Brazil is in stagflation Brazil (EWZ) is in a state popularly known as “stagflation.” Currently, the economy is characterized by low growth, high unemployment levels, and a rising inflation rate. The economy is stagnant. It’s at a high level of inflation. The consecutive rises in the key rate, the SELIC rate, haven’t been able to help rein in inflation in Brazil. The economy already has one of the highest key rates among the emerging market (EEM) economies. Also, the economy is contracting. Its GDP (gross domestic product) contracted by 1.90% in the second quarter this year. Falling commodity prices have been eroding the commodity-rich country’s export revenue. It also impacted the revenue of key businesses in the area like Petrobras (PBR)(PBRA), Vale, and Gerdau. The corporate tax rate in Brazil is at 34%. It’s one of the highest among emerging nations. Please read, Why Brazil looks expensive compared to the BRIC nations, for a look at Brazil’s valuation against the other BRIC (Brazil, Russia, India, China) nations. Let’s take a quick look at the economic woes that Brazil is facing. GDP Brazil’s GDP is contracting. It was -1.90% in 2Q15 and -0.70% in 1Q15. Industrial Growth Manufacturing conditions are deteriorating. The Markit Manufacturing PMI (purchasing managers’ index) for August 2015 came in at 45.80. It has been at the contraction—below the 50 threshold mark—level since February 2015. Unemployment Unemployment is rising. It was at 7.50% in July 2015. It was at 4.30% back in December 2014. Inflation and the SELIC rate Inflation is soaring in Brazil. Currently, it’s at 9.53% in August 2015—up from 6.41% in December 2014. Also, a rise in the SELIC rate isn’t helping. The rate is at 14.25%. There have been seven consecutive hikes in the rate with no deterrent effect on the roaring inflation rate. Government budget
The Brazilian government’s budget is in deficit. It’s -0.60% of the country’s GDP—a historic low. It averaged +1.86% from 1998 to 2014. Brazil’s economic situation definitely doesn’t seem to hold much promise for the nation. However, there’s light at the end of every tunnel. There are certain opportunities that could help Brazil recover from its current economic situation
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Chinese manufacturers need to improve how they use technology in their processes to take advantage of the potential of "smart manufacturing", Deloitte said this week. In a report released at a World Economic Forum conference in Dalian, Deloitte said that companies "display different levels of maturity in informatisation" with only 42% of the manufacturing companies it surveyed having integrated IT into their production processes.
More will need to be done if manufacturers are to support the Chinese government's 'Made in China 2025' plan, with its emphasis on technology and innovation, Deloitte said. Of 133 companies who responded to its survey, 46% admitted that only one part of their business has integrated IT into its production systems, and 6% have made no attempts to use IT in their manufacturing processes at all. The most popular reason for not using IT is the challenge of building it in to the production process, with difficulties in collecting and analysing system data the second biggest barrier respondents identified, Deloitte said. The percentage of companies making extensive use of automation equipment increased to 23% in 2015, compared to 11% in 2013, Deloitte said. Automobile and electrical machinery companies make the most use of automation, it said. Shanghai-based Bernd-Uwe Stucken of Pinsent Masons, the law firm behind out-Law.com said: "We see indeed a growing number of enterprises increasing the level of automation. Sometimes the technical upgrade is radical and disruptive, turning labour intensive production lines into fully automated production lines run by a very few supervisors. It seems that privately owned enterprises in particular are cutting personnel cost by investing in automation." "The trend to turn to smart manufacturing is good news for European machine builders for whom China will remain an attractive market even if, or maybe because, the Chinese economy is passing through a painful transition," he said. "Chinese enterprises have also realised that they need to acquire foreign technology to improve their manufacturing capabilities. Hence, many companies have started to buy technology through various channels. The acquisition of technology-heavy enterprises in Europe has become a dominant theme and we expect that this trend will grow and be persistent in the next years, again even if the Chinese economy may be on a bumpy road for a while," Stucken said. Gary Coleman, a senior adviser for Deloitte Consulting, said: "Multiple emerging technologies such as 3D printing, robotics and artificial intelligence are driving disruptive innovations and enabling new players to stake a claim in a range of industrial sectors including manufacturing. For example, technologies like the cloud are allowing new entrants in manufacturing to bypass legacy systems and enable faster communication all along their supply chains. China needs to strongly invest in and embrace these technologies to move from a current manufacturing giant to a global manufacturing power house." Chinese companies are likely to use mergers and acquisitions to increase their market share and acquire technology, Deloitte said. Chinese premier Li Keqiang called in August for faster development of the country's manufacturing sector to boost the Chinese economy. A lack of innovation, low added value and slow service are holding the sector back from the goals of the 'Made in China 2025' and 'Internet Plus' initiatives, Keqiang said at the time. Launched in March, Made in China 2025 is a ten-year action plan designed to turn China into a world manufacturing power. It is often described as China's version of Europe's Industry 4.0. Feeling skeptical that wearable technology will ever catch on in manufacturing shops? So are many of the respondents to the recent State of Manufacturing Technology Report, a study that includes data from more than 130 manufacturers across the country.
In fact, some 35 percent of respondents said smart glasses are overhyped. And when you consider that 93 percent of survey respondents use consumer tablets in their manufacturing operations, 80 percent incorporate consumer mobile devices and 48 percent already use sensors to track materials and machines, it’s obvious that today’s manufacturers are eager to deploy modern devices that help people and machines team up to get more done. In fact, wearable computing devices are changing manufacturing. Here are the three areas where you’ll notice the biggest difference. #1: Training Is Faster and Better If you’ve ever hired people for manufacturing jobs, you know that new employees face a potential roadblock to productivity: the computer. No matter how computer savvy your new hires may be, they’ll still need to learn the software applications you use for recording hours, entering data about new shipments, and reporting product defects. Wearables eliminate the time and expense of teaching new line workers how to navigate software. To put it simply, wearables do the logging on for your staff, as well as a great deal of the data entry. Think of what that means: you can now hire a new employee, set them up with wearable technology that talks to your machines and computers, and deploy them on your assembly line as not only a productive worker, but also a data collection agent. And because they won’t be constantly running to a computer to punch in data, your new hire will get much more done. Let’s picture how this might work: You equip your warehouse staff with digital scanning devices and Google Glass. The pointers allow them to point to any box and see captured barcode data about its contents displayed on their Google Glass. This will not only eliminate the need for them to open boxes and examine the contents, but also enable them to record data on new shipments in a fraction of the time. There was a time when you could hire new line workers based on their skill, not their computer savvy. That day is here again. Wearables let assembly line staff focus on what they do best. #2: Safety Issues Are Disappearing We’ve all seen the signs: “34 Days Since Our Last Accident.” Soon, we won’t need those signs at all. Wearables will make workplaces virtually accident-proof by overriding the worst human judgment. Picture this: you require all your warehouse staff to wear a (yet-to-be prototyped) smartvest. If a forklift driver is rounding a corner and doesn’t realize another worker is standing there, no problem. His smartvest will beep an alarm code that signals him to slow down and be alert. That’s Version 1.0, of course. Version 2.0 will actually interact with the forklift’s controls and apply the brakes when a collision with a human is imminent. Wearables are doing more than that to promote safety on the manufacturing shop floor. Because they’re on people at all times, they help management gather data on the speed at which workers are traveling—so that the one forklift driver who consistently drives too fast can be corrected. Wearables also let management gather data about how workers are spending their time on the shop floor and what safety hazards they’re exposed to on a daily basis. The benefits extend to customer safety, too. Imagine a sensor that electronics manufacturing workers can wear on one finger and touch to an electronic component to make sure it has been welded at the correct temperature. The temperature data would automatically be transmitted to the cloud, where the company’s management could then monitor product quality in real time. These are the kinds of innovations that are already emerging onto the market. #3: People and Machines Now Communicate as Equals Wearables do more than minimize your training requirements, save time for line workers, and help prevent accidents. They also let people and machines communicate with no barriers. A warehouse worker points to a box with a digital pointer and sees its contents on Google Glass without opening it. A line worker wearing sensors on his hands touches a finished product to measure its size and shape and verify that it meets specifications. Another line worker points to a machine to see data on Google Glass about the machine’s speed, temperature, efficiency, and maintenance history. Workers share all this data with their peers who may be affected by it—without leaving the shop floor. And all of this data is stored in the cloud for real-time or future analysis. It’s as if our manufacturing workers are walking around trailing ones and zeroes. Decision-makers crave those ones and zeroes. Whether it’s generated by a machine or by a human, data is what drives every strategic business decision today. The more data, the better. |
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