Case Study Betim Fiat Factory Flashcards
1
Q
Location?
A
Betim, near Belo Horizonte, Brazil
2
Q
Industry type?
A
Secondary industry
3
Q
Fiat headquarters and background?
A
Headquarters in Italy
Began manufacturing cars in Brazil 30 years ago
Betim factory opened in 1976
4
Q
Area, employees and vehicles of factory?
A
2,000,000 M SQUARED
Employs 10,000 people
Capable of producing 800,000 vehicles a year
5
Q
Why Fiat chose Brazil: human - car ownership?
A
- Low but rapidly growing levels of car ownership in Brazil from 1 in 12 in 1980 to 1 in 8 today
- Alongside rapid pop. growth (currently 1.134%) provides great and ever expanding market for the cars produced at Betim
- No need for expensive transport to other side of world
6
Q
Why Fiat chose Brazil: human - economic incentives?
A
- Brazilian government offers loans, grants and cheap land covering 50% of initial start up costs for new factory
- Allows Fiat, despite not being Brazilian company, to take its profits out of Brazil and back to Italy where it is headquartered
- Maximised Fiat’s profits
7
Q
Why Fiat chose Brazil: human - health, safety and environmental laws?
A
- Fiat saves money because the regulations controlling industrial activity in Brazil is not as strict as in Italy where HQ is
- An estimated 19.3 fatalities per 100,000 workers per year occur in Brazil compared to 6 per 100,000 in Italy
8
Q
Why Fiat chose Betim: physical - metal deposits?
A
- Rich metal deposits including iron ore
- Means that the Minas Gerais state is the heart of the Brazilian steel industry and home to many steel works
- Reduces transport costs for steel, one of main raw materials for car manufacture
9
Q
Why Fiat chose Betim: proximity to coast?
A
- Betim less than 300km from coast
- Most of Brazil’s pop lives near coast so transport costs from factory and market are minimised
- This location also minimises cost of transporting cars for international sale to ports such as Rio de Janeiro
10
Q
Why Fiat chose Betim: human - large, cheap labour pool?
A
- Betim has large apx 400,000 pop
- Rapidly growing (Brazil growth rate 1.134%)
- Meaning that wages are therefore cheap and maximises profits for Fiat
11
Q
Why Fiat chose Betim: human - transport connections?
A
- Betim has excellent road and other transport links connecting it to the rest of Brazil particularly coast and ports such as Rio
- E.g. Brazilian national highway 381 and 262 (BR381 and BR262), railway line
12
Q
Why Fiat chose Betim: human - site?
A
- Site was prepared
- Had already sewerage, electricity and links to main road network
- Minimised amount of ‘up front’ investment required by Fiat
