NCR Corp. is opening a plant in Brazil to take advantage of free-trade agreements in South America and Africa that will reduce the cost to manufacture and to ship ATMs into these fast-growing markets.
During a second-quarter conference call with analysts last week, Bill Nuti, NCR chairman and CEO, said the manufacturer will sell SelfServ-model machines throughout Latin America to take advantage of the existing agreements between Brazil and other South American countries. South America is the world's fourth-largest ATM market.
"There are free-trade agreements between Brazil and those countries, so we can export out of Brazil," Nuti said. Brazil also has free-trade agreements with certain countries in Africa that would lower the cost to ship ATMs to those countries, Nuti said.
"The free-trade agreement that Brazil has with Africa has the potential to lower our costs of ATMs, be it logistics, manufacturing and shipments," said Nuti, adding NCR could lower costs by $200 to $250 per machine.
Brazil does not have a free-trade agreement with the continent of Africa, but in October 2007, Brazil, South Africa and India–three of the world's fastest-growing economies–signed a free-trade agreement.
Africa is a fertile market for NCR and otherATM manufacturers, say industry experts.
"The Middle East and Africa is competing closely with Central and Eastern Europe," says Dominic Hirsch, managing director of Retail Banking Research, a London-based strategic-marketing firm. "The Middle East and Africa is growing fast due to selected countries expanding quickly, notably Nigeria and Iran (in the Middle East)," Hirsch says.
In addition to Nigeria, NCR wants to sell ATMs in South Africa, Morocco, Algeria and Egypt, a spokesperson says.
The region also is growing from a relatively small base, Hirsch wrote in an e-mail message to ATM&Debit News. "Nigeria, for example, has fewer than 30 ATMs per 1 million people compared with over 1,800 per million people in South Korea," he wrote, which has the largest number of ATMs per person in the world.
Brazil also is a member of Mercosur, a free-trade association in South America that would make it easy for NCR to ship to other South American countries.
"The news here is that NCR is emphasizing Brazil because it is such a large ATM market," Gil Luria, an analyst with Wedbush Morgan Securities in Los Angeles, tells ATM&Debit News. "In 2006, there were more than 100,000 ATMs in Brazil and 60,000 in the rest of South America. I don't think things have changed that much since then," Luria says.
NCR announced in June it would spend $37.5 million to construct a new manufacturing plant in the Amazonas region in Northern Brazil. Since the announcement, NCR's management has changed its strategy.
NCR now will lease space for a manufacturing plant in Brazil instead of building a new facility, Richard Maton, a company spokesperson, tells ATM&Debit News. Although the NCR has selected Amazonas as a region where it will locate the plant, the company still has not settled on an exact location.
"We're still looking for a location," Maton says. The factory, scheduled to open in December, and the plant's 250 workers will manufacture NCR's SelfServ line of ATMs. The opportunity NCR sees in Africa as well as the rest of the world played a role in the company's decision to move its headquarters from Dayton, Ohio, to Duluth, Ga.
The move provides company officials easy accessibility to international flights at Atlanta's Hartsfield-Jackson Atlanta International Airport, NCR spokespersons agree. Delta Air Lines is the airport's largest carrier and in 2006 it became the first U.S.-based airline to schedule direct flights to countries in Africa. ATM