A CURRENT BOOM
“The economic situation in Rio Grande do Sul today is better than it's been in the past 15 years. declares Rolf Hemesath. “Compared to many other Brazilian states, our economy is much more dynamic.” According to Hemesath much of the current boom is not merely due to Brazil's overall economic health, but to Rio Grande do Sul’s unprecedented moment of political harmony.
“Traditionally, the state has always been governed by parties that were in opposition to those in power in Brasília,” explains Hemesath. “However, now both state and federal governments are in the hands of the PT (Workers’ Party). Instead of frictions, there are a lot more affinities. The result has been a larger allocation of federal resources, more economic incentives, and increased attraction in terms of foreign investment.”
All of this is good news for Ernesto Woebcke, the oldest construction company still in operation in Rio Grande do Sul (and the fourth oldest in Brazil) and one of only five top players in its segment. The family-owned business was founded in 1923, in the Gaucho capital of Porto Alegre, by Alfredo Haessler, an engineer of German extraction. The fledgling venture earned its current name in 1929, when Haessler joined forces with another engineer by the name of Ernesto Woebcke, who was seduced by the growth opportunities presented by Rio Grande do Sul’s incipient urbanization and industrialization.
Over the next few decades, the company consolidated its presence in the market through its participation in major construction projects undertaken in both the commercial and industrial sectors. However, its fortunes really took off in the 1960s and ‘70s when Brazil, in the throes of its “Economic Miracle,” underwent transformations that spurred on major expansion and modernization of industrial facilities and investment in a historic number of massive-scale infrastructure projects including bridges, water treatment stations, and hydroelectric and energy plants.
The company rose to the challenges of the day by moving to an 82,000 square-foot side in Gravataí, a town 16 miles outside of Porto Alegre. Here, it built a 10,000-square foot facility for the manufacture of precast concrete and invested in state-of-the-art German technology that allowed it to manufacture large-scale reinforced concrete buildings and other structures – silos, water reservoirs, and enormous stacks and chimneys measuring up to 200 meters – that were heavier than those produced by any of its competitors.
Stacks and chimneys of such heights became Ernesto Woebcke’s signature specialty. In fact, over the last decade, its expertise has led the company to score important contracts in various sectors, most notably in the state's thriving energy sector, where it has participated in the building of gas-fired and charcoal fueled thermoelectric plants (98 percent of Brazilian charcoal is harvested in Rio Grande do Sul).
More recently, the company has met with success by branching out into other untapped energy-related niches. One of its biggest current projects – responsible for 30 percent of its revenues – involves the expansion of four new aeolian parks. An ongoing project that began in 2005, Ernest Woebcke is building close to 200 towers, ranging in height from 100 to 110 meters for 2 to 2.3 MW wind turbines.
A second major contract involves the construction of a pioneering diesel oil plant for Brazilian oil and gas giant, Petrobras. “This plant will be groundbreaking in that it will use motors whose emissions are extremely low,” explains Henrique Hemesath. “At the beginning of 2012, Brazil adopted Euro 5 emissions standards, environmental legislation by which all industries must use motors that will result in a 90 percent reduction of sulfur emissions. We’re in charge of planning and constructing this plant. The project represents a major undertaking for us and will be responsible for 50 percent of our revenues this year.”
Meanwhile, there are many new opportunities that are mushrooming in the industrial sector. Ernesto Woebcke is set to participate in the expansion of a cellulose plant, in Guaíba, which was recently purchased by CMPC, a Chilean group that is the largest paper and cellulose company in Latin America. Construction on the R$4 billion (US$ 2.1 billion) project is scheduled to begin at the end of 2012. The company is also gearing up to help build two new shipyards at Rio Grande Port, Brazil’s second largest port in terms of international maritime trade. And presently it’s involved with the construction of a new 33,000-square-foot administrative headquarters for Vonpar, owner of the Coca Cola franchise in southern Brazil, which has already garnered press for the fact that its completely automated building will feature a fully networked system of controls and sensors.
INVESTING IN THE FUTURE
Thanks to these projects, Ernesto Woebcke expects this year’s profits to double those of 2010, in which it racked up revenues of R$80 million (roughly US$42 million). Meanwhile, the company’s bottom line isn't the only thing that’s increasing. It recently enlarged its Gravataí facility by 20 percent, invested in top-of-the-line new European equipment, and doubled the size of its transportation fleet from six to 12 trucks, all of which are customized, and outfitted with hydraulic cranes, so that they can carry particularly large and extremely heavy cargo. Such investments help explain how this medium-sized, family-owned company has succeeded in becoming what Rolf Hemesath proudly describes as the “Number One choice in the marketplace,” with a client list that includes the biggest and most important industries in Rio Grande do Sul.
“We are capable of doing things that many of our competitors aren’t able to,” points out Henrique Hemesath. “For instance, our new trucks are engineered especially for precast concrete and offer a specialized logistics solution; in terms of weight and size, nobody else in Rio Grande do Sul is able to transport what we can. But there's also the fact that nobody has the technology for mixing concrete that we do. Because of the sophisticated equipment we use – made by a leading German manufacturer of construction equipment – our concrete is mixed with a precision that results in it being twice as resistant as conventional precast concretes.”
And indeed, the fact that Ernesto Woebcke is so vertically integrated – the company supplies everything from planning and machinery to cranes and trucks – ensures that clients can count on projects of high quality that are completed on deadline and almost never require follow-up repairs. However, in its pursuit of excellence, the company considers its ultimate trump card to be its work force; this is why, in the last two years, Ernesto Woebcke has expanded its team from 500 to 1,000 employees.
“One of the biggest challenges facing Brazil today is the shortage of qualified labor,” confesses Henrique Hemeseth. “The economy has grown so much and there are not enough specialized workers to meet the demand of so many new projects. For this reason, we’re investing in young people – 80 percent of our new hires are production assistants, many of whom are working for the first time and who will go through in-house training. This is an urgent necessity, not just in terms of civil construction, but the entire Brazilian economy. For this reason, we’re not thinking about the short term. We're investing a lot now because we’re hoping that in 5 to 10 years, this will pay off, not just for our company and the segment, but for the future of Brazil.”