Brazil is one of the world’s top potential spenders. Munitions manufacturer IMBEL maintains a piece of this market while targeting exports and civil markets for its firearms and training services. Christopher Van Buren takes aim at this company’s double-barreled marketing strategy.
The other day, my brother-in-law showed me the Argentinean-made Colt pistol he used in Viet Nam. You would never know that this American-designed handgun actually had been manufactured in South America. But it seems that South America has long been providing arms to the rest of the world. Today, Brazil’s globalization efforts puts it into the spotlight in arms manufacturing and companies like IMBEL provide many different products. IMBEL manufactures handguns, automatic machine guns, chemical explosives, high caliber munitions, military communications devices, and accessories.
It’s a robust line of war supplies, but IMBEL is not just in the war munitions business. Its markets include military, civil police, private security forces, export, and private business. The company’s resourceful management has kept its five main manufacturing facilities operating by maintaining older equipment while continuing to produce new, cost effective handguns and machine guns for its markets.
“We have great technology and production. Innovations like our communications systems are used all over the world, but where we compete well is in pistols and machine guns. Our machine guns are exported all over the world,” says Ubirajara D’Ambrosio, IMBEL’s CMO. Approximately 20 percent of IMBEL’s machine guns are exported with the greater part remaining in Brazil for its military and police needs.
Targeting the Markets
Brazil has four principal police forces – civil, military, highway and federal. Each is responsible for a different aspect of the law. Then there are the different branches of the armed forces and a host of special law-enforcement agencies. “We supply the civil police, the military police and the armed forces,” Ubirajara explains, “but the civil market is much greater for us than the military market.”
And what the civil market wants is pistols. Lots of pistols. “We already sell to the highway patrol, the civil police and different government agencies. Now we are beginning to sell to the Federal police too. The military market is stable, but the police are growing.” IMBEL can produce as many as 6,000 pistols per month and another 1500 machine guns. Not only is the civil police force keeping up with the growing population and skyrocketing violence in the country, but new laws allow Civil Police officers to have and wear their own guns on personal time. “This is important, because these officers will want to buy the same guns they use at work, guns from IMBEL.”
IMBEL’s guns are made to serve the police, from the designs to the trigger and safety mechanisms. Plus, IMBEL offers training and technical workshops for police. “The federal police just started training with our pistols,” imparts Ubirajara. The company has invested significantly into its police training facilities, which offer workshops in tactical maneuvers and weapons handling by over 35 instructors. It includes lodging facilities and is the only center in Brazil for this purpose. “We have a long partnership with the CBC [Brazilian ammo manufacturer] and other large companies to provide training.”
But IMBEL has its sights on another market and has recently lowered its participation in the training facility. What could be better than selling guns to the police? In Brazil, an even bigger market is the up-and-coming public safety business. With so much crime in Brazil’s populated areas, armed security is one of the fastest growing business segments in the nation. Most business buildings and many private ones are patrolled by armed security guards 24 hours a day.
Then there are the exports. Most of IMBEL’s pistols, around 60 percent, are exported to countries like the United States, Venezuela and Uruguay. “All our products are designed from our factory for optimum price and quality,” asserts Ubirajara. “Our greatest market is in exporting pistols to the United States through distributors like Springfield. We work on increasing productivity and production without increasing price.” Ubirajara credits IMBEL’s strong partnerships with Brazilian metallurgical giants Alcan and Alcoa for the company’s cost-benefit ratio, along with its innovative ways of working with the materials, including modern forging methods.
“We grew by finding the market opportunities. Some of our plants grew more than others and we ended up with some out-of-date products too. But we’ve forged great partnerships with some big companies.” IMBEL maintains five plants in the Southwest of Brazil, a commercial headquarters in Sao Paulo and an administrative office in the country’s capital of Brasilia. The company employs 2,000 workers in all of its facilities combined.
Profit in Obsolescence
The company’s electronics technologies are among its newest developments. The line includes military communications equipment, radios and software. But since the Brazilian military uses so little of this equipment, production remains low for these products. Such is the case for many of IMBEL’s more advanced technologies. “Our explosives are produced with our own nitrocellulose for excellent quality. But we have very low production and we’re not competitive with private companies in explosives and accessories. Everyone creates these chemical products,” explains Ubirajara.
So IMBEL is finding new ways to serve the market using its facilities and production capabilities. Since its chemical products are becoming obsolete, IMBEL is marketing its facilities to national and international companies as “for hire” chemical plants. “Companies come and work inside IMBEL’s facilities,” explains Ubirajara.
“They can produce more without investing in additional facilities and equipment. They can put their investments into their new technologies.” IMBEL has turned other obsolete aspects of its business into new profit centers. Once the company’s 90mm munitions for combat vehicles were in demand. Today, the market is diminishing. “We sold a lot of these for the CASCAVEL vehicles. ENGESA made URUTU and CASCAVEL for the whole world and we made the munitions. Now, they are not used much.” So IMBEL has made a business of renovating and servicing these old vehicles, and sometimes re-selling them to foreign markets,such as Latin America and the Middle East. “We offer a maintenance contract for these vehicles and our teams go out there or the vehicles are sent here to Sao Paulo.”
IMBEL is moving with the market. The company is beginning to see action with its 40mm and 45 mm machine guns on the international market and it continues to use its advanced productivity and quality materials to gain a competitive advantage for its pistols and machine guns. “We have no growth in chemicals, only in handguns and machine guns…more than 10 percent per year.”
Ubirajara continues to look for better suppliers and more advanced production methods to increase profitability without increasing the prices of his products. The company’s double-barreled approach: To form strategic partnerships for shared growth and to work with two key pistol markets (military and civil). He has also contracted with a national management consulting team to improve management, production, project coordination and administration capabilities. “They see our faults in management and logistics,” he says humbly. Meanwhile, IMBEL is armed and ready for a new phase of business and profits.