January 26, 2010 Light Through the Tunnel

Volume 13 | Issue 1

It’s been a long and winding road for Toniolo-Busnello, a 55-year-old construction company that specializes in building tunnels for railways

For a company whose main activity is all about plowing straight ahead, Toniolo-Busnello came into being in a very roundabout way. The company’s founders, the brothers Joaquim and Germano Toniolo and their cousin Otaviano Busnello, originally worked in Brazil’s southernmost state of Rio Grande do Sul. There was nothing unusual about their occupation seeing as Bento Gonçalves, the town in which they lived, was the center of one of Brazil’s leading grape cultivating regions.

What was more unusual was the cousins’ decision, in 1945, to expand their horizons by branching out into new activities. Relying only on horses and manual labor, they began transporting stone and providing other construction services. However, the activity that quickly proved to be the most profitable for the fledging company (which was officially incorporated as Toniolo-Busnello in 1954) was the building of tunnels for Rio Grande do Sul’s rapidly expanding railway system.

SUBTERRANEAN SPECIALISTS
Today, many of Brazil’s railways have been deactivated, but in the mid 20th century, as the nation’s industrial economy grew in leaps and bounds, construction of new lines boomed. From 1945 to 1960, Toniolo-Busnello honed its expertise at building tunnels for railways. Major growth, however, came in the later 1960s when the company was contracted to build nine tunnels for a major stretch of rail network linking Rio Grande do Sul to the rest of the country.

In the 1970s, the importance of trains was already diminishing as Brazil experienced a rapid, unprecedented proliferation of highways. With the momentum and experience it had gained over the past decade, Toniolo-Busnello lost no time in expanding into this booming sector with the acquisition of a trio of construction companies that boasted considerable experience in roadwork along with some important clients.

“It was at this point that we started paving, filling, grading, embanking, and other activities related to highway construction, which was experiencing enormous growth at the time,” recalls Director Humberto Busnello. The company acquired three rock crushing plants and invested heavily in new equipment, including its first Tamrock Jumbo imported from Finland (today with 11 Jumbos, Toniolo-Busnello boasts the largest fleet of these vehicles in Brazil). “But what really set us apart in the market was the fact that we had this particular experience working with tunnels. With the opening of new roads in Rio Grande do Sul and Santa Catarina, there was a demand for experts who knew how to remove rocks and work in subterranean areas and these activities were our specialty.”

DECADES OF DIVERSIFICATION
Subterranean experience also proved essential in the 1980s when the company branched out once again, this time into Brazil’s important mining industry. The move provided a catalyst for Toniolo-Busnello’s expansion into mineral-rich regions such as Minas Gerais (the Southeast), Goiás (the Central-West), Bahia (the Northeast), and Pará (the North), thus consolidating its presence throughout Brazil’s vast territory. To date, the company has constructed over 115 km miles of underground tunnels for clients from all sectors, including important national and international groups such as Brazil’s Votorantim and Canada’s Yamana Gold. In fact, today Toniolo-Busnello is Brazil’s leading specialist in terms of drilling tunnels for mines. With the sector presently evolving at a rapid pace, mining has become one of the company’s main focuses, and is responsible for between 15 and 20 percent of its revenues.

For Toniolo-Busnello the main source of revenue, however, is derived from another thriving Brazilian industry that the company only began exploring more recently: hydroelectricity. The company first began participating in the construction of hydroelectric plants in the 1990s, but since 2000 the segment has proved increasingly lucrative as Brazil – 90 percent of whose energy needs are met by hydroelectricity – has begun investing in earnest in a multitude of small hydroelectric centers located throughout the country. Capable of generating up to 30MW of energy, these mini-plants – whose construction involves subterranean tunnels – are much more efficient and inexpensive than large facilities, and have little or no negative impact on the environment.

“Today the hydroelectric segment represents between 30 and 40 percent of our total revenues,” declares Busnello, pointing out that the company’s winning of several major contracts was responsible for the astounding growth rate – 180 percent – that it experienced between 2007 and 2008. “Our revenues leapt from R$130 million to R$330 million (approximately $65 to $165 million),” he confesses. “Although we’re currently ranked 30th in the industry, we’re also the heavy construction firm that has grown the most in terms of revenues. And in spite of the global financial crisis, this year we’re expecting to earn R$350 million.”

While hydroelectricity and mining are important segments, Toniolo-Busnello also participates in sanitation, water main, and industrial projects. Meanwhile, as it looks toward the future, the company is refocusing its efforts on the two segments in which it has traditionally had the most experience: railways and highways.

“Although currently roadwork accounts for only 10 percent of our business, there are many new projects taking place and lots of investment, particularly in anticipation of Brazil’s hosting of the World Cup in 2014. We see lots of opportunities in this segment as well as with railways, which are being revived by the government.” Declares Busnello, alluding to plans for the development of a national railway sector that will involve the construction of around 6,000 miles of new railways in addition to reparation of the 20,000 miles already in existence.

AN INCLUSIVE VISION
Underground expertise aside, Busnello credits several key factors for the company’s success, including its credibility throughout the industry, a lean and flexible administration, and a commitment to using only the latest high quality materials and equipment. “We do very little outsourcing, preferring – for reasons of costs and control – to do everything ourselves,” admits Busnello. “Consequently, we’re really on top of the latest technology. Whether it’s updating trucks or machines or buying completely new equipment, we’re constantly investing and evolving in order to achieve the lowest costs in terms of maintenance and the highest confidence in terms of our equipment and services.”

Indeed, Toniolo-Busnello takes great pains to personalize its services. This involves being in constant dialogue not only with its clients, but also with its employees – the company has 2,000 direct and 800 indirect collaborators, – suppliers, shareholders, and with the residents of the communities in which it carries out its projects.

“Every year, we conduct studies with these five key groups to get their reactions to our performance and to find out what we can do better. After we get everybody’s feedback, we concentrate on reinforcing our strengths and working on our weaknesses,” says Bunello. “For us, success is the result of offering engineering solutions and infrastructure that respects the environment as well as all of these individual and collective interests.” In taking into consideration the viewpoints of all those who participate in, and are impacted by, the company’s activities, Toniolo-Busnello proves that its achievements in the tunnel sector owe nothing to having tunnel vision.

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