoTech in the annexes.

116
3.17. AREAS OF OVERLAP WITH THE ELECTRIC-ELECTRONIC SECTOR

We have noted a growing trend in the use of plastics in the electric-electronic sector.


According to the annex, there is interest in developing specific packaging for the
electric-electronic sector.

117


118

PART 4 EU-BRAZIL COOPERATION

An initial evaluation leads us to consider the following segments as ones that are
priorities to both regions:

4.1 TECHNICAL PLASTICS FOR THE E&E AND MEDICAL-HOSPITAL
SECTORS

o Saving energy is the key to this product. Plastic can achieve this goal in a
variety of different ways:
Saving energy during manufacturing.
Saving energy during the life cycle of a product.
Saving energy at the end of a products life cycle: reuse, recycling
and recovery of energy.

4.2 WASTE MANAGEMENT TECHNOLOGIES

o Find ways to reduce waste production.
o Improve the recovery options at the end of a products life cycle.
o Find realistic quantitative objectives in order to create legislation on the subject.
o Biodegradable plastics: Encourage projects using these products, focusing on the
fermentation phase of the process. Make use of the know-how and qualified
equipment in place in Brazil, even if it is employed by other sectors (beer,
sugarcane rum). Make use of the know-how involved in these techniques, to be
employed in the plastics sector.

In the first case, Europe has Technological Centers and successful applications, as for
example, the case of flexible electronic plastic for document reproduction (see examples
of success). To understand the plastic technologies used in the medical-hospital sector,
we are considering the possibility of participating alongside CT ASCAMM, making use
of its expertise in micro-injection.

In the second case, Brazil has a CTs network, which develops biopolymers. As
mentioned elsewhere, PHB Brasil is already producing P(3HB) on a pilot scale, with a
project to expand to 2000 t/year in 2008. Please note that for our study, the CT selected
to participate is the IPT-SP (Technological Research Institution of So Paulo).

PHB Brazil is mentioned in the text on biopolymers, since it is already producing P
(3HB) on a pilot scale, with a project to expand to 2,000 ton/year in 2008.

See the attached document about biopolymers.

119
PART 5 TRENDS AND CONCLUSIONS

5.1. TRENDS

After an analysis of the various sectors in Europe and Brazil, we will summarize the
trends for the sector pursuant to the following lines of investigation:

- Micro-injection and micro-mold technology.

- Technical plastics for the E&E and medical-hospital areas

- Biopolymers and nanocompounds in various segments of the sector

- Intelligent packaging.

- Waste management technologies.

Note: Attached article reporting seminars and trends for 2006 for the plastics industry at
the Chicago NPE 2006 fair. It ratifies the information presented and that coincide with
the main international trends.

120
5.2. CONCLUSIONS

5.2.1. PROBLEMS FACED BY THE SECTOR

Shifting to areas with cheaper labor.

Although the study includes European and Brazilian geographic zones, the
global context must always be kept in mind when developing daily activities. It
is against this backdrop that products with little added value and high
production costs is now increasingly being manufactured in places on the
planet with lower costs, like China and Eastern Europe.

Variation of raw material prices

The petroleum industry and raw material manufacturers have a decisive
influence on the plastics manufacturing market. Their decisions on prices may
favor or reduce sales and the evolution of this sector.

Improvements to installation and infrastructure

The more modern the machinery a country owns, the better. But a modern
industrial park will not guarantee success. You must take into consideration the
importance of performing appropriate equipment maintenance.

You dont have to think about plastics for the aerospace sector, what we need
is for manufacturers to better understand the existing technology in order to be
able to add value to their products.

With relatively old machinery, but optimized maintenance, it is possible to be
competitive on the market.

The level of training that workers have is directly related to this important
element.

The MSCs should find their own market niches to increase the added value,
since the current tendency is that products with lower added value will migrate
to countries with cheaper labor.

As Mr. Toni Soler of Talleres Format S.A. puts it: injecting and
manufacturing plastics is not the same thing as creating them.

The management of MSCs demonstrates a very low level of commitment to
participating in international cooperation projects.

Among other things, this project attempts to encourage the MSCs to
participate in international projects, notwithstanding that the large majority of
MSCs do not actively participate in cooperation projects with other companies,
unless they see cash results almost immediately.

The MSCs in the molds and tools sector suffer stiff competition from
countries that work at lower costs, as is the case with China.

121

5.2.2. FIELDS OF DEVELOPMENT

After an analysis of the various sectors in Europe and Brazil alike, we can summarize
the trends for the sector pursuant to the following areas of investigation:

- Micro-injection and micro-mold technology.
- Technical plastics for the E&E and medical-hospital areas
- Biopolymers and nanocompounds in various segments of the sector:
packaging, agriculture, medical-hospital,...
- Waste management technology.
- Administration and industrial design.

Note: Attached article reporting seminars and trends for 2006 for the plastics industry at
the Chicago NPE 2006 fair. It ratifies the information presented coincides with the main
international trends.

122
PART 6 SUPPORT MATERIAL

6.1. INFORMATION SOURCES

ABDI Balano PITCE 2005
ABDI Poltica Industrial, Tecnolgica e de Comrcio Exterior: Inovar para
competir Alessandro G. Teixeira 2006
ABICALADOS Resenha Estatstica 2006
ABIEF Relatrio anual 2005
ABIMAQ
ABIMO
ABIPLAST Anlise da Balana Comercial 2000 2005
ABIPLAST Perfil 2004 e 2005
ABIPLAST Srie Histrica
ABIQUIM A Indstria Qumica Brasileira abr/2006
ABIQUIM Relatrio Anual 2005
ABRAFLEX Dados Setoriais 2004
ABRE Relatrios anuais 2004 e 2005
Anais da Nanotec 2005 nov/05
ANFAVEA
APME. Association of Plastics Manufactures in Europe
Austin Asis Anlise Setorial Plsticos 2006
Cambra de Comer de Manresa / Copca
Capacitao Tecnolgica de MPEs em APLs um Estudo no Segmento de
Materiais Plsticos ANPEC SUL 2005 UFSC
Cefamol. Associao Nacional de Industria de Moldes (Portugal).
CEFAMOL. Industria Portuguesa Moldes 2004
CEMPRE Informa Compromisso Empresarial para a Reciclagem (various
editions)
CNI A Indstria e a questo Tecnolgica 2002
CNI Mapa Estratgico da Indstria 2007 2015 (2005)
CNI Tendncias da Indstria Mundial Desafios para o Brasil 2005
CNI / SEBRAE Indicadores de Competitividade para a Ind. Brasileira 2005
Cordis
DATAMARK Consultoria
Dun & Bradstreet
Earto
Estudo do Potencial dos Clusters ABC e Joinville UnB / MDIC 2002
Estudo Prospectivo da Cadeia Produtiva de Embalagens Plsticas para
Alimentos MDIC/STI EQ/UFRJ
Eurostat
Export Plastic News 2005 e 2006
ExportPlastic Plastshow 2006 Formao de cultura e oportunidades de
exportao
IBGE PIA / Produto Vol. 22 N 2 2003
IBGE PINTEC 2003
Sector Reports (various)
INP Instituto Nacional do Plstico
InpEV Instituto Nacional de Processamento de Embalagens Vazias

