February 26, 2014 An Investment Strategy That is Paying Off

Volume 17 | Issue 1

Brazil's largest producer of agricultural machinery invests in constant evolution in one of the country's most important industries. Reuben

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Stara SA manufactures the broadest range of agricultural machines, and offers the best-prepared after-sales service in Brazil. With over 50 years of steady growth, Stara invests in its plants and people to ensure opportunities for growth.

The company has made wise decisions in negotiating the challenges of a notoriously unpredictable market. The proof lies in annual revenue growth, which has increased by more than 15 times in the last seven years to one billion Brazilian reais (around $430 million).

Stepping up to domestic and global demands, Stara has plans to expand infrastructure and sales borders in the future.

“We are modernizing and improving our production methods and investing in internationalization,” affirms Company President, Gilson Trennepohl.

Making History
Founded in 1960, Stara was the result of a division of a partnership between Johannes Stapelbroek and Gerrit Rauwers, who had opened a forge for assembly and maintenance of agricultural implements. Stapelbroek and his two sons established the company in the city of Não-Me-Toque (Rio Grande do Sul state), to produce farming machinery and released the first ever weeder in Brazil. The weeder featured wheels, targetable accessories and suspended shanks and marked the beginning of Stara’s now long-standing tradition of creating innovative solutions for farmers.

The company followed the developments in Brazilian agriculture, which Trennepohl describes as falling into three phases. The first, from around 1950 to 1970 saw the start of mechanized farming – a period when the first weeding machinery was introduced.

“From the 1970s to about 2000, agriculture underwent revolutionary changes. Production today would probably be two-thirds less without the progress made during this time,” Trennepohl says. For Stara, change included expansion of the company’s industrial area.

In 1982 Stara went public, bringing new partners, ideas and capital. The company entered a new generation of growth – changing management strategies while keeping the ideals of the founders.

1999 marked another important step for Stara – a joint venture with German company Amazon Werke. The project brought the company to the final stage of the Brazilian agricultural developments that Trennepohl identified as precision farming.

The first precision farming project was created under the name Aquarius in 2000. The project continues to research precision machinery and operations today, forming the largest database of its kind in the world. “Stara was a pioneer of precision farming in Brazil. Não-Me-Toque is the capital of precision farming and our company is respected by producers and suppliers alike for its contributions to the industry,” Trennepohl explains.

In 2001, a commercial alliance with Sfil Industrial Agrícola Fortaleza Ltda was formed for the planter and seeder regional market – Stara Sfil. The partnership led to Stara becoming one of the first companies to implement direct planting machinery, in real time, in Brazil.

Subsequent years and changes in company partners brought Stara to the hands of the third and fourth generation of the Stapelbroek family. Negotiations with German shareholders resulted in the sprayer manufacturer gaining control over Stara and the plant was greatly improved. An increase in the product portfolio also strengthened the brand allowing a rising participation in domestic and international markets. By 2008, the company was considered to have the most complete line of agricultural machinery in Brazil.

Strategic investments made in 2009 guaranteed a larger share of the market and sustainable growth. Stara acquired SPW (manufacturer of self-propelled sprayers) introducing a new product to the extensive line – the only self-propelled sprayer in Brazil to be shipped with a technological kit. In the same year, the company also directed considerable investment at its foundry for cast iron machine parts in Carazinho.

“In 2010 we celebrated our 50th anniversary, focusing on our pride in being a family company, offering transparency, clear results, sustainable growth, trust and commitment. Planning and strategy are our foundations and maintain the solidarity of our brand,” Trennepohl affirms.

Products and Parts
Stara’s products are classified into six areas: transport, fertilizer application, sprayers, movement, planters, and corn header. “The unifying factor in all of our product divisions is precision farming,” Trennepohl says.

Each area offers a broad range of different tools and machinery tailored to specific needs, crops, and soil types. Importantly, each area is of equal weight in terms of revenue. “Efforts are carefully balanced to avoid dependence on one implementation or specific market. The objective is to provide all-round machinery for the producer – not only focus on soil preparation for example,” he clarifies.

Stara has grown its product lines through adding innovative products, which benefit from the company’s distribution network and contacts and have created a consolidated portfolio.

Company quality and reliability is also embodied by the original parts the company produces. Carefully manufactured replacement parts, delivered punctually, increase the farmers’ productivity and durability of Stara’s machines. Constant concern and investment in products demand the latest innovations and technology for manufacturing methods and processes. All machines and parts produced in accordance with ISO: 9001.

As well as safety, packaging, and high quality raw materials, Stara is investing in expanding its infrastructure and staff training.

Building a Bigger Future
Stara currently has three facilities in Brazil. The 80,000-square-meter headquarters in Não-Me-Toque, where the company was founded, houses the factory and administration offices. Stara employs 2,660 staff in total, including the forge and painting unit in Carazinho and third factory in Santa Rosa (also in Rio Grande do Sul).

“We are currently investing heavily in increasing the production area of the Não-Me-Toque plant. Excavation is complete for the construction of a three-phase extension plan, which will increase the size of the factory to between 150,000 and 160,000 square meters by 2015,” Trennepohl reveals.

Simultaneous investments in Santa Rosa will move the existing plant to new, larger, and more modern premises.

The motivation behind bigger plans is an even brighter future. Stara is already one of the leading agricultural machinery companies run with Brazilian capital and exports to 35 countries. “South America represents between 50 and 60 percent of exports – we also export to Eastern Europe and Africa,” Trennepohl says.

Although Stara does not presently export to the United States, Trennepohl does emphasize the company’s interest in North America: “We are analyzing partnership proposals and the possibility of acquisitions to enter the US market.”

Today, exports are responsible for 12 percent of total revenue, but Trennepohl says this will increase to 25 percent by 2017. His predictions are supported by the huge rise in annual revenue over the last seven years: from $28 million in 2006 to an estimated $430 million this year.

In the future, Stara (currently 99.64 percent owned by the Stapelbroek Trennepohl family) plans to open capital to remain competitive. A growing number of multinationals setting up shop in Brazil (especially in the last five years) has tightened the market and together with exchange and interest rates creates industry challenges.

“We made our mark in the industry through constantly increasing productivity and through making durable, reliable machines that maintain their value,” Trennepohl says.

Despite evolution and innovation, it is the company’s staff that Trennepohl hold responsible for the Stara’s successful strategies: “We work on offering opportunity to our people – every role in the company is important and without our dedicated staff we would never have achieved market leadership,” he concludes.

With record-breaking growth in revenue and constant focus on infrastructure, technology and staff, Stara never falters in producing intelligent farming solutions. As performance soars, a closer look at the company proves that success has been achieved through careful planning with feet firmly on the ground.

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