RIO DE JANEIRO, Brazil - J. Ignacio Lopez de Arriortua has hatched a plan for an auto plant in northeast Brazil owned and operated by suppliers.
The former General Motors and Volkswagen AG purchasing chief is trying to find suppliers and other investors to put up the $1 billion needed to build the plant. It would produce cars under the Loar (from LOpez de ARriortua) name. The company would be responsible for the cars' design, quality control and distribution.
Walter Baldi, the Loar representative in Brazil, said 11 suppliers - three Brazilian and eight Spanish - already have said they want to take part in the $1 billion project. He said he would not identify potential suppliers or investors until the project becomes more concrete.
Baldi, a Brazilian, has worked in the nation's auto industry for 26 years. He has worked for Ford Motor Co., for Autolatina (a disbanded Ford/VW joint venture), and most recently for VW as a sourcing manager. He and a secretary are the only two Loar employees in Brazil.
ECHOES OF GM, VW
The proposal echoes Lopez's dreams for plants at GM and VW. At GM, Lopez had hoped to build an assembly plant staffed by suppliers in his Basque homeland in northern Spain.
GM never built the plant. Lopez departed for VW. Using Lopez's concepts, the German automaker built two experimental assembly plants, in Brazil and the Czech Republic.
VW's plant in Resende, Brazil, produces commercial trucks. VW has designed those trucks to be built in seven modules, with one supplier responsible for each. Inside the facility, suppliers assemble the modules, install the axles, engines and truck cabs, assemble the vehicles and paint them.
Volkswagen employees inspect the trucks and manage the plant, but VW handles none of the assembly itself.
SEEKING GOVERNMENT HELP
Humberto Castro, an official with the Secretary of Industrial Policy, confirmed that Loar applied to the government Oct. 26 for federal tax incentives. Castro said the agency was awaiting for additional documentation.
'Once we get that go-ahead, we can start formalizing the contracts whereby suppliers will fund and take part in the building and running of the plant,' said Baldi. 'If we get the government go-ahead in the near future, we should have 80 percent to 90 percent of those contracts with around 23 suppliers signed by the end of 2000.'
The plant would be built in the northeastern state of Bahia.
Loar will invest in putting together three teams: one for the design, one for quality control and one for distribution. Baldi said a U.S. company will handle the engineering aspects of the body, platform and instrument panel design. Loar is negotiating with various European companies to supply the engine.
The plan calls for the 23 suppliers to build the plant on a modular design - with each supplier being responsible for installing one or more of the 52 modules to the car as it goes down the assembly line.
Five Loar models would be built on the same platform: a hatchback, called the Carmen; a sedan, the Pilar; a convertible, the Lourdes; a four-wheel-drive sport-utility, the Begonia; and a 4wd pickup, the Guadalupe. Loar estimated that the hatchback, the cheapest model, will retail for around $6,000, and that the convertible, the most expensive, will retail for $12,000.
Loar said the plant is expected to turn out 25,000 vehicles in 2003 and 150,000 in 2006. Plans call for suppliers to add modular extensions to the plant so production could reach 200,000 units in 2007 and 300,000 units in 2010. Loar also plans to export 30 percent of its output.