123
Relatrio Anual 2004 e 2005.
Instituto do PVC
Instituto Inovao Mapeamento dos Centros de Inovao no Brasil - 2004
Instituto PLASTIVIDA
IPT / SP PRUMO Projeto de Unidades Mveis Plastshow 2006
ITAL / CETEA Embalagens Plsticas Jul/2004
Kompass
MaxiQuim Assessoria de Mercado Diagnsticos Setoriais
MDIC / SDP Frum de Competitividade Cadeia Produtiva da Indstria de
Transformao Plstica Perfil Apr/2004
MDIC / SDP RENAI Projetos de Investimentos 1 Semestre de 2005
MDIC / SDP RENAI Setor de Transformao Plstica
MDIC / SECEX Balana Comercial Brasileira 2005
MDIC / SECEX Exportao Brasileira por Porte de Empresa Aug/2005
MPI Modern Plastics International - Economic forecast 2006: What's in
store? Jan/2006
MPI - Modern Plastics International (various editions)
Nanocompsitos Polimricos novos mercados para a Indstria do Plstico
Braskem.
Observatrio Econmico Year 4 No. 11 Jan/Fev/Mar/2006
Omnexus.com web site
Plsticos Biodegradveis Telmo Ojeda Ulbra Plastshow 2006
Plastics Europe. Association of Plastics Manufacturers. An analysis of
plastics consumption and recovery in Europe (Published Summer 2004)
Projeto Rede de Centros Tecnolgicos e apoio PMEs no Brasil Diagnstico
das dificuldades e carncias de infra-estruturas em CTs e Associaes
Empresariais dos Setores de Plsticos e E&E no Brasil Dec/2005
Revista Brasileira de Inovao Vol.3 No. 1 Jan/Jun/2004
Revista do BNDES Estrutura e Competitividade da Indstria Brasileira: O
qu mudou? Dec/2004
Revista Plstico Industrial (various editions)
SEBRAE / SP A insero do DESIGN na sua empresa Aug/2005
SENAI/SP Congresso ABIPITI 2004 A Experincia de um Centro de
Formao Profissional em Incluso e Inovao
SINDIPEAS Desempenho do Setor de Autopeas - 2005
Specialchem4polymers web site
Valor Econmico Valor Setorial Oct/2004

6.2. WEB SITES

Website for SPI (SOCIETY OF THE PLASTICS INDUSTRY, INC.)
www.plasticsindustry.org

Website for Association of Plastics Manufacturers: PlasticsEurope
www.plasticseurope.org

Website for RTP Co. Engineering Plastics
http://www.rtpcompany.com/info/apps/market/packaging/index.htm

124

Website for the European Plastic Product Manufacturer (EPPM) source of information
on materials and equipment for the plastics manufacturing industry
http://www.eppm.com

Website for Association of Plastics Manufacturers in Europe (APME)
http://www.apme.org

Website for the Australian company OzmoTech, technological leader in converting
plastic waste into fuel http://www.ozmotech.com.au/

Website for IDES. The Plastics Web
http://www.ides.com

125
Website for Consejo Superior de Investigaciones Cientficas de Espaa (CSIC)
http://www.csic.es/

http://www.global21.com.br

126

6.3. OUR THANKS

List of agencies and companies in alphabetical order:

Abiplast
Abimaq
Abiquim
Aimplast
Allibert
ASCAMM
Braskem
BASF
Biblioteca (general de Manresa)
Cambra de Comerio de Barcelona
Cambra de Comerio de Manresa
CCP
CDTI
Centro Espaol de Plsticos (CEP)
Centro Tecnolgico de Manresa
CIDEM
COPCA
Earto
ESADE
European Comisin
Export Plastic
FATEC-ZL Fundaao Paula Souza
FEAMM
FINEP
Fundaci EMI-Manresa
INWENT
INP Instituto Nacional do Plstico
IPT Instituto de Pesquisas Tecnolgicas de Sao Paulo
Josep Manel Manresa
MDIC
PIMEC (Pequena y Mediana Empresa) Seinba
SENAI-DN Servio Nacional de Aprendizagem Industrial
SENAI Mario Amato
SOLVAY
Talleres Format, S.A.
Universitat Autnoma de Barcelona
Universitat Politcnica de Catalunya (EPSEM, Manresa)
UNICAMP
VIGES Consulting, S.L.

127
6.4 CONSULTANTS

This study was prepared in June of 2006 by the following consultants, who were chosen
based upon the agreement reached between the delegation from the European
Commission in Brazil, under the aegis of Project EuropAid/119860/C/SV/multi
Technological Centers Network and Support to Small and Medium-Sized Companies.

Afonso Henriques Neto, chemical engineer with an MBA in Marketing, Planning
and Industrial Administration, with experience in the Plastic Resins and Manufacturing
Industries. He began his career in the Plastics and Additives Division at Ciba-Geigy.
Later he worked for seventeen years in the plastics engineering division at Rhodia S/A,
where he worked in the Laboratory, Product Development, Applications and Technical
Assistance Area. He held various internships and took a variety of extension courses
throughout Europe and the United States. He also worked in the product marketing area,
performing various market studies in South America and Brazil.
As a consultant, he specialized in Strategic Marketing and New Business Development
for the Plastics Chain, performing work for companies such as BASF, LATI
Thermoplastics, SCANIA Latin America, among others.
As a university professor, he teaches a variety of classes in the areas of Industrial
Organization, Quality and Productivity and the Science and Technology of Polymers.

Antoni Viladomat Vers has an MBA in Company Management and Administration
from ESADE (Escuela Superior en Administracin y Direccin de Empresas),
and a Masters in Administration from Universitat Politcnica de Catalunya (UPC).
He also holds a Superior Engineering Degree in Organization from the Universitat de
Vic (UV), as well as an Industrial Technical Engineering Degree from Universitat
Politcnica de Catalunya (UPC).
His professional activities through 2003 included work for a variety of different private
companies in the banking, industrial, entertainment and professional
training/qualification sectors, where he held management, teaching and consulting
positions. His broad experience also includes work at small, medium and large sized
national and multinational companies in countries such as Spain, France, England, Japan
and Brazil.
Currently he is a director at the company Viges Consulting SL where he is one of the
founding partners, and he gives classes on matters related to business administration at
different educational facilities such as the Universitat Politcnica de Catalunya (UPC),
among others.

128
PART 7 ANNEXES

7.1. LIST OF ANNEXES

Annex 1: Examples of Success: Electronic Plastic
Annex 2: Breakthrough in biodegradable cosmetics packaging

Annex 3: Rapid prototyping, the solution for those who need to make decisions quickly and efficiently.

Annex 4: Article about the trends in the plastics sector, according to NPE 2006

Annex 5: Packaging for Electronics

Annex 6: Article about new technology to convert plastics waste into fuel

Annex 7: Technological Examples in the Plastics Transformation Sector (ENGEL)

Annex 8: Technological lines of investigation for the ASCAMM Technological Center)

Annex 9: Scoring spreadsheet for the different segments of the Plastics Transformation Sector:

Annex 10: Structure and competition within the Brazilian Market

Annex 11: CNI Special Probe Year 3, No. 3, Nov/2005

Annex 12: Plastics Manufacturing Industry Commercial Trade Balance

Annex 13: Analysis of the Plastic Manufacturing Trade Balance (2005)

Annex 14: LPA of the Santo Andr region - SP / Plastic Thermoplastic Injection

129

Annex 1: Examples of Success: Electronic Plastic

Technology

Plastic Logic is developing and exploiting world-
class technology for manufacturing printed plastic
electronic circuits. These circuits are constructed
using solution processing and direct-write
techniques and consist of transistors and other
components that are produced from polymers and a
variety of other materials.

The technology is characterised by:

New solution-based air-stable materials.
Direct-write manufacturing techniques to
achieve high resolution atterning on
distorting substrates.
Low processing temperatures allowing the
use of flexible and low-cost plastic substrates.
Eventual migration from sheet-based to roll-to-roll processing.

Plastic Logic has unique intellectual property and know-how in combining novel materials and
fabrication techniques to create manufacturable processes which are truly scalable for:

- Large-area
- High-volume
- Low-cost

130

This approach enables active electronic circuits to be produced on large flexible plastic substrates with high
yield. In addition, direct-write techniques provide the potential for rapid design cycles and
customisation,
shorter run-lengths and faster turn-around.

This is achieved without the complexity and capital expense of:
- Multiple mask steps requiring precision alignment
- High temperature processing
- Vacuum deposition

The performance of printed plastic electronics today is broadly comparable to amorphous-Silicon
with the potential to go beyond this with new innovations in device architectures, manufacturing
processes and nano- materials.

Company

Plastic Logic is a leading developer of plastic
electronics technology. It develops and exploits new
manufacturing processes which combine the power
of electronics with the pervasiveness of printing. The
company's technology enables new product
Concepts in a wide range of markets
including displays and sensors.

The technology has the potential to radically change the economics of key segments of the
electronics industry. It enables revolutionary new applications by printing electronics on thin and flexible
plastic substrates using a process scaleable for large area, high volume and low cost.

