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Basf changes paint production in Brazil, cuts cost

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A change in the production process of Basf’s decorative paints in Brazil has reduced the number of ingredients to 15 from 25 without altering the final product, according to the company. For the new production process, Basf invested R$50 million in a new plant, in addition to investments in technological development.According to Marcos Allemann, the company’s vice president of decorative colors for South America, the novelty is the result of five years of research in the company’s laboratories and is a local innovation. Now, it can be studied in other countries. The company has already received delegations of Basf employees from abroad."It is a technology that, for the time being, we only have in Brazil, and now it is being evaluated to be scaled up to other plants, which we are very proud of," he said.The new process made it possible to eliminate the use of additives that were previously necessary to facilitate the dispersion and stabilization of the paint. The other ingredients were retained.The lower number of ingredients means a reduction in the production costs of the architectural paints sold under the Suvinil and Glasu brands. Depending on the strategy chosen by the company, the cost reduction can mean an increase in profitability or competitiveness.According to the executive, a cost reduction of R$35 million to R$40 million per year is expected, and an increase in product margin of 1 to 1.5 percentage points, if the price is maintained. "The project tends to pay for itself in two years," he said.The cost reduction comes in handy as the prices of raw materials for paints had been rising until last year. Basf raised the price of paints by 20% in the first half of 2022 to pass on these increases, Mr. Allemann said. The company’s margin, which had been below historical levels since the pandemic, was largely restored with this increase. Now, the company has another way to boost the...

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