Luciana Lopez & Stuart Grudgings – Reuters, 10/30/2011
The nondescript stretch of asphalt is an unlikely symbol of Brazil’s attempt to lift its economy into a new high-tech era.
If officials in the industrial town of Jundiai get their way, it will soon be named Steve Jobs road — in homage to the late Apple Inc co-founder and a nod to the expected windfall that producing iPads and iPhones here will bring.
Brazil’s government has loudly proclaimed a deal it says is worth $12 billion for Taiwanese technology giant Foxconn to produce iPads and build a whole new industry based around screens used in an array of consumer electronics from smartphones to televisions.
President Dilma Rousseff was certainly smiling after her official visit to China in April this year: in part because of a deal developing for an iPad factory. The excitement was soon palpable as technology giant Foxconn, which produces Apple’s popular tablet, announced plans to open an iPad assembly plant in Brazil, providing 100,000 direct and indirect jobs – and making Brazil the first country other than China to produce the tablet.
Soon however, concerns over the rate of taxes paid by the company in Brazil (particularly the IPI taxlevied on industrialized products), and also issues with logistics, infrastructure and a lack of skilled workers within Brazil were reportedly hampering negotiations, with some saying the deal was in trouble.
Recently Foxconn chairman Terry Gou has allayed fears after confirming that the new iPad factory in Jundiaí, São Paulo state, will be officially opened in December this year – although later than many had expected.
Eike Batista, Brazil’s richest man, wants to help Taiwanese technology giant Foxconn (2354.TW) with its plans to produce Apple products such as the iPad in the country, the latest twist in a much-hyped deal that could be worth up to $12 billion.
After a meeting with President Dilma Rousseff on Friday, Batista told reporters his EBX group “loves to bring in modernity,” adding that Foxconn’s planned entry into Brazil “fits perfectly with that.”
Batista — a larger-than-life entrepreneur, with a talent for marketing — said his EBX group is still working out details of how it could work with Foxconn, the manufacturer of Apple’s iPad table, as well as a slew of other products.
Taiwan’s Foxconn confirmed it will start producing iPads in Brazil in December but is still negotiating a multibillion-dollar expansion plan in the country, senior company and government officials said on Thursday.
President Dilma Rousseff first announced the Foxconn proposal to build Apple’s (AAPL.O) hot-selling tablet in Brazil during an official visit to China in April.
The lengthy negotiations reflect the country’s sometimes difficult investment climate and the Rousseff administration’s ambiguous stance between a heavy government hand and the need to attract private capital.
A much-hyped $12 billion plan for Taiwanese manufacturer Foxconn to produce iPads in Brazil is “in doubt” due to stagnant negotiations over tax breaks and Brazil’s own deep structural problems such as a lack of skilled labor, government sources tell Reuters.
The proposal to build Apple’s sleek tablet computers in Brazil was first announced in April by President Dilma Rousseff during an official visit to China. Senior officials hailed the deal as a sign of growing economic ties with Asia, and proof that Brazil was moving up the value-added manufacturing chain as its economy grows.
Yet the idea for a “Brazilian iPad” prompted immediate skepticism back home, where factories have struggled for years with high taxes, an overvalued currency and a lack of qualified workers due to poor education and a tight labor market.
Apple has reportedly ventured out of its manufacturing stronghold in China to open an iPad factory in Brazil.
According to a report on Brazilian site UOL uncovered by MacStories, Brazil’s Minister of Science and Technology Aloizio Mercadante confirmed that the new plant is ready to start churning out Apple’s tablet, which will begin shipping in the country in December.
“At first many doubted, but it will be the first time that the [Apple] will produce iPads outside Chinese territory,” he said at a hearing with the country’s Commission of Economic Affairs. “We are taking a big step for digital inclusion in the country.”