Founded in November 2000, as a spin-out from Cambridge University's Cavendish Laboratory, Plastic
Logic is
building on over 10 years of fundamental research by a world-class team. It is developing and
exploiting a portfolio of intellectual property based on printing of active electronic circuits using advanced
plastic materials.

Headquartered in state-of-the-art clean room facilities on the Cambridge Science Park, the company has
received investment of over $25 million from a range of Venture Capital and other investors.

The company's business model in high volume markets is to licence its device and process
technology to
manufacturers and thereby enable the rapid growth of the plastic electronics industry.

Source: http://www.plasticlogic.com/index.php

131

Annex 2: Breakthrough in biodegradable cosmetics packaging
(May 29, 2006)

RPC Cresstale has successfully completed the first trial production of a 100% biodegradable
lipstick. The development which follows the moulding of a compact using the same polymer
represents a significant breakthrough in cosmetics packaging.

The pack was produced using PHA, a polymer produced from organic sugars and oils that
breaks down in soil, composting, waste treatment processes, river water and marine
environments. The only products generated during decomposition are carbon dioxide and
water; since these are the materials required used to make the material, the life cycle is
effectively a closed loop.

PHA, while behaving essentially like fossil fuel based polymers when moulded, has a smaller
manufacturing 'window.' The resulting mouldings have, to date, proved to be far more heat
stable than the more familiar biodegradable PLA polymer, proving PHA's suitability to the
cosmetics packaging market.

The lipstick uses the RPC patented 'Revolve' mechanism, which boasts a unique collapsible
tower. This allows the lipstick, including the decorative cover and base, to be made in only four
moulded parts and from one single material, instead of the conventional five components
requiring a number
of different materials.

Work began on the lipstick following the successful moulding of a complete screw-top cosmetic
powder compact.

"A high degree of moulding expertise was needed to overcome the previously unknown
problems presented when moulding this innovative new material," comments J ohn Birkett,
Project Manager at RPC Cresstale. "The successful application of PHA indicates that fully
biodegradable cosmetics packaging can be a reality."

Source: RPC Group site: www.omnexus.com

132
Inside view Head office
So Caetano do Sul, SP
Annex 3: Rapid prototyping, the solution for people who need to make decisions
quickly and efficiently.

RAPID PROTOTYPING
THE SOLUTION FOR PEOPLE WHO NEED TO MAKE DECISIONS QUICKLY AND
EFFICIENTLY.
CONTEMP is a company headquartered in So Caetano do Sul that manufactures and
sells measurement and process control instruments. Founded in 1984, the company has
built its reputation on the quality of the products it develops using Brazilian technology.
CONTEMP is the only company on the market that manufactures metering and process
control instruments, calibrated with RBC certification, with assembly options that include
either an electrical panel or remote supervision.

Plastic parts and prototype production
technology without the need for molds,
developed exclusively in Brazil by
Quickplast, was the solution found by
CONTEMP, to perform studies on a new
Temperature Data Acquisition device,
designed by the company.

According to Dener G. Kruziski,
Engineering Supervisor at CONTEMP, the
company needed a prototype for a plastic
cabinet that covers the circuitry of the
acquisition device. With the objective of
this prototyping stage of the project was to
perform studies on the device and verify
the details necessary for the production of
the instrument at a national level, the
pressure on the execution was the
companys greatest needs. Dener affirms that the quickness supplied by the technology
employed by Quickplast was decisive. The delivery was made over a short period of time, and
there was no need to develop tools to create the mold.

.

Source: http://www.pecasplasticas.com/cases_prototipagem_rapida.asp

133
Annex 4: Article about trends in the plastics sector, according to NPE 2006

The New Technol ogi es Pavi l i on wi l l be or gani zed ar ound
i nnovat i ons or t echni cal quest i ons t hat SPI consi der s t o be
of gr eat i mpor t ance f or t he pl ast i cs sect or s over t he next
f ew year s, accor di ng t o Lynne Har r i s, vi ce pr esi dent of
sci ence and t echnol ogy at SPI . These quest i ons cover f our
di f f er ent t hemes, descr i bed by Lynne Har r i s bel ow:

-NANOTECHNOLOGY: Miniscule filler materials can earn a lot
of money. When you i ncor por at e mol ecul e si zed f i l l er
mat er i al s i nt o pol ymer s, sci ent i st s ar e cr eat i ng new t ypes
of nanocompounds t hat expand t he r each t hat pl ast i cs have,
and can be appl i ed t o a wi de var i et y of di f f er ent
mat er i al s, f r omaut o par t s t o packagi ng, says Har r i s.

-BIOPLASTICS: Innovative resins from abundant sources.
Thi s expandi ng f i el d has t he pot ent i al t o r educe t he
sect or s dependency on f ossi l f uel r aw mat er i al s, and t o
expand i t s bi odegr adabi l i t y opt i ons.

ENERGY EFFICIENCY: Obtaining profits in a time of high fuel
costs.
Pl ast i c pr ocessor s and compani es t hat suppl y t hem wi t h
mol di ng t ool s and equi pment began a sear ch t hr oughout t he
sect or t o f i nd ways t o r educe ener gy consumpt i on. Some of
t he i nnovat i ons t hat ar e r eachi ng t he mar ket ar e al r eady
pr omi si ng maj or r educt i ons.

RECYCLING: Discovering value in processing remnants and
post-consumption waste. St r ong conser vat i on l aws and t he
power hel d by economi c f act or s j oi n f or ces t o i mpose an
even gr eat er pr i or i t y upon maxi mi zi ng t he usef ul l i f e of
pol ymer mat er i al s by maki ng use of r ecycl i ng.

The New Technol ogi es Pavi l i on wi l l have di spl ays f r om
t echni cal compani es and or gani zat i ons, i ncl udi ng compani es
t hat wi l l be di spl ayi ng t hr oughout ot her ar eas i n t he f ai r .
Each one of t he f our f i r st days of t he NPE 2006 wi l l be
dedi cat ed t o pr esent at i ons on one of t he pavi l i on s f our
t hemes.

We have set asi de a l ar ge pr omi nent ar ea i n t he sout her n
r oom of McCor mi ck Pl ace f or t he New Technol ogi es Pavi l i on,
and we have r educed t he f ee nor mal l y char ged t o non- SPI
member compani es by 25%, per met er squar ed of di spl ay space
wi t hi n t he pavi l i on, says Wal t Bi shop, vi ce pr esi dent i n

134
char ge of commer ci al f ai r s f or SPI .

I nf or mat i on about t he di spl ays i n t he New Technol ogi es
Pavi l i on can be obt ai ned f r om Wal t Bi shop, who can be
cont act ed t hr ough e- mai l wbi shop@socpl as. or g, or by
t el ephone 1- 202- 974- 5230 ( USA) .

###

NPE 2006: The I NTERNATI ONAL PLASTI C PRODUCTS FAI R wi l l be
hel d on J une 19- 23, 2006, at t he McCor mi ck Pl ace
Convent i on Cent er i n Chi cago, and wi l l be t he l ar gest
i nt er nat i onal pr esent at i on of pl ast i cs pr oduct s t hi s year .
Founded and sponsor ed by SPI ( Soci et y of t he Pl ast i cs
I ndust r y, I nc. ) , t hi s t r i enni al f ai r wi l l be t he 25
t h
NPE
si nce 1946. Mor e t han 2000 compani es ar e expect ed t o
pr ovi de di spl ays and shar e a space mor e t han 93, 000 m2 i n
si ze, of whi ch a f ul l t hi r d wi l l be f r om out si de of t he
Uni t ed St at es. Mor e t han 75, 000 pr of essi onal s i n t he sect or
wi l l be i n at t endance. Vi si t t he si t e www. npe. or g t o obt ai n
mor e i nf or mat i on about t he f ai r .

