Brazil is the largest industrial market in South America. Pulp and paper, mining, steel, automotive, food and chemicals all have large, often very modern plants there. Many of these plants come from European manufacturers. And many maintenance managers in Brazil know the same problem: in Europe the spare part is a standard item, in Brazil it is a project.
This article explains why spare parts for Brazilian plants have to be planned differently, and what procurement and maintenance should bear in mind.
Why Brazil is different
A complex import system
Brazil has one of the most complex tax and import systems in the world. In addition to import duty, imported goods are subject to further federal and state taxes. The amount depends on the customs classification, called NCM in Brazil, and partly on the state. For buyers this means: the ex-works price in Europe says little about the actual cost in Brazil.
Approvals and certifications
For certain product groups Brazil requires a conformity assessment by INMETRO, the national institute of metrology and quality. Certain electrical components, for example, may be affected. If a spare part requires certification and the proof is missing, the import can fail.
Distances
Many plants are located far inland, such as pulp mills in the middle of their eucalyptus plantations or mines in Minas Gerais. Even within Brazil, the journey from port or airport to the plant takes time.
A strong local industry
Brazil has its own capable supplier industry. Many international manufacturers produce locally. For some parts there are domestic makes that are equivalent and require no import.
In Brazil, the winner is not whoever orders fastest. It is whoever knows earliest what they need.
Five principles for spare parts planning
1. Allow more lead time
What is on a distributor’s shelf in Europe within a few days takes considerably longer for a plant in Brazil if it has to be imported. Plan maintenance shutdowns and stock replenishment with correspondingly longer lead times. Orders for a planned shutdown should go out early, not in the last month.
2. Keep critical parts on site
Because rush procurement from abroad is laborious, higher stock levels for critical imported parts pay off compared with a similar plant in Europe. The calculation is: tied-up capital versus downtime risk. In Brazil it comes out in favour of stock more often.
3. Check local equivalents
For every imported part the question is worth asking: is there a domestic make or a locally produced part from the same manufacturer? That saves import costs and time. A proper technical check of equivalence is important, so that an unsuitable part is not installed for cost reasons.
4. Bundle requirements
Every import causes fixed costs for documents, handling and clearance. Importing individual small parts is therefore often uneconomical. Bundle requirements into larger, planned orders, for example quarterly or ahead of shutdowns.
5. Keep classification and documents clean
The correct NCM classification, complete technical descriptions and correct invoices are not a formality in Brazil. Mistakes lead to delays or additional claims. Work with suppliers who know the requirements and prepare the documents accordingly.
The right order of questions
Before a spare part is ordered for a Brazilian plant, a fixed order of questions helps. First: is the part really critical, or will a later order do? Second: is there an equivalent domestic source? Third: if not, can the requirement be bundled with other imported parts? Fourth: have classification, technical description and possible certification requirements been clarified? If you answer these four questions for every larger order, you avoid most surprises.
Ex-Tarifário: an instrument worth knowing
With the Ex-Tarifário, Brazil has a scheme under which import duty can be reduced for certain capital goods as well as IT and telecommunications goods if there is no equivalent domestic production. The scheme is tied to conditions and procedures and mainly concerns machinery and equipment, less so individual wear parts. For larger components or plant modernisations, however, it may be worth reviewing the option with a specialist consultant.
Example: pulp and tissue
Brazil is one of the world’s major pulp producers, and tissue production is growing too. These mills run continuously, often around the clock and for long periods without interruption. Unplanned downtime is expensive, and planned shutdowns are short and tightly scheduled.
For spare parts planning this means:
- Large components such as roll bearings, gearboxes or pumps are planned long before the shutdown.
- Wear parts such as wires, felts, doctor blades and seals can be calculated in fixed cycles and are suitable for framework agreements.
- Electronics and drive technology from European manufacturers are often imported parts with a discontinuation risk.
- Because some mills are remote, the plant store has to cover more than in a city with a distributor network.
Similar patterns apply in mining and the steel industry, which are also strongly represented in Brazil.
Typical scenario: the shutdown that came too early
A plant is planning its annual maintenance shutdown. The spare parts list is drawn up two months in advance, as is usual at the European sister plant. Several items are imported parts from Europe. For some, everything works. For others a document is missing, and for one the classification is disputed. The parts are stuck in clearance while the shutdown begins. Maintenance has to postpone work, and some of the measures slip into the following year.
The following year planning starts earlier, imported parts are procured in one bundled order, and the documents are agreed with the supplier in advance. The shutdown goes according to plan.
Plant store, consignment or framework agreement?
There are several models for stockholding. The classic plant store gives you full control but ties up capital. A consignment stock, where the supplier provides goods on site and only invoices them on withdrawal, relieves the balance sheet but requires a supplier with a presence in the country. Framework agreements with fixed call-offs suit plannable wear parts. In practice many plants combine all three models, matched to the criticality and plannability of each part.
Common mistakes at plants in Brazil
- Adopting European planning lead times unchecked
- Importing individual small parts instead of bundling requirements
- Keeping technical descriptions too brief, so that the classification becomes disputed
- Not checking domestic alternatives, or using them unchecked
- Discovering certification requirements only at import
Language and contacts
Maintenance in Brazil speaks Portuguese. Technical queries to manufacturers in Europe often go via English, sometimes through several stages. Every translation is a source of error. A supplier with Portuguese-speaking contacts on site and access to the manufacturers in Europe shortens this chain considerably.
KTB in Brazil
KTB has its roots in exporting spare and wear parts to Latin America and is present locally with KTB do Brasil. Our country headquarters is in Campinas in the state of São Paulo, with further offices in Belo Horizonte and Porto Alegre, among others. Together with our head office in Hamburg we combine access to European manufacturers with contacts who speak Portuguese and know Brazilian processes.
Read how we source spare parts worldwide on our procurementpage. Our cost optimisation.
Conclusion
A plant in Brazil needs its own spare parts strategy. More lead time, higher stock levels for critical imported parts, checking local alternatives, bundled orders and clean documents make the difference. Here, global sourcing above all means knowing what works locally and what does not, and having a reliable channel for the rest.
Do you operate a plant in Brazil and want to improve your spare parts supply? Write to us via our contact page.
Frequently asked questions
Why does sourcing spare parts for Brazil often take longer?
Brazil has a complex import system with several taxes, its own customs classification and, in some cases, certification requirements from INMETRO. On top of this come document requirements and often long distances to plants inland. Each of these steps takes time. Errors in classification or documents quickly lead to further delays.
What is NCM in Brazil?
NCM stands for Nomenclatura Comum do Mercosul, the common customs nomenclature of the Mercosur states. It is based on the international Harmonised System and determines which duties and taxes apply to a product and which requirements apply. Correct NCM classification is crucial for every import into Brazil, including spare parts.
What is Ex-Tarifário?
Ex-Tarifário is a Brazilian scheme under which import duty can be reduced for certain capital goods as well as IT and telecommunications goods if there is no equivalent domestic production. It mainly concerns machinery and equipment, less so individual spare parts. For larger projects it is worth reviewing with a specialist consultant.
Should you stock more spare parts in Brazil than in Europe?
For critical imported parts, usually yes. Because rush procurement from abroad is laborious and time-consuming, the trade-off between tied-up capital and downtime risk more often favours higher stock. This does not apply to parts that are available locally in equivalent quality. That is why it pays to check every imported part for domestic alternatives.