Brazilian-based entrepreneur, Flavio Maluf says the Brazilian market for construction is suffering an unprecedented crisis, and recovery is predicted to be slow. According to a survey, the construction sector’s profitability fell from 11.2 percent in 2014 to 2.3 percent in 2015. Only three of the 23 construction companies ranked among the 500 largest in the country managed to grow in the last year. Profitability of the industry has never been so low.
The biggest problem with the construction industry is the companies’ excess inventory. There is approximately two years worth of sales currently ready or under construction. Last year, the principal mission of construction companies was to accumulate cash as quickly as possible to pay off debts and begin getting rid of the overflowing inventory. For this to occur quickly, they started giving discounts of up to 50% on the price of real estate. “Currently, there is excess supply and total lack of demand,” says Maluf. The speed with which the construction industry will emerge from the crisis depends on the mood of the economy.
The construction market, of course, is not the only one that suffers from the country’s economic downturn. Other sectors, such as the auto industry, had it worse, with a 15% decrease in sales. Manufacturers of consumer electronics also shrank by 9%. They all suffer from a nefarious combination of dangerously high inflation, rising unemployment, rising interest rates, and tight credit. According to IBGE, about 11.4 million Brazilians are unemployed, and high inflation combined with rising interest rates make consumers pinch those pennies.
The increase in unemployment means that less is sold to consumers, the industry reduces productivity and tax collection decreases. This loss accounts to the country losing about $12 billion Brazilian Real per month. Yet, with government reforms, President Michel Temer is trying to send a strong signal of political commitment.
Since 1951 Eucatex has been dedicated to producing eco-friendly sustainable products. Flavio Maluf, President and CEO has been a staunch supporter of environmentally friendly and responsible products that also go hand-in-hand with his ecological beliefs. After attending New York University, Maluf returned to Brazil to join the family business. He started in the trade before transferring to the industrial division. Flavio was voted to his current President position in 1997 where his initiatives for the company has led to successful growth and profit.
Flavio Muluf’s career includes a proven track record of success and he advocates for continuous improvement.