Founded i n 1937, SPI ( SOCI ETY OF THE PLASTI CS I NDUSTRY,
I NC. ) i s a t r ade associ at i on t hat r epr esent s one of t he
l ar gest i ndust r i al sect or s i n t he Uni t ed St at es. Member s of
SPI r epr esent t he ent i r e suppl y chai n i n t he pl ast i cs
sect or , i ncl udi ng pr ocessi ng compani es, machi ne and
equi pment manuf act ur er s, as wel l as r aw mat er i al suppl i er s.
The Amer i can pl ast i cs i ndust r y empl oys 1. 3 mi l l i on wor ker s
and gener at es mor e t han US$ 345 bi l l i on i n annual sal es. To
obt ai n mor e i nf or mat i on, pl ease vi si t SPI s websi t e at
www. pl ast i csi ndust r y. or g.

135
Annex 5: Packaging for Electronics

Electronics Packaging Applications

ICP Storage Bins
Akro-Mils located in Akron, OH specializes in material handling and storage
systems. Their totes and bins can be found worldwide, helping manufacturers
sort, store, and transport parts safely and efficiently.
ICP Storage Boxes
Stat-Tech develops and manufactures injection molded, rigid plastic
packaging to protect sensitive electronic parts.

ASC Chip Trays
A new family of Static Dissipative Compounds improves reliability and saves
time in manufacturing chip trays, packaging products, and consumer goods.

Wafer Carrier
Modern automated wafer handling processes have increased the need for tighter
tolerances on wafer carriers. Entegris, Inc., is the first company to make significant
changes to the original linear wafer carriers developed in the early 1970's

Handheld Breath Analyzer
Drunk driving offenders in many states now have a choice: Forfeit their
license or test their breath alcohol content before and while driving with the
LifeSafer Interlock device.

Guide Rails
In the growing European electronics market, manufacturer C.E.P.I. Rack s.r.l.
in Italy has pioneered a new guide rail for module racks which hold and
transport electronic circuit boards.

Clean & Ship Tray
Thermoplastic compounds used in the data storage and semiconductor industries
must pass stringent requirements for cleanliness.

Tape Cases
Protecting sensitive magnetic media from static electricity prompted Perm-A-
Store, Inc. of Wichita, KS to develop the Conductive Turtle cases.

136
Cases
When one of their top distributors, Faes BV of Bladel, needed a static
dissipating material for suitcase-type carriers, SPI BV of Eersel, Netherlands
knew what to do.

ESD Shelf Support
Pictured is a storage system for reticle boxes. Reticles are the master pattern of
the circuitry that is exposed by a photolithographic process onto semiconductor
chips. Precision Robots, Inc.

Conductive Transport Box
A carbon fiber reinforced ABS material compounded by RTP Company
provides conductive properties needed for a new substrate carrier box.

ESD Storage Box
Classic Line, a division of Northwest Molded Products in Racine, Wis.,
expanded its line to include ESD protective storage/transport containers ranging
in size from 1 5/8 by 2 1/8 inches to 5 by 7 inches.

PC Board Rack
K & R Associates, Inc., of Lawrenceville, N.J., produces Max-Rak, an assembly
line rack for up to 25 printed circuit boards ranging from 0.031-inch to 0.125-
inch thick.

http://www.rtpcompany.com/info/apps/market/packaging/index.htm

137
Annex 6: Article about new technology to convert plastic waste into fuel

Melbourne-based group OzmoTech has had to take its ideas overseas to be
recognised,
writes Emma-Kate Symons

April 20, 2006

AN innovative Australian technology that converts plastic bags, ice-cream containers, milk crates and
wheely bins into clean diesel fuel suitable for cars, trucks, trains and buses is seducing environmentally
conscious investors and local governments across Europe.

But at home OzmoTech, the Melbourne-based group that developed the ThermoFuel process, is
still a relatively low-profile waste-to-energy outfit battling government indecision over excise on fuels
derived from plastics, and local council preferences for traditional waste-disposal methods.

The Dutch environmental technology firm EnvoSmart made headlines from Paris to Amsterdam and
Berlin when it paid $190 million for the exclusive continental European rights to OzmoTech's system
for turning plastic waste typically destined for landfills into standard diesel.

It was the biggest joint venture between an Australian and Dutch company, marked by a special ceremony
at the Australian embassy in The Hague in February.

Starting this year, OzmoTech will ship 31 plants - all manufactured in Melbourne - to 14 European
countries, beginning with Germany later this year.

The Berlin plant will transform 42,000 tonnes of plastic waste into 38 million litres of diesel fuel
annually.

In 2007, plants will be established in the Netherlands, Poland and Sweden, followed by
Luxembourg, Belgium, Slovakia, Norway, Denmark, Italy, Latvia, Lithuania, Estonia and the Czech
Republic.

Last year, OzmoTech signed an exclusive contract with Axiom, backed by the Victor Smorgon
group, to begin building its plastic waste conversion plants in Australia. But the potential $90 million
deal is on hold pending an Australian Taxation Office decision on excise applicable to diesel produced
from plastic waste.

While Australia deliberates, most of OzmoTech's business is being conducted overseas, and particularly
in Europe where local authorities and investors are eager to jump on the alternative fuel bandwagon amid
rising oil prices, diminishing fossil fuel resources and concerns to promote "profits as well as the
planet" in the waste industry.

According to the Organisation for Economic Co-operation and Development, developed nations will
produce about 45 per cent more waste in 2020, compared with a quarter of a century earlier.
About 350 waste-to- energy plants are operating in Europe in a market worth $500 million a
year. The industry has been traditionally dominated by mass incineration facilities, but the EU is
now moving towards "cleaner" fuel production.

In late 2004, OzmoTech struck a $35 million agreement with British renewable energy firm Cynar to
build seven plants for the United Kingdom and Ireland. The firm is also expanding into Spain;
with Hungary, Turkey and eventually the US identified as the next export market targets.

Speaking to The Australian from the headquarters of EnvoSmart in Roosendaal in The Netherlands,
chairman John Bouterse said the technology appealed to European investors because of widespread
concerns about sustainable energy sources.

138
"We have a lack of energy and we have a lack of fossil fuels," Bouterse says. "And we are realising now
that in our waste there's more potential in converting some of those products into fuel.

"Of course, there is money to be earned but most investor groups we have now are also concerned about
the planet. So the profit is one factor but so is the future of the planet.

"It is also political. The more open energy market that we have in Europe makes it much easier to produce
energy and to sell it. And we have increasing oil prices. The lack of energy in general means
that more investors are realising that we can make big money.

"If oil prices increase nearly every day, then your profits increase similarly. It makes the waste market
where you can produce fuel with waste a very good market to invest in."

According to Bouterse, the waste industry used to be a very old market that held little sex appeal for
investors.

"It was not sexy to invest in garbage and waste, but now it is becoming a professional, innovative market
and therefore also interesting for venture capitalists to invest in," he says.

"In Europe, people are realising that if you don't invest in waste, in clean water, clean air and clean soil,
then your children and grandchildren won't have a life in 25 years."

Technological advances helped EnvoSmart convince governments and venture capitalists that alternative
fuels generated from waste were a sensible investment. Local authorities were also under pressure across
the EU to reduce landfills. Under a Brussels directive, biodegradable waste going to landfill must be
reduced to 35 per cent of the total within 10 years.

"In the past, industrial processes for recycling plastic wastes were not profitable, because fuel
was not produced in sufficient quantities," Bouterse says.

"But with the Australian technology, the output is raised to 99 per cent. Each kilo of plastic gives almost
one litre of diesel. Boats, trucks, buses, generators, every type of diesel motor could use the diesel
produced."

OzmoTech chief executive Garry Baker says the Melbourne group has orders for more than 60
plants worldwide, of which only 14 are destined for Australia.

"There are different sorts of pressures applicable to the European markets," he says. "In Australia
many councils and waste managing operators still operate normal landfills and don't have the imposition
on them to seek alternatives."

Marketing manager Marc Middleton gives the example of Mornington Council in Victoria, which
put its waste management out to tender two years ago. "We approached them to say: 'You should do
some of these (ThermoFuel) plants, you have got enough plastics'. It was just tailor made for it. And they
said they were committed to landfill for the next nine years.

"The Europeans are more aggressive in their development of alternative environmental technologies and
also more aggressive in their support for the development of alternative fuels.

"We're currently working through these issues with the Australian government and are hopeful of a
successful outcome which will catergorise the thermofuel diesel as an alternative fuel. That outcome
would give the fuel an excise rate similar to biodiesel. We are a genuine alternative and should be
considered one like biodiesel."

