Siemens unit forced to buy equipment abroad

Bnamericas Published: Wednesday, December 27, 2006
The Brazilian unit of German equipment supplier Siemens (NYSE: SI) is being forced to purchase spare parts and equipment from outside Brazil due to the strong real currency, newspaper Valor Econômico reported. Siemens, which produces 80% of its private automatic branch exchange (PABX) systems at its factory in Brazil's southern city of Curitiba, has seen costs climb 10% since opening in 2003, according to Baldoino Sens, general manager of the plant. The US dollar was worth on average 3 reais in 2003, while currently the greenback floats between 2.15 reais and 2.20 reais. With the strong real, the percentage of local materials used to construct the PABX, systems such as cables and metallic parts, has fallen to 30% from 35%. The company also faces increasing freight and labor costs, according to the executive. Siemens produces the remaining 20% of its PABXs in Greece, which in future could pose a threat to the Brazilian facility as the costs of producing in Greece are dropping and coming close to those of Brazil, according to Sens. Siemens' factory in Curitiba has 1,200 employees and 150 suppliers.

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