How Rockwell Automation sees the outlook for Latin America in 2025

One of the global leaders in industrial technologies, Wisconsin-based Rockwell Automation starts 2025, like its peers in the sector, facing a challenging scenario in Latin America.

On the one hand, there is political instability and potentially adverse effects on industries from Donald Trump's tariffs and high interest rates in markets such as Brazil.

On the other, there is a need for companies in the region to level up in operational efficiency, through technology, to be more competitive in this new global dynamic. 

In this interview, Rockwell Automation's new VP for Latin America, Leandro Kruger, discusses these issues and more. Formerly head of the Brazilian operation, Kruger was appointed to the VP position at the end of last year.

BNamericas: What are your goals in the position and how do you see the business environment for 2025?

Kruger: I took over at the end of the year. So, I've just completed about two months in the position. It's a period of learning and transition, but in any case, I'm taking to the region my knowledge accumulated in the Brazilian operation over the last few years.

In general, I see our segment as having many opportunities. Companies and industries continue to look to increase the resilience of their operations, and this means investing in technology and automation.

Threats are increasing every day, since you have more technology and more connected industrial and operational assets. And we're able to support our customers from the sensor on the factory floor to the processing of data collected and the decisions made based on that.

BNamericas: Since you were appointed, the macro scenario has clearly become more challenging. What are the possible effects of US tariffs and rising interest rates in markets such as Brazil, for example?

Kruger: Since October, with the US elections, we've seen that many uncertainties have arisen. This has impacted the industry in general in Latin America, which has adopted a more... conservative stance, let's say. But there are segments and segments. There are industrial segments that are becoming more conservative in light of the challenges and others that are spotting business opportunities.

Besides, each country in Latin America has a different dynamic. 

In Mexico, the impact is stronger due to its almost umbilical synergy with the US market. But there was a pause, a breather, with the diplomatic talks between the two countries. We had two days of panic and on Monday things eased a little bit.

BNamericas: The tariffs were halted for at least a month. And others, covering several countries, were announced.

Kruger: Yes, but from what I'm seeing, things are tending to settle down. 

In Brazil, we need to see how the country will deal with the taxation of two of its main exported inputs to the US, steel and aluminum, even though Brazil isn't as dependent on the US as Mexico.

Other countries in the Southern Cone and in Latin America have their own difficulties and issues. 

Argentina has a scenario that we have to monitor with the new administration. Peru and Ecuador have gone through serious internal problems and are recovering. Colombia has also been slowing down a bit.

Yet these are countries that are very focused on commodities. And a rise in the value of commodities can always boost the overall economy.

The beauty of our business is that we're multi-segment, we're cross-industry and multi-country. We serve everything from heavy industries, such as oil and gas, mining, cement and metals to industries such as food, beverages, automotive, tires, etc. It's rare for all of them to be doing well at the same time, just as it's rare for all of them to be doing badly.

BNamericas: How exposed are you in Mexico? And what are the strategies to mitigate or offset these political risks? Do you aim to be less dependent on nearshoring and serve more Mexican companies in Mexico, for example?

Kruger: Both. Rockwell Automation Mexico is our largest structure in the region. We also have well-established distributors, and this helps us a lot in having coverage in the country that most of our competitors don't have.

There's a strong presence of international companies in Mexico, many of them US ones. 

So, it's not just a question of local strategy and execution, but of how our company relates to these companies on a global level, to all of these companies.

There are several alternatives. With this capillarity that we have, we're also serving and doing business with Mexican companies. 

There are public programs to encourage infrastructure investment, and this moves industries such as cement and steel towards domestic consumption. There's a clear focus from the government on accelerating growth and investment, and this pushes the economy.

BNamericas: And what about Brazil and the steel industry?

Kruger: I see it as an opportunity. The raw materials industry, in general, has assets that are many years old, decades old. Productivity is important for Brazilian industries to compete and be more efficient. Having said that, the steel industry in Brazil, the large companies in particular, are already quite technological.

It's an opportunity for Brazilian industry to invest more in modernizing its production plants for 21st century output. We must remember that those tariffs are the same for everyone, for every country.

Furthermore, the Global North in general is increasingly looking to the Global South for resources.

BNamericas: In technology and industrial automation, which fronts are expected to drive business the most this year? AI, cloud, cybersecurity?

Kruger: In this journey to create the future of industrial operations, what we advocate for is a broader technological platform for industry. I can have fantastic AI functionalities, but if everything down on the factory floor is manual, it won't be very effective. Our vision and mission is really to support our customers with a holistic take.

That said, Rockwell has significantly expanded its cybersecurity, IoT, software capabilities, our analytics and cloud capabilities. We brought to the market factory execution software, we brought MOM, manufacturing operations management, based on the cloud.

We also focus on our production logistics platform, which incorporates machine automation with robotic automation capabilities, thus connecting machinery with independent robots for transportation and logistics production.

And today we work with a hybrid architecture, with multiple forms of connection, whether wireless, cable, cloud, on-premise, ensuring that we have as much as possible in edge computing gains.

BNamericas: In December 2023, Rockwell shut down the Jundiaí factory in Brazil. How are manufacturing operations in Latin America today? 

Kruger: We operate in over 20 countries in Latin America, with local presence, and we have plants in Mexico, two very large factories, and in the Dominican Republic.

As you mentioned, we had a plant in Jundiaí, but the company learned a lot from the disruption in the supply chain [during the pandemic]. All companies learned, and this was part of a strategy review to be more efficient and more resilient in the event of a new disruption.

What we manufactured in Jundiaí, we were capable, at that time, of manufacturing the same product in at least three other factories around the world. It didn't make sense, during a difficult time, to supply three factories with the same inputs. So, we shut one, and it was the one in Jundiaí, which had the smallest volume.

Jundiaí manufactured a lot for Brazil, Argentina and Peru.

But today, what we produced in Brazil, we can produce in Canada, Poland or China at interesting costs. And we continue to have very significant production capacity.

BNamericas: Are there plans to expand or reduce production capacity in Mexico and the Dominican Republic?

Kruger: Everything remains as it is. The Dominican Republic and Mexico produce for Latin America and the world.

Internally, we've also evolved a lot in terms of production since the crisis in the supply chain. There's a higher level of efficiency, we've invested a lot in technology.

BNamericas: How much of what you produce in the region stays in the region and how much is exported?

Kruger: Most of it is exported. 

Latin America, for Rockwell Automation, represents about 8% of the business.

The interesting thing is that we have been increasing our share in the company. We were 6%, went to 7%, and today we're 8%. In the last fiscal year, the company had revenues of US$8-9bn. We have both grown the pie and increased the regional slice of it.

BNamericas: Are you expanding the workforce in the region? Are you hiring?

Kruger: We have over 1,000 people in Latin America, not counting the factories in Mexico and the Dominican Republic.

We are hiring. There are professionals who are very hard to find in the market. For all the technologies that are in high demand, finding qualified professionals is a challenge. 

But we have worked with partnerships and have invested in our own professionals within the company, in training this workforce to be able to meet these new demands.