Vermeer supports stronger U.S.-Brazil trade relations at hearing

By Erin Voegele | June 21, 2013

A representative of Pella, Iowa-based Vermeer Corp. advocated for a more open, transparent trade relations with Brazil during a recent U.S. House of Representatives Ways and Means Trade Subcommittee hearing. The hearing focused on the growing trade and investment relationship between the U.S. and Brazil, the challenges facing U.S. job creators, and how to maximize constructive bilateral engagement.

According to a hearing advisory issued by Subcommittee Chairman Devin Nunes, R-Calif., the U.S.-Brazilian trade relationship is among our country’s most important and promising trade relationships, noting Brazil has been on average the U.S.’s eight largest trade partner over the past five years. The notice specified that the trade relationship has ample room to grow, as Brazil’s economy is large and shows strong growth potential. 

While the statement said that the Brazilian government has not historically pursued bilateral trade and investment engagement with nations outside the MERCOSUR arrangement, current U.S. and Brazilian administrations have substantially increased bilateral dialogue.  The hearing focused on current U.S.-Brazil trade and investment issues and whether they provide ripe for inclusion in an expanded and constructive bilateral trade and investment agenda. Dough Hundt, president of underground solutions at Vermeer, was among those invited to testify at the hearing.

As part of his testimony, Hundt spoke about Vermeer’s operations in the biomass sector. “Our equipment…helps [farmers, ranchers and livestock producers] meet and overcome the challenges of harvesting crop residues for the fast-emerging biomass industry,” he said in written testimony. “Recognized for inventing the round hay baler, our agriculture equipment line now includes balers, bale processors, bale wrappers, cob harvesters, disc mowers, mower conditioners, rakes, tedders and trailed mowers.”

Hundt also addressed the role of Vermeer equipment has played in managing natural resources in both the U.S. and abroad. “Vermeer equipment is used for responsibly managing and utilizing natural resources around the world,” he said. “Waste management contractors, tree care crews, landscapers, biomass power plant owners and mining professionals all use Vermeer equipment to reduce green waste, harvest alternative energies including solar and biomass, and precisely extract valuable minerals and resources from the earth. Whether chipping pruned tree branches around the U.S. Capitol, grinding sugar cane trash in Brazil for renewable energy, installing PV pedestals in South Africa for solar farms, or doing precision iron ore mining in Western Australia, Vermeer equipment is at the heart of managing natural resources around the world.”

According to Hundt, U.S. manufacturers have long sought to be partners in Brazil’s growth and development, noting the country has one of the largest economies in the world and has proven to be an important trading partner for the U.S. He said Vermeer has maintained a presence in Brazil for more than 30 years though exporting and dedicated in-country dealers. “Vermeer played an important role as a supplier of equipment used in major development projects in Brazil, including the fiber optic telecom installations of the 90’s and more recently the surge of biomass projects for delivery of clean and sustainable energy,” Hundt said.

Vermeer has actually established a local, wholly-owned subsidiary in Brazil to handle distribution and after-sale support. “We are bullish on the Brazilian market. It is a market with a great need for the products we manufacture, across all of our industry segments,” Hundt said. “End users have a strong preference for our products, and U.S. products in general, and our business practices are highly appreciated by our Brazilian customers. Despite the significant challenges for a medium-sized U.S. manufacturer in doing business in Brazil, our business is growing rapidly due to Brazil’s growth and need for the solutions we provide.”

As part of his testimony, Hundt highlighted several examples of Vermeer solutions currently meeting industrial needs in Brazil, including the ranking, baling, transporting and grinding of sugarcane waste for use as feedstock in electricity generation. Vermeer chippers and grinders are also an integral part of the biomass and renewable energy industry in regions eradicated orange trees and sustainably planted and harvested eucalyptus trees are used in bioenergy.

Hundt also described challenges his company faces in operating in Brazil that are unique to the country and its policies. “These challenges significantly and unnecessarily raise the cost of doing business with Brazil and limit stronger partnerships and greater competitiveness, both for Vermeer, but also for the Brazilian economy,” he said. “Issues we confront can often be grouped into complexity/bureaucracy and the cost of importation.” For example, Hundt noted it took his company six months to be issued a business license and taxpayer number in Brazil, while the same process took half a day in Singapore.

“Perhaps our most pressing challenge is the cost of importing our equipment into Brazil, including the cost of cascading taxes and fees, the formalities behind the border, and the effect on our product demand and our competitiveness relative to Brazilian alternatives,” Hundt said, noting that due to import duties, cascading taxes and additional feeds, the purchase price of Vermeer equipment for Brazilian customers averages 60 percent higher than for U.S. customers.

Hundt closed his remarks by noting his company strong supports constructive and positive ways in which the U.S. can build a closer economic and trading relationship with Brazil. “Both the United States and Brazil face political and structural realities that affect the discussion. Yet we believe the timing for increased conversation with Brazil is right given the political timeframes of each country, the need for growth, the fact that we’re in talks regarding other significant trade deals (TPP and TTIP), which create some urgency on the Brazilian side, and the need for infrastructure development in Brazil ahead of significant events,” he continued.