In its brief history, Brazil’s TGM Turbinas has gone from small-scale turbine maintenance to becoming the number one manufacturer of steam turbines in the country. Michael Sommers finds out how the company conquered the national market and its strategies for going global.
In 1991, TGM Turbinas was a tiny start-up company operating out of a small building in the town of Sertãozinho, São Paulo. At the time, its activities were limited to the maintenance of small steam turbines. However, following a move to a larger 54,000-square-foot plant in 1994, the company decided to take the plunge and begin manufacturing its own turbines for the generation of energy and the operation of industrial machines, the first of which – a low-pressure, low-temperature (300 psia/600 F) turbine – was launched in 1996.
According to TGM’s commercial manager, Júlio Bianchini, it was only in 2001 that the company really became a force to be reckoned with. “The period 2001-2002 was a turning point for us. After investing heavily in the training and hiring of new technicians, TGM began to manufacture its first high-pressure, high-temperature (900 psia/900 F) turbines for Brazil’s sugar and alcohol sector. This really allowed us to assert ourselves in the Brazilian market.”
From sugar and alcohol, TGM rapidly expanded into the pulp and paper, steel, timber, food, petrochemical and chemical segments. Before long it was the number one manufacturer of turbines in Brazil and the largest supplier of the sugar and alcohol sector. Along the way, the maximum potential of its turbines – which didn’t exceed 15 or 20 megawatts when the company first went into production – acquired a generating capacity of up to 50 megawatts.
Currently, TGM dominates 70 percent of the sugar/alcohol market and has between a 40 to 60 percent market share in terms of other industries. “Having proven our expertise, we’re really focusing on diversification,” admits Bianchini. “The market for turbines is growing enormously due to the need for efficient energy sources. There is pressure on national industries to improve their performance and reduce their costs; as such many are now turning to steam turbines as a viable alternative. As a result, we have recently been experiencing growth rates of 30 to 40 percent a year.”
At the moment, TGM’s 355,000-square-foot manufacturing facility consists of four plants – measuring a combined total of 215,000-square-foot – where, in a year, it performs maintenance on 1,000 turbines and manufactures between 120 and 130, ranging in size from small to large. However, in order to keep up with increasing demand, the company is in the midst of augmenting its installations by 30 percent. A new manufacturing area has just been completed, and within three months a new plant for producing turbine-reductors will be finished, which will double the company’s production capacity.
Although having the best product in the marketplace is essential, Bianchini stresses that it isn’t enough. Clients might initially purchase TGM’s turbines, but they won’t remain faithful if there isn’t an efficient service sector to support the products. “We have really set ourselves apart by the emphasis we place on customer service,” confesses Bianchini. “TGM has a highly qualified sales team. Even more important is our technical assistance team, which is absolutely key when it comes to turbines. Our clients can’t afford to halt production due to a mechanical failure. Rapid response is an imperative. For this reason, we offer 24-hour service for every kind of turbine – even those that aren’t made by us. Our specialists know everything there is to know about every type of turbine, including those that are no longer made and those manufactured in Europe and the United States. As a result, we can safely claim that we offer the best technical assistance for steam turbines in all of Latin America.”
Presently, more than 20 percent of TGM’s turbine sales are exported to other countries. Meanwhile, in 2005, the company decided to further broaden its horizons by initiating exports to Europe. In 2006, the company inaugurated TGM Kanis, a German office based in Nuremburg that has provided it with a European foothold and has facilitated sales and follow-up services. TGM has also opened a representative office in the United States, where it currently supplies turbines to sugar/alcohol and pulp and paper companies as well as thermal power and effluent treatment plants.
Although the massive decline of the U.S. dollar accompanied by the soaring Brazilian real has caused the company to lose competitively in terms of the price advantage it once had, the high quality of its products and services has allowed it to remain on equal footing with international competitors. Last year, of the 117 turbines TGM sold, 96 were purchased in Brazil and 21 were exported. This year, the company is poised to better its performance: In the first eight months of 2007, it sold 108 turbines within Brazil and 19 to international clients. Moreover, when it goes head-to-head with multinational manufacturers, TGM has proved its mettle time and time again. In 2006, competing against various international firms, it won a contract to supply two turbines to Bahia Pulp, a Brazilian pulp mill. Then earlier this year, it beat out numerous global rivals in a bid to supply two high-pressure turbines to the South Africa Pulp and Paper Association’s (SAPPA) plant in Austria. When asked what the secret is to competing on the world stage, Júlio Bianchini doesn’t have to hesitate before responding: “When it comes to our customers, there’s nothing we won’t do. We are there whenever they need us, 24 hours a day. The combination of having a good product and always putting the client in first place is a surefire recipe for success.”