OzmoTech purchased the intellectual property rights to the ThermoFuel technology from a Japanese
inventor three years, refining and advancing the process. The company had managed to bypass
concerns about recycling because it did not tap into existing plastic recycling programs, drawing only on
feedstocks that were
heading for landfills. OzmoTech has no competitors in the energy-to-waste industry.

139

"As far as energy from waste and the waste-management industry broadly is concerned that has not
worried us because we're working in a very specific field," Middleton says. He says he likes to give
potential clients the
example of one ice-cream container stuffed with plastic wastes that could be turned into diesel fuel that
would drive a car 11 kilometres.

"This plastic will go to landfill but we can turn it into something genuinely beneficial. It reduces demands
on fossil fuels. Its environmental benefits are broad. Some of them are only modest. Regarding air
emissions, the benefits are marginal but still are genuine.

"There is a perception that alternative fuel is still backyard stuff. But I think we're right on the
cusp now.
There is a genuine shift in acceptance that this type of technology is operationally effective and
financially viable."

Source: http://www.theaustralian.news.com.au/story/0,20867,18864063-643,00.html

140
Annex 7: Example of Technologies in the Plastic Manufacturing Sector (ENGEL)

ENGEL
European know-how global presence.

Over the past half century, Engel has developed into a group consisting of 8 production plants located on 3 continents, with
Sales and Service representations in 90 countries.

ENGEL AUSTRIA GmbH. ENGEL AUSTRIA GmbH. ENGEL AUSTRIA GmbH.
Plant Schwertberg, Austria Plant St. Valentin, Austria Plant Dietach, Austria (Robots, Automatio
(Small/Medium-Sized Machines) (Large-Capacity Machines)
Engel Machinery Korea Ltd. Engel Canada Inc. Guelph, Ontario, Engel Machinery Inc. York, Pennsylvania,
Pyungtaek-City, Korea
Canada (Small/Medium-Sized Machines)

USA

(Small/Medium-Sized Machines)

(Large-Capacity Machines)
Engel Strojirenska spol s.r.o Kaplice, ENGEL AUTOMATISIERUNGSTECHNIK
Czech Republic (Machine Components)
DEUTSCHLAND GMBH.

Hagen, Germany (Automation Units)

141

THE COMPLETE ENGEL RANGE

Source: http://www.engelglobal.com/at/maschinen.html

... at a single glance.

142
Annex 8: Technological lines of Investigation for the ASCAMM Technological
Center

Technological lines of investigation undertaken by the ASCAMM Technological Center

The center has a technological R&D department comprised of researchers from different
fields. The technological investigatory lines are listed below:

1. Full product development
Innovative product solutions using new materials, advanced manufacturing
technologies, which allow entry into new markets (conceptual design,
prototypes, industrialization, life cycle)

2. Manufacturing processes and production technology
- Rapid Manufacturing processes: metallic drawings without frames and
presses and fast manufacturing uses sinterized laser technology.
- Plastic injection processes: multi-material, multicomponent and
microinjection
- Injected casting of lightweight alloys
- Development and manufacture of cutting edge molds and matrices, sensor
tools for intelligent production

3. Materials
Manufacture of new materials with new properties and structures or the
Optimization of existing means.
- intelligent materials (plastic materials with shape memory)
- substitute materials to improve product services.

4. Technologies for the information industry
- expert design and production support systems
- Collaborative work environments focused on projects
- Technological knowledge management

The centers experience with R&D projects has been garnered over ten years, and
during this time, it has gained valuable knowledge and results for companies in the
sector. Currently, the Foundation is actively participating in more than thirty
investigative projects, of which seventeen are international.
The ASCAMM Foundation has an active commercial and collaborative relationship
with more than 30 companies, mainly small and medium sized companies in the
reference sector. It also maintains a broad and solid international collaboration network
with a wide number of different industrial, technological and teaching organizations
throughout Europe as well as the rest of the world. All of this put together makes
ASCAMM very knowledgeable on the subject, from both a technological as well as an
organizational point of view, as well as with respect to the current circumstances faced
by industrial manufacturing companies.

Remarks: The aspects that are most relevant to the plastics manufacturing sector and
correlate sectors are highlighted in yellow.

143

Annex 9: Scoring spreadsheet for the different Segments of the Plastics
Manufacturing Sector:
SECTOR Manuf. plastics weight 2
Indicator: I1 I1 I1 I2 I3 I4

Code
Designation Billing 04/05
(US$ billion)
Billing 2004
(US$ billion)
Billing 2005
(US$ billion)
Annual average
growth rate (%)
Added value
level (%)
export / production
(%)
S-1 EMBALAGENS 10.2 (04) / 13.0(05) 5.40 6.70 7.6% (05) US 4582 / t 24.5% (05)
Food/beverage - 3.40 4.10 7.5% (01 - 05) nd 20% (04)
Pharmaceutical - 2.00 2.60 7.0% (04) nd 4.9% (04)
S-2 CIVIL CONSTRUCTION 7.6%GDP INDL.(04) 1.58 1.60 (-) 15.5% (05) US 2562 / t nd
S-3 DISPOSABLES nd 1.45 1.75 3.9% (05) US 8080 / t nd
S-4 TECHNICAL COMPONENTS xxx 1.32 1.75 16.1% (05) US 9816 / t 5
Automotive (Auto-parts) 14.9 (04) / 16.5 (05) nd nd 10.8% (05) US 9155 / t 24%(04)/26.8%(05)
E&E 27.95 (04) / 38.21 (05) nd nd 16.3% (05) US 54669 / t 21.8%(04)
Medical hospital ... 1.85 (04) nd nd nd nd 17% (04)
S-5 AGRICULTURAL 10%GDP NAC.(04) 1.05 1.44 11.8% (05) US 2606 / t nd
S-6 DOMESTIC UTILITIES nd 0.66 0.8 4.4% (05) US 3503 / t nd
S-7 FOOTWEAR nd 0.40 0.48 (-) 3.3% (05) US 4017 / t 27.5% (03-05)
S-8 LAMINATES 0.8 (04) 0.13 0.16 6.1% (04) US 5703 / t nd
S-9 TOYS nd 0.13 0.16 6% (04) nd nd
S-10 OTHER SEGMENTS nd 1.05 1.12 (-) 10% (05) US 3877 / t nd

(RESINS) Extrusion of Compounds and
Masters
6.2 (05) nd nd 4% (04) nd 22.6% (05)
Biopolymers, Nanocompounds 1.25 (04) nd nd nd > US 6000 / t nd
ITP MAN. PLASTICS xxx R$ 40.44 R$ 38.76 (-) 4.1% (05) ----- 6.5% (ton)
ITP MAN. PLASTICS xxx 13.17 15.95 3.8% (05) US 3742 / t 6.1% (US)
S-11 MACH. & ACC. FOR THE
PLASTICS INDUSTRY
0.33 0.26 0.33 23.8% (99 - 04)
9.5% (05)
5 7.6% (04-05)
S-12 TOOLS AND
MODELING
nd nd nd 50.7%(export) 5 US$ 106.3 million (05)
S-13 RECYCLING 0.45 0.45 (R$1.23) nd 10% (04) US 480 / t 4% (03)

peso 2
Indicator: I5 I6 I7 I8 Total

Code
Designation Level of innovation (%) Strategic
alignment
Integration with
CTs
PMEs level of
participation (%)

S-1 PACKAGING 36.2% 4 4 75% (05) 38
Food/beverage 33.7% 4 4 > 60% 37
Pharmaceutical 46.8% 5 4 <50% 33
S-2 CIVIL CONSTRUCTION 29.9% 3 2 >80% 23
S-3 DISPOSABLES 36.2% 2 4 >70% 34
S-4 TECHNICAL COMPONENTS 49.7% 4 3 55% 41
Automotive (Auto-parts) 46.2% 3 3 54,8% (04) 40
E&E 56.4% 4 4 >50% 44
Medical hospital ... 59.1% 5 2 79% (04) 39
S-5 AGRICULTURAL <30% 4 3 >80% 34
S-6 DOMESTIC UTILITIES <30% 2 2 >70% 28
S-7 FOOTWEAR 29.8% 3 4 88% (04) 27
S-8 LAMINATES 36.2% 2 2 75% (05) 28
S-9 TOYS 36.2% 2 2 >80% 29
S-10 OTHER SEGMENTS 36.2% 3 3 >50% 24

