The manufacturing industry wants to transform Brazil. Our people deserve and can have a future of development and social justice
Nations the size of Brazil need a strong manufacturing industry. Progress in services, agribusiness, mineral prospecting and the financial sector is not enough to promote an effective project for sustained development, i.e. one that is economically thriving, socially just and environmentally friendly. This observation, so obvious and practically consensual throughout the world, is occasionally met with inconsistent counterpoints in Brazil, in contrast to what is seen in the rich nations and the other members of the BRICs. In these countries, the role of manufacturing in their journey towards modernization, socio-economic inclusion, attracting and promoting productive investment, intensive job creation, innovation and business opportunities is undeniable.
Such questions express a very shallow view that we should stick to our innate vocations in industrial activity, that is, limit it to agro-industrial processing. This premise doesn't even stand up to analysis in terms of the balance of trade. As much as agribusiness and agroindustry have a high profile in our foreign trade today, we would have a gigantic annual deficit if we didn't manufacture capital goods, steel, chemical products, cars, cement, plastics, toys, footwear, medicines, agricultural machinery and implements, trains, buses, trucks, computers, clothes, household appliances, electronics and a multitude of high value-added products.
Denying us, as an economy and as a nation, the prerogative to develop skills and technologies means going back to the jurassic colonialist logic, resigning ourselves to the condition of suppliers of primary products and buyers of advanced goods. This anachronistic equation can be summed up in one word: subservience. It is essential for full development, meeting the demands of the population and even national sovereignty that we reduce our dependencies by exploiting our best skills, whether they are natural or acquired over time.
At this very moment, when we are dealing with Covid-19, we have a harsh example of this issue: we are dependent on the import of active ingredients for the production of vaccines, certainly the item in greatest demand in the world today, subjecting ourselves to the goodwill of foreign laboratories and governments, which will fatally delay the end of the pandemic in the country. Fortunately, our competent Butantan and Fiocruz institutes, which have participated in the development of immunizers, will soon have the transfer of technology, which will allow them autonomy for manufacturing. To do this, however, they have developed skills.
As did Germany, Japan and South Korea, devastated by wars, which, far beyond their natural vocations, built three of the most sophisticated and diversified industrial parks in the world. As Brazil has also shown, on a smaller scale, by manufacturing high-performance airplanes, researching and developing flex-fuel engine technology, which is fundamental and strategic for the whole world to be able to use cleaner, renewable biofuels, and by producing, thanks to the agile and efficient setup of numerous factories, lung respirators, masks and personal protective equipment to deal with the pandemic.
These three excellent national examples and the worrying vaccine issue are enough to make it incontestably clear that we must not neglect industrial promotion and the consequent progress in R&D. It's worth remembering that even the United States, the richest country on the planet, is promoting a policy to rebuild and strengthen its manufacturing park, recognizing its socio-economic importance.
More damaging than the extinct rhetoric in the civilized world about the significance of the manufacturing industry is the fact that Brazil has been losing density in the sector prematurely, resurrecting and giving strength to the concept, with the absence of public policies aimed at strengthening it and, what is worse, with friendly fire being fired at manufacturing. Manufacturing has been attacked by waves of overvaluation or sharp fluctuations in the exchange rate, high interest rates, a shortage of credit to finance working capital and investments, legal insecurity, customs compliance with subsidized products in competing nations, insufficient funding for research and unprecedented taxes.
It could be argued that other sectors also face such obstacles. This is true, but not to the same extent and severity. Services have a different logic of international competition and are governed by a different tax regime, as is the financial market, which has specific regulations for its operation. National agriculture, fortunately, is a global supplier. In this segment, we only import what we don't produce in sufficient quantities here, such as wheat. Its tax burden is infinitely lower, which doesn't detract from its merits in terms of innovation and productivity. Proof that manufacturing is disproportionately hit, for example, by the artillery of taxes is the fact that it collects from the public coffers an amount equivalent to twice its share of GDP.
One emblematic piece of data shows how all these hardships undermine industrial competitiveness: a study by the Competitive Brazil Movement (MBC) revealed that producing in Brazil costs R$1.5 trillion more every year, around 22% of our GDP, than the average for member countries of the Organization for Economic Cooperation and Development (OECD). It is precisely the industrial park that has heroically faced and resisted all these problems that is being criticized by outdated thinkers, defenders, it seems, of neo-colonialism. It is also this park that, in the regions where it is most present, leaves its mark by contributing to the best socio-economic, income distribution and education indicators, as can be seen in the interior of São Paulo, Santa Catarina or Rio Grande do Sul.
It's important to make it clear that, despite everything, the sector has outperformed itself. Although it represents 21.4% of GDP, it still accounts for more than half of exports of goods, 69.2% of business investment in R&D, 33% of federal tax collection and 31.2% of employer social security collection. In addition, it employs 20.4% of all Brazilian workers, pays the best wages, is the activity that generates the most chain impacts, pays the most taxes and promotes the spread of technology and productivity, according to IBGE data.
Anyone who understands the significance of this data should be more concerned when they look at some other figures: in the last six years, as a result of all the problems pointed out here, 36,600 factories have closed their doors in Brazil; in 2020, we suffered 17 closures a day. Last year, with the national economic crisis aggravated by Covid-19, the sector recorded its lowest share of GDP since the historical series began in 1946.
It's high time we brought our discourse into line with the world that is growing, developing and playing the strategic game. We need to discuss the issue with detachment and an open mind, in a process of mobilization to revitalize the manufacturing industry and lead our country to a new level of development. The sector doesn't want subsidies and benefits, but only the conditions to recover and make its competitiveness viable. In this sense, with the resilience and capacity to overcome that have always been present in its history, allowing it to still be among the largest manufacturing parks on the planet, it is open to constructive dialogue, with the sincere purpose of contributing to transforming Brazil into a great and happier nation.
Members of the Industry Coalition:
