British engineering in Latin America

British companies are looking for substantial engineering contracts from South America in the wake of recent major orders by Mexico and Brazil. The Mexican deal, which is for a (STR)330 million ($623.7 million) steel mill , was won by the Sheffield-based Davy-Lowey firm. The contract appears to be a significant triumph for British engineers in the face of fierce foreign competition from West Germany, Japan, and France.

Prime Minister Margaret Thatcher witnessed the memorandum agreement between Mexico and Britain during her recent visit to the third-world summit meeting in Mexico.

The steel-mill project seems to confirm Mrs. Thatcher's assertions that an increasing number of British exporters are becoming more internationally competitive, and she has said that the order is the ''largest single turnkey contract'' ever won in Mexico.

Britain earlier this year secured a similar large steel-mill contract from India, which followed a visit to the subcontinent by the United Kingdom's prime minister.

Most of the 80,000 tons of steel needed for the Mexican project at Sicarsta will be made in Britain's rolling mills in job-hungry northeast England. And British firms involved in North Sea oil fields are continuing to look to Mexico's expanding petroleum business for more orders for oil rigs.

Brazil's developing economy may also provide lucrative orders for Britain in addition to the (STR)350 million ($661.5 million) deal agreed by the South American country in late October. The deal includes contracts for four roll-on roll-off ships and two container vessels. Glasgow is expected to build at least one of the ships in the (STR)120 million maritime deal.

The overall trade arrangement with Brazil includes the (STR)77 million conversion to coal burning of a power plant at Santa Cruz, and the development of coal mines for heating stations.

Ferranti will supply four Brazilian warships with electronics systems, and the General Electric Company will construct a rail electrification grid at Recife in northern Brazil. Some British petroleum equipment companies have also obtained (STR)30 million worth of drilling gear for Brazil's offshore oil fields.

Nine British banks, led by Lloyds International, are backing the financial package with the Brazilian government. The United Kingdom's government-backed Export Guarantees Department is underwriting the economic-political aspects of the arrangement. It is expected that firm orders will be placed in Britain by April 1982.

The two important South American deals are regarded here as ''Christmas presents'' for a section of Britain's heavy engineering industry which has been badly hit by the recession. Saudi Arabia and South America are two regions which are particularly vital to the UK in obtaining a much higher percentage of international engineering orders.

Britain's Confederation of Industry chief recently said that 250,000 UK workers have sacrificed wage increases in 1981 to obtain more work, and union leaders are far from happy with the way that the government is trying to influence a national incomes freeze of 4 percent in 1982.

There are still no signs of a basic improvement in Britain's economic depression, but some business people feel that UK industry is beginning to gain a promising edge in the struggle to secure more widespread overseas contracts.

-30-