(RESINS) Extrusion of Compounds and
Masters
42.1% 2 3 <50% (04) 29

Biopolymers, Nanocompounds >70% 5 5 >70% (04) 42
ITP MAN. PLASTICS 36.2% 4 3 94% (05) 28
ITP MAN. PLASTICS 36.2% 4 3 94% (05) 36
S-11 MACH. & ACC. FOR THE
PLASTICS INDUSTRY
44.4% 4 3 >70% (05) 38

S-12 TOOLS AND
MODELING
43.5% 4 2 90% (05) 36

S-13 RECYCLING 13.7% 5 1 97% (03) 26

NOTES: 1. Average annual growth, considering an exchange variation of (-) 17% in 2005.
2. Packaging and laminates: ABRE and ABIEF
3. Automotive and auto parts sector: ANFAVEA and SINDIPEAS
4. Machinery and accessories for the plastics and tools and modeling industry: ABIMAQ, Revista Plstico Industrial
5. Level of innovation: Anal ysis of Pintec 2003 and Revista Brasileira de Inovao
6. Footwear sector: values based on the variation of the number of pairs and exports of plastic footwear (Source: Abicalados summary for 2006)
7. Recycling sector: CEMPRE, ABEPET , PLAST IVIDA, MaxiQuim (2004), ABREMPLAST
8. Engineering Plastics and Compound Extrusion based on information from the Resins Sector
9. Resins, Compounds and Masters based on data from ABIQUIM and APEX
10. Level of Added Value: Anal ysis of Pintec 2003, MDIC (Exportations by Technological Intensity) and v alue of exports in US/ton (Perfil 2005
ABIPLAST )
11. Billing: weight between total billing for the sector and billing on the IT P.
12. Strategic alignment: analysis of the relevance of the sectors based upon the PIT CE, Competitiveness Forum

144
Annex 10: Structure and competition within the Brazilian Industry
BNDES Magazine Dec/04

Table 5
Export coefficient (Exports/Production) 1996/2004
Industrial divisions 1996 1997 1998 1999 2000 2001 2003 2004
General industry 17,3 14,7 15,1 16,3 16,5 17,6 22,3 22,3
Extraction industry 66,1 63,4 55,9 60,3 66,9 71,2 83,7 89,8
Transformation industry 17,0 13,8 14,3 15,4 15,5 16,3 20,7 20,5
Food and beverages 23,5 16,3 15,2 14,7 19,3 20,6 27,3 27,5
Smoking 58,6 39,1 9,7 8,7 9,4 17,5 23,1 19,6
Textiles 14,0 9,3 8,5 9,4 11,1 11,0 17,2 15,0
Clothing and accessories 5,7 3,1 3,0 4,7 5,6 4,5 7,5 7,2
Leather foot wear and articles 49,4 31,1 32,0 36,1 38,3 37,5 45,6 48,4
Wood 38,1 33,1 41,1 45,3 48,6 56,8 64,9 70,4
Paper and cellulose 16,8 17,3 24,0 22,2 15,6 18,0 25,8 21,4
Petroleum and alcohol refining 4,9 3,5 5,9 6,8 7,2 7,6 10,3 8,8
Chemical products 9,3 8,3 8,3 9,0 8,4 9,2 12,5 11,9
Rubber and plastic 8,3 6,8 5,4 7,3 8,4 8,7 11,9 11,1
Non-metallic minerals 8,4 7,7 7,4 8,6 9,0 10,4 14,5 15,1
Basic metallurgy 47,9 28,3 33,1 31,1 23,4 29,8 34,8 31,8
Metal products exclusive
Machinery and equipment 7,1 6,2 5,1 5,8 6,4 5,5 7,9 7,7
Machinery and equipment 25,1 20,6 20,1 19,5 19,5 20,7 28,9 27,9
Electrical machinery, devices and
materials 12,5 9,7 9,0 10,3 10,3 11,1 13,9 14,7
Electronic communications
material

10,7 6,8 11,0 16,4 18,1 15,8 15,0 16,5
Automotive vehicles
Other transportation
22,9 22,7 20,4 20,6 20,7 22,2 29,5 27,1
equipment 11,4 31,7 57,0 74,3 51,7 34,3 25,3 35,0
Furnishings 12,1 8,9 9,6 11,6 13,0 14,1 18,1 18,9
Source: Specifically prepared based on the BNDES database
2004 data based on the 12 month period of J une, 2003 to J une, 2004

Table 2
Added value of the Brazilian Industry: Relati ve participation
of each segment in the Industry Total 1996 and 2002
(in %)
Di visions within the industry Value of industrial
transformation (%)
1996 2002
General industry 100,0 100,00
Extraction industry 2,20 3, 01
Transformation industry 97,80 96,99
Food and beverages 17,80 16,77
Smoking 1,21 0,93
Textiles 3,18 2,30
Clothing and accessories 1,81 0,98
Leather foot wear and articles 2,15 2,04
Wood 0,84 1,15
Cellulose, paper and paper products 3,79 4,84
Publishing, printing and reproduction of
recordings
4,77 2,97
Non-metallic minerals 7,62 13,95
Chemical products 13,04 11,24
Rubber and plastic 3,91 2,63
Non-metallic minerals 3,31 3,71
Basic metallurgy 5,42 7,26
Machines for the office and information
technology equipment
5,26 2,86
Machinery and equipment 6,81 5,61
0,44 0,83
Machinery and equipment 2,54 2,27
Machines for the office and information
technology equipment

Electrical machinery, devices and materials 3,79 2,93
Electronic materials, devices and equipment
for communication

Medical Hospital, Optical instrumentation and
others
0,83 0,73
Automotive vehicles 8,63 7,26
Other transportation equipment 0,74 2,22
Furnishings 2,04 1,65
Various 0,04 0,06

145
Annex 11: CNI Special Opinion Poll Year 3, No. 3, Nov/2005
Investments in the Brazilian Industry

Realization of planned investments for the 1st semester of 2005
Investments planned for the 1st semester of 2005 were:
Realized
Partially
realized
Postponed
until the
2nd
semester
Postponed
to 2006
cancelled
% % % % %
Size
Small and medium 23,9 33,3 9,5 11,3 18,7
Large 43,4 37,9 8,4 3,9 6,4
Industrial types
Non-metallic minerals 23,9 36,6 14,2 4,5 20,9
Metallurgy 43,0 32,2 7,4 6,7 10,7
Mechanical 24,7 37,1 6,7 7,9 23,6
Electrical material 34,3 40,0 8,6 11,4 5,7
Transportation material 36,1 31,2 16,4 4,9 11,5
Wood 15,1 35,9 9,4 5,7 34,0
Furnishings 17,0 22,0 10,2 18,7 32,2
Paper and cardboard 23,8 33,3 2,4 19,1 21,4
Rubber 27,6 41,4 10,3 13,8 6,9
Leathers and skins 11,1 48,2 11,1 14,8 14,8
Chemicals 47,6 33,3 2,9 6,7 9,5
Pharmaceutical products 31,4 54,3 5,7 5,7 2,9
Plastics 35,0 23,3 13,3 10,0 18,3
Textiles 28,0 20,0 14,7 17,3 20,0
Clothing and foot wear 12,8 37,3 9,8 12,8 27,5
Food products 32,6 33,3 9,6 13,3 11,1
Beverages 37,5 34,4 12,5 9,4 6,3
Others 27,4 35,0 7,0 12,1 18,5
Use rate for production capacity and expectation for the purchase
of machinery and equipment
Full use of
capacity
Purchase of
machinery and
equipment
2004 2005 2004 2005
Size

