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Few international companies have already moved to the Northeast of Brazil, and those who did move are surely happy with their decision of building factories in the region. Locating industrial plants in Northeastern Brazil is a good deal for a series of structural reasons.
1 - Structural reasons why wages will remain low
The cost of labor in Northeastern Brazil is low, and it's likely to remain relatively low in the future, because of structural reasons, mostly related to geography. The fact is: workers simply don't need high wages to survive in Northeastern Brazil.
First, the climate of Northeastern Brazil is a tropical climate, and there is nothing that can be really called "winter". That means workers in Northeastern Brazil don't need to save to pay their heating bills in the winter, simply because there is no need ever for heating, in any month of the year. And the climate of the region won't become colder for the next millennia, so it's a factor that won't change in the future.
Second, housing solutions are cheaper in Northeast of Brazil, because houses don't need to be very solid, since they don't need to face many natural hazards and natural disasters. Besides houses not needing good insulation, since there is no winter, the region also don't have any record of earthquakes, hurricanes, or tornadoes. Cheap houses can stand for decades, without facing risks coming from nature. That means workers don't need much money to build their houses, and that won't change in the future.
2 - Factory buildings can be cheaper for the same reasons
The same reasons mentioned above are valid regarding the factory buildings. They don't need to be built to withstand earthquakes, hurricanes, or tornadoes, since those hazards do not exist in Northeast Brazil. Also, factories never need heating in winter months, and that reduces operational costs.
3 - The workforce is relatively well educated
The population of Northeastern Brazil under the age of 40 is relatively well educated compared to the population of some Third World countries in Asia, Africa, and even in Latin America. The literacy rate among the population under 40 years old is above 97% and the average years of study for that demographic is more than 8 years. And under the age of 25, the educational levels are even better. It's easy to find a young, relavitely well educated workforce, even in the smaller towns.
Qualified workers for command positions are also not difficult to find, since the region has some very good federal universities. The state of Ceará, in particular, is a nationwide famous source of good engineers in Brazil.
4 - Easy access to markets
Here is where geography favours Northeastern Brazil again. Besides having access to the domestic consumer markets of Brazil (a country of 200 million) and the other Mercosur nations, the strategic geographic position of the Northeast of Brazil gives it easy access by sea routes to the European market, to the East Coast of the United States, and also to the growing African market, like the more than 175 million people in Nigeria, or the fast growing GDP of Angola (a country that speaks the same language as Brazil).
5 - Good infrastructure
Even if the Northeast of Brazil lacks a good rail infrastructure, it does have a good network of paved roads, and some good modern ports, with special mention to the ports of Pecem, in the state of Ceara, and the port of Suape, in the state of Pernambuco.
Also, there are some "export processing zones" around port areas where factories dedicated to production for export pay almost no taxes. One of such export processing zones is the one around the port of Pecem, in the state of Ceara, that is already fully operational, with a huge South Korean steel mill already producing and exporting, taking advantage of the tax exemptions.
6 - Strong sunshine for most of the year
As a plus, companies interested in using photovoltaic solar power to supply part of the electricity demanded by their factories can count on the fact that in most parts of Northeastern Brazil, the sun shines strongly, in a favorable angle, during most of the year, with many months without a single rainy or cloudy day.
Those are some of the good reasons for locating industrial plants in the Northeast of Brazil. Geography favours the region in many ways, and the human resources and infrastructure are good enough to allow production without issues. Some companies from different countries are already taking advantage of those conditions, and producing in the region. Many more companies are likely to soon realize the great opportunities that are available in Northeastern Brazil.
(text by MalaMan, on City Data Forum - November 22, 2016)
Lets ship all our call centers, warehouses (everyone is bought and sold over web anyways), IT, banking, and I hear Legal profession can also be outsourced, to Northeastern Brazil for those same reasons. And we should just open the borders too so people from northeastern Brazil can just come here, take all the service jobs, and taxi cabs, not pay any taxes, and then go when ever they feel like.
Taurus Group is a multi-local corporate group specialising in household needs worldwide. In Brazil they own the "Mallory" brand, that makes fans, and many other kinds of small domestic appliances, sold in all of the Brazilian market nationwide.
Their factory is located in the municipality of Maranguape, near the city of Fortaleza, in the state of Ceará, in the Northeast of Brazil:
South Korean steel making companies POSCO and Dongkuk Steel also invested in this region of Brazil.
In a joint-venture, the South Korean companies built a huge steel mill called CSP (Companhia Siderurgica do Pecem) in the "export processing zone" near the Port of Pecem, a few kilometers to the northwest of the city of Fortaleza, in the state of Ceará:
Hello Democrats, here is a perfect example of why tax reform is needed in the United States. There are plenty of countries that have very favorable tax and workforce structures that the U.S. has to compete with.
To the OP, good for you. Your country should be very proud of your strengthening economic situation.
A well educated young workforce that doesn't need high wages, because of geography.
In a place much closer to the USA and Europe (and also Africa) than Southeast Asia is.
That you can find the state of Ceará, in Brazil.
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