After its acquisition in 2006 by China's Solartec, Brascabos has invested in boosting production capacity, and is preparing a round of its own acquisitions at home and abroad to further increase output, Jeffrey Matthews reports.
Brascabos, Brazil’s biggest maker of electrical systems for household appliances, has enjoyed strong growth in recent years, and since its takeover in 2006 by Hong Kong-based Solartec has become part of a much bigger, international industrial group with activities all over the world. Sales increased in the years preceding the current economic crisis, boosting demand for refrigerators, washing machines and other appliances for which Brascabos makes parts. That spurred the Brazilian company to open a new factory in Manaus in 2008. Now Brascabos plans to grow more by making its own acquisitions, according to General Manager Glauber Marcal.
“We’re in talks to share relevant space in a factory in Mexico and another one in Brazil. We’re still working on those, so I can’t say more, but we’re in advanced stages in the negotiations for both of them,” he said. Joining the Solartec group has given Brascabos a different model to emulate. Solartec, one of the world’s biggest makers of electrical connections for appliances, including cables, has a very vertical production process. After buying ingots of copper (normally called cathodes), the company turns the metal into cables and has its own PVC plants to provide the coverings. In 2007 Solartec bought a copper deposit in northern China near Mongolia that should start producing for use in the company’s factories in about three years.
Brascabos started operations in 1985 as a unit supplying electrical systems for its mother company, Brastemp, a Brazilian household appliance maker. In 1992 Brascabos merged with two other companies and spun off as an independent business that sold its products to other customers in addition to Brastemp. In 1994 Brascabos moved into a new market after opening a plant to make wire and cables, and in 1998 the decision was made to start supplying auto parts, a plan that came to fruition in 2003 when the company sold its first brush cards and electrical systems to car makers.
The expansion of the industrial sector in the Amazonian city of Manaus led the company to open a plant there in 2000, complementing the work already being done at the factory in Rio Claro, in Sao Paulo state. In 2004 the Rio Claro plant was moved to a different plant in the same area and consolidated with a new production unit, forming a 5,000-square-meter (53,820-squarefoot) facility on 22,000 square meters of land.
The Manaus plant originally occupied space within a production facility owned by Brastemp, so after Brascabos was purchased by Solartec in 2006, the new owner decided to set up a new, independent unit in Manaus. The new unit was completed at the end of last year, giving Brascabos its own 3,500-squaremeter factory in the city. From those plants Brascabos supplies power cables, simple and complex electrical systems for home appliances, electronics goods and cars. The car parts include special sensors, thermofuses, and brush cards to collect power generated by electric motors, electrical current regulators and even anti-theft car alarms for clients including Whirlpool, TRW, Bosch and Mitsubishi Motors.
Brascabos recently completed an investment of R$750,000 in a new business at the Manaus plant. Working in a partnership with Ajax, a Brazilian maker of car batteries that is both a client of and a supplier to Brascabos, the new unit takes new batteries shipped to Manaus by Ajax, charges them with electricity and then sends them to local buyers. “All the engine makers are in Manaus; that’s why we charge the batteries there,” said Marcal. “Suzuki, lots of others, all have factories there. What happened was that, during a conversation with someone in the motor industry in Manaus, we asked them what the local market was lacking, and they said batteries and tires.”
Brascabos decided to stick with the electrical side of the business, and the rest was easy. The charging equipment was developed by Ajax, sold to Brascabos and shipped to Manaus. Now the unit, which started operations in June, receives and charges about 15,000 batteries per month from Ajax’s Sao Paulo plant and has the capacity to charge up to 20,000 batteries per month.
Another recent investment by the company bought new, fully automated equipment that boosted production capacity by about 20 percent. The equipment, purchased last year for about R$3 million, brings the two factories’ total capacity to 51 million electrical components per year, 12 million power cords per year and 216,000 kilometers (134,216 miles) of cable and wire per year.
The factories boast the two new automated lines, another 26 cut and crimp machines that make wire and other components, 13 molding machines to make the covers for cables and wires and other plastic pieces, and more pieces of equipment that between them can make parts and components for more than 200 different product lines.
Those products are developed by, or at least with the help of, Brascabos’ engineering department, which uses the latest development tools to work with customers to design the parts and components they need.
QUALITY MEANS SALES
Brascabos’ success over the years has come from its management’s ability to identify promising markets, and from its workers’ focus on quality. Employees get extensive training in total quality management using Six Sigma and other well known systems. Those extensive efforts have gained recognition from clients including TRW, Embraco, Whirlpool, Valeo and Continental, which have all given Brascabos awards for quality. The company has also earned the International Organization for Standardization’s 9001:2000, TS 16949:2002 and 14001:2005 certificates.
The company meets or exceeds the requirements to gain product safety and quality certificates from Underwriters Laboratories in the U.S., the Argentine Institute for Normalization (IRAM), Italy’s IMQ standards organization and the INMETRO standards agency in Brazil.
The company’s quality-control laboratory makes sure Brascabos’ products meet clients’ specifications. The lab does chemical and flame tests to make sure the products can resist harmful environments, and can analyze the conductivity, wear, and strength of parts as well.
Brascabos’ clients have rewarded the company with quality awards, and also with rising sales. Revenue increased every year since 1986, reaching 124 million reais in 2007, before declining in 2008 because of the worldwide economic recession. Sales fell to 119 million reais last year, and the company expects revenue of about R$100 million for this year. “We know what we have to do to keep our customers happy,” said Marcio Bianchini, key accounts leader for Brascabos’ auto-making clients. “We make sure we make what they need, and supply it to them when they need it, from our plants, which are located in two of Brazil’s biggest industrial areas.”
Brascabos doesn’t just work to keep its customers happy, it also makes sure to protect and help out its workers and the residents of the communities near its factories.
“Protecting the environment, and the safety of our workers, is a big part of our work,” said Bianchini.