Small and medium 47,0 49,5 56,3 50,0
Large 47,3 51,0 57,2 48,9
Industrial types

Non-metallic minerals 46,7 45,6 54,7 47,6
Metallurgy 45,3 52,6 59,5 48,8
Mechanical 46,1 51,1 56,8 52,0
Electrical material 48,2 49,3 55,4 52,5
Transportation material 43,2 47,1 58,5 49,6
Wood 48,7 47,7 49,4 33,8
Furnishings 46,4 52,2 53,1 47,8
Paper and cardboard 46,2 49,4 56,3 55,4
Rubber 48,7 54,2 54,4 47,5
Leathers and skins 40,6 50,0 55,2 43,5
Chemicals 46,9 50,0 60,9 53,3
Pharmaceutical
products
42,3 45,0 67,4 66,4
Plastics 50,4 50,4 55,6 54,5
Textiles 46,3 47,3 59,1 49,0
Clothing and foot wear 46,4 48,3 55,0 46,0
Food products 48,3 51,1 56,5 50,2
Beverages 50,0 49,2 58,0 48,4

(a) Adequacy ratio between production capacity and expected demand
(b) Expectancy ratio between the purchase of machines and equipment for the next year.
The ratios vary from 0 to 100 points. Ratios above 50 points indicate more than adequate
capacity or expectation of increased purchases
(c) Source: Sondagem Especial [Special Survey] Year 2, no. 03, October 2004.
* Cancelled or postponed for indeterminated period

Main planned investment objecti ves for the following year

Small and medium
in October of
Large
in October of
2004* 2005 2004* 2005
Increase production 56,7 44,0 61,8 49,2
Improve the quality products 41,1 44,3 46,2 46,1
Launch a new product 28,0 30,2 20,4 22,3
Increase efficient use of inputs 15,6 19,6 26,9 27,5
Reduce labor costs 24,5 25,2 13,4 17,6
Reduces other costs 15,6 18,6 15,1 24,4
Others 1,8 3,5 4,3 5,7

Factors that could impede planned investments from being made for 2006
Uncertaintyconcerning the
development of demand
Shortage of own financial funds
Insecurities regardingthe taxsystem
Financingcosts
Third party financial fundingnot
available
Deficient infrastructure
Environmental regulations
Shortage of qualified workers
Others
Large
Small and medium

146
Annex 12: Plastics Manufacturing Industry Commercial Trade Balance

Manufactured Plastics
Commercial trade balance
T
h
o
u
s
a
n
d
s

o
f

t
o
n
s

Chapter 39 Others (except 39) Total
Chapter 39 Others (except 39) Total
Manufactured Plastics
Commercial trade balance
U
S
$

m
i
l
l
i
o
n
s

147

Annex 13: Analysis of the Plastics Manufacturing Trade Balance (2005)

Components for the automotive industry
CDs and magnetic cards
Shoes and soles
Pneumatic screens
Others
Manufactured plastic products NOT classified in position 39
NON-PLASTIC PRODUCTS UNDER CHAPTER 39
TRADITIONAL PLASTICS EXPORTS UNDER CHAPTER 39
OTHER PRODUCTION IN CHAPTER 39
Products manufactured in Chapter 39
GENERAL MANUFACTURED PLASTICS TOTALS
MANUFACTURED PLASTICS NOT CLASSIFIED UNDER POSITION 39
Total das Exportaes
US$ 974.36 million FOB
(2005 J anuary through December)
Anal ysis of the commercial trade balance for the total of manufactured plastic products

148

Analysis of Exports J anuary through December, 2005

% s/ General Total

Weight (ton) US$ FOB US$ FOB/ton
Peso US$ FOB
GENERAL MANUFACTURED PLASTICS TOTAL
275,074,41 974.357.317,00 3,542.16 100.00 100.00

PRODUCTS MANUFACTURED UNDER CHAPTER 39
221,327.79 613.928.381.00 2,773.84 80.46 63.01
3915 Waste, residue and remnants 7,444.89 3,570,522.00 479.59 2.71 0.37
3916 - Monofilaments (monothreads), chambers, rods and profiles 1,876.12 6,452,868.00 3,439.48 0.68 0.66
3917 Tubes and accessories 13,963.94 65,394,174.00 4,683.08 5.08 6.71
3918 Coating for flooring, walls or ceilings 1,618.42 1,825,381.00 1,127.88 0.59 0.19
3919 Plates, sheets, strips, tapes, films or other flat shapes, self-adhesive 8,385.93 46,686,889.00 5,567.29 3.05 4.79
3920 Other plates, sheets, films, strips and blades, of non-cell plastics 101,501.69 206,241,198.0
0
2,031.90 36.90 21.17
3921 Other plates, sheets, films, strips and blades 33,219.71 87,566,084.00 2,635.97 12.08 8.99
3922 Baths, sinks, toilets, bidets, articles for sanitary or hygiene uses 1,043.18 3,746,914.00 3,591.81 0.38 0.38
3923 Articles for transporting or packaging, corks, lids and devices used to
l
35,344.09 100,905,451.0
0
2,854.95 12.85 10.36
3924 Table services and other domestic, hygiene or cosmetic use 6,119.52 21,438,974.00 3,503.38 2.22 2.20
3925 Construction equipment devices 2,117.72 6,672,914.00 3,151.00 0.77 0.68
3926 Other works 8,692.60 63,427,012.00 7,296.66 3.16 6.51

NON-PLASTIC PRODUCTS UNDER CHAPTER 39
16,194.12 46,270,421.0 2,857.24 5.89 4.75
Cellulose filler 2,069.59 16,629,777.00 8,035.30 0.75 1.71
Cellulose and cellulose acetate plates 48.5 293,461.00 6,050.74 0.02 0.03
Polymethyl methacrylate plates (acrylic) 3,707.01 8,839,890.00 2,384.64 1.35 0.91
Plates of melamine formaldehyde (formica) 10,369.02 20,507,293.00 1,977.75 3.77 2.10

TRADITIONAL PLASTIC EXPORTS UNDER CHAPTER 39
89,533.36 229,503,320.0 2,563.33 32.55 23.55
BOPP film 46,735.07 81,809,745.00 1,750.50 16.99 8.40
Self adhesive film 8,385.93 46,686,889.00 5,567.29 3.05 4.79
PET films 11,852.48 26,923,765.00 2,271.57 4.31 2.76
Corks and lids 5,158.52 21,657,331.00 4,198.36 1.88 2.22
Domestic products 6,119.52 21,438,974.00 3,503.38 2.22 2.20
PVC laminates 9,425.71 18,243,370.00 1,935.49 3.43 1.87
Polyvinyl butyral 1,856.13 12,743,246.00 6,865.49 0.67 1.31

MANUFACTURED PLASTICS NOT CLASSIFIED UNDER
POSITION 39
53,746.62 360,428,936.00 6,706.08 19.54 36.99
Shoes and soles 12,146.08 159,183,635.00 13,105.76 4.42 16.34
Components for the automotive industry 5,112.47 46,784,233.00 9,151.00 1.86 4.80
Pneumatic screens 11,572.39 36,528,009.00 3,156.48 4.21 3.75
CDs and magnetic cards 335.23 19,224,824.00 57,348.16 0.12 1.97
Syringes 918.13 5,350,875.00 5,828.01 0.33 0.55
Thermal bottles 1935.42 6,469,767.00 3,342.82 0.70 0.66
Toothbrushes 550.46 6,849,209.00 12,442.70 0.20 0.70
Lighters 600.71 5,744,928.00 9,563.56 0.22 0.59
Others 20,575.73 74,293,456.00 3,610.73 7.48 7.62

149

Annex 14: LPA for the Santo Andr region SP / Plastic Thermoplastic
Injection

PRESENTATION OF THE PROJECT

This project will be developed under the coordination of SENAI/DN, through the Industrial
Technology Unit UNITEC, with technical coordination provided by the School Escola
SENAI Mario Amato, and services will be provided through an agreement executed between
SENAI/DN and the Ministry ofDevelopment, Industry and Foreign Trade MDIC.

OBJECTIVE

The objective of the project is to undertake activities that increase the competitive
capacity, innovation and quality of the production sector, stimulating development of
skills within the LPA, increasing competitive differentials, and consequently leading to
qualitative improvements on the activities performed by the companies, with the goal of
creating jobs, increasing occupation rates and earnings.

This objective will be reached through an industrial diagnostic, technical training and
technical assistance. The target public for these activities are micro, small and medium-
sized companies, which comprise the Local Production Arrangement of the Santo Andr
region - SP, with a total of up to 15 companies.

People participating in the training activities will be the managers and workers directly
involved in coordination activities and the execution of production activities in the area
of thermoplastic injection. The number of spaces is limited to two participants per
company for each course offered.

Assistance work will be provided according to the pre-established schedule, as needed
by the company to be served. The project may last for up to ten months, with respect to
technical training and assistance. The goals to be reached by participating companies
should be reflected in the productivity, quality, competitiveness and information
technology indicators for the sector.

PHASE 1

AWARENESS RAISING WORKSHOP
OBJECTIVE

The main objective of the Workshop is to raise awareness among people at micro, small
and medium sized companies in the plastics sector (Thermoplastic Injection),
demonstrating the importance of the projects action, with an eye toward innovation,
quality and compliance that products have with technical norms, which are fundamental
values for improving competitiveness and winning in new markets.

The proposal is to promote the project, presenting the content, methodology, benefits
and advances through participation in the project. This initiative will provide margins to
companies so that hey may develop and produce their products based upon current
market norms, adding value, increasing quality, productivity, as well as improving the
possibility of earning a greater share of the domestic market, through the introduction of
innovative and well established technologies and administrative practices.

150
The event hopes to reach up to 60 participants.
METHODOLOGY

Explanation with the aid of multimedia materials.

- Raw materials characteristics and properties

- Influences that the raw materials have on the injection process

- The technical relationships between: Product geometry X Tools

- Technical factors of the injection processes

- The technology applied to production

- Presentation of the LPA project

Duration: 04 hours.

PHASE 2

VALIDATION AND APPLICATION OF THE DIAGNOSTIC QUESTIONNAIRE

OBJECTIVE

To collect general and specific information from fifteen LPA participant companies,
which will aid in the preparation of the PAI (Immediate Plan of Action), as well as
during the other phases of the project.

METHODOLOGY

Technicians from the SENAI Mario Amato School will schedule visits at each LPA
participating company. During these visits, diagnostics will be performed, through the
application of questionnaires, principally to verify the following information:

- Environmental conditions;

- Technology used;

- Products manufactured by the company;

- Raw materials;

- Production bottlenecks;

- Efficiency levels;

- Product and Tool project;

- Management Tools (Process, Quality);

- Information technology (computers, software);

151
- Professional training and qualification of collaborators.

DURATION:

The initial diagnostic visits should not exceed the limit of four hours for each company.
At least two daily visits should be held, one in the morning and the other in the
afternoon. Total of 60 hours.

TABULATION OF THE DATA COLLECTED

- The strategies used to survey the information cited will be as follows:

- Validation of the questionnaire through an interview with three LPA companies;

- Completion of the questionnaire during the interview by the other companies
participating in the LPA;

- Compilation of the data collected;

- Preparation of correlation tables. Processes X Companies / Companies X Raw
materials;

- Calculation of the activities X products areas;

- Presentation and selection of Performance Indicators;

- Survey and analysis of company documentation (lay out, production schedules,
procedural forms...);

- Photographs;

- Product analyses;

- Process analyses production flow.

Duration 24 hours

Preparation of an Immediate Plan of Action PAI

OBJECTIVE

To train companies to use the project as a tool for adding value to the product, as well as
the Element that propels the competitiveness of domestic products.

METHODOLOGY

The PAI Portuguese acronym for an Immediate Plan of Action, will be
implemented through individual training and assistance provided to fifteen companies,
using the data collected in the diagnostic as the starting point. These training sessions
seek to provide theoretical training and more evenly distributed knowledge throughout
the group. Therein, the individual assistance plans have the objective of providing the
practical application of the knowledge acquired in the companys routine.

152
CONTENT

- Training;
- Individual Assistance;
- Schedule;
- Costs.

Duration: 40 hours

PHASE 3

Execution of an Immediate Plan of Action PAI

TRAININGS THEORETICAL AND PRACTICAL TRAINING

THEORETICAL TRAINING 1 TRAINING: Raw material / Product / Tools
Project

Objective

To supply participants with information that allow them to develop injected product,
based upon theoretical and practical technological characteristics.

METHODOLOGY

Explanatory and practical classes

Content

- main polymers on the market characteristics and properties;
- Influences that raw materials have on the injection process;
- Product
- Form of the injected product

Geometric details, color, texture;
Functionality
- Relationship between the shape of the product and the tools project;

- Concept and foundation of the injection analysis - Moldflow;

- Product conception and materialization technology Reverse Engineering / Rapid
Prototyping.

Duration: 40 hours
ASSISTANCE
OBJECTIVE
To promote improvements to a product using the methodology applied in Theoretical
Training 1.

153
METHODOLOGY

Individual assistance and consulting for the LPA companies chosen.

Based upon an initial diagnosis, provide in depth assistance to a company to develop
and improve a product;

Apply the technological information for raw materials / products / tool projects,
presented in Theoretical Training 1, on the product selected.

Expand the methodology applied on Theoretical Training, using modifications, making
use of the product selected.

Duration: 8 hours per company (total 120 hours)

Product conception and project (analysis): (total: 200 hours)

Reverse engineering and Prototyping: (total 225 hours)

APPROPRIATENESS OF THE PRODUCTION PROCESS

Training Theoretical and Practical Training

THEORETICAL TRAINING 2 TRAINING: Thermoplastics Injection Process

Objective

To train participants to implement methodologies that aid in the compliance of the
production process.

Content

Appropriateness of the raw materials (choice, control, storage, greenhouse, mixture);

Equipment (machinery, components);

Fast exchange (set-up)

Important process aspects (problems and solutions); Finishing on the product;
Technical form preparation

Tools evaluation (check list)
Duration: 40 hours
ASSISTANCE

OBJECTIVE

To provide guidelines to a company concerning the appropriateness of their production
process on a new product, or further, to improve existing processes.

METHODOLOGY

154
Individual assistance and consulting for companies on the LPA chosen.

- Instructions concerning the appropriateness of their machinery and/or equipment, or
further, the acquisition of new ones;

- Set-up;

- Appropriateness of the raw materials (choice, control, storage, greenhouse, mixture);

- Product finishing;

- Storage and stocking;

- Control and tests;

Appropriateness of the Production Process: 150 hours
APPROPRIATENESS OF THE PRODUCTION PROCESS (MANUFACTURING)

TRAININGS THEORETICAL AND PRACTICAL TRAINING

THEORETICAL TRAINING 3 TRAINING: Manufacturing Process Thermoplastics
Injection

OBJECTIVE

To train companies to organize their production process in order to reduce waste and
improve competitiveness.

METHODOLOGY

Demonstration and practical classes;

Content:

- Lay-out (macro and local);

- Production planning;

- Production control;

- Process form;

- Quality control Visual techniques;

- Quality control Laboratory tests;

- Reuse of waste (remnants).

Duration: 40 hours

ASSISTANCE

155
OBJECTIVE

To train companies to organize their production process in order to reduce waste and
improve competitiveness.

METHODOLOGY

Assistance and individual consulting to companies listed for the LPA.
Content
- Study and Organization of the Lay-out;

- Assessment of the appropriateness of production planning;

- Apply production control tools;

- Develop and apply process forms.


Phase 4

Reports

PERFORMANCE INDICATORS
Strategic Plan of Action - PAE
OBJECTIVE
To accompany the improvements made to both process and product using measurable
indicators.

CONTENT

- Accompaniment of the indicators listed;

- Preparation of reports;

- Evaluation of the results;

- Realignment of the process;

- Preparation of the Strategic Plan of Action PAE

156
EVALUATION OF INDICATORS
Two months following the end of the project, the performance of the production for the
participating companies will be calculated, based on the criteria and indicators defined
in advance by the partners, in order to assess productivity or competitive gains related to
the training received within the scope of the project. SENAI instructors/consultants will
be responsible for establishing the measurement processes at the companies.
Duration: 80 hours
Assistance consulting (technical hours): total of 440 hours
Instruction (technical hours): total of 244 hours.

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