The Brazilian affiliate of KSB, a leading manufacturer of pumps and valves, has obviously benefited from the name and experience of its German parent company. However, as President Carmelo Fernandez Moldes explains to Michael Sommers, the cutting-edge products KSB Brasil has designed for domestic markets such as sugar and petroleum have not only conquered Brazil, but are also attracting global interest.
KSB has been synomymous with pumps and valves since industries began using them. Founded in 1871, by the early 20th century, the German company was already a leading European manufacturer of both items. Beginning in the 1940s, KSB decided it wanted to become a world leader as well. Subsequently, it began opening affiliates around the globe in countries as far-flung as the U.S. India, and Argentina. One of its first forays abroad was Brazil, where in the aftermath of World War II, large-scale industrialization was still in its early stages. In 1957, following the construction of a plant in Varzea, São Paulo, KSB began its conquest of the Brazilian pump market.
A PIONEERING PRESENCE
Backed by (what was at the time) close to 90 years of experience in Germany, from the outset KSB Brasil was viewed as a pioneering force. Its plant was state-of-the-art and its first products – industrial and water treatment and transport pumps – featured technology that was considered very vanguard. Throughout the 1960s, growth kept pace with the development of Brazilian industry. However, in the 1970s, when Brazil was caught up in the “Economic Miracle” – a period of fantastic growth driven by industrial expansion and mega projects dreamed up by the military government – KSB’s fortunes also soared. The Varzea plant was expanded, and high-tech, specialized products were developed to supply thriving market segments such as the metallurgical, mining, sugar, and petroleum industries. The two latter industries would prove particularly important for both Brazil and KSB. KSB began supplying pumps to the sugar industry in the 1970s when, in response to the oil crisis of 1973, Brazil came up with the famously innovative solution of using ethanol from sugar cane as fuel for motorized vehicles. In the 1980s, as offshore oil drilling technology developed, KSB began supplying pumps for the first offshore platforms built by petroleum giant, Petrobras.
“Moving into these markets marked a period in which we began developing very sophisticated products,” recalls KSB Brasil’s President Carmelo Fernandez Moldes. “We were creating pumps for regular day-to-day domestic and industrial use, but we also began contributing to very important large-scale projects, particularly in sectors such as water treatment and production and refining of oil. Our operations were constantly expanding, and we opened up new sales centers around the country.”
To keep up with the soaring demand for its products, in 1982, KSB inaugurated its own 61,000-square-foot foundry in the town of Americana, São Paulo, where it could produce the various metals – irons, bronzes, and special alloys – required for its pumps. Currently, two-thirds of the foundry’s metals furnish KSB’s needs, while the remaining one-third is sold to other companies. More recently, in 2006, KSB purchased a 26,000-squarefoot factory in Baruari, São Paulo, and began manufacturing the same valves (90 percent of which supply oil and gas companies) that its parent company had been making for decades.
CONSOLIDATION – AND EXPANSION
“Having conquered the marketplace for pumps some time ago, we’re now basically consolidating our lead,” points out Moldes. “However, valves have a whole new potential for us. And although we’ve only just begun, we’re growing a lot. In five years, we hope to be one of the top three producers of valves operating in Brazil. Although, right now valves only account for 10 percent of our products and services, our goal is to have them represent 30 percent of our business.”
At the moment, business is doing very well. Over the last year, KSB has experienced a 15 percent increase in revenues and a 20 percent increase in sales The company’s goal right now is to increase production capacity in all its plants to keep up with demand. It is even on the lookout for a new São Paulo unit that would it allow it to expand significantly.
In the meantime, in order to stay ahead of the pack, KSB constantly strives to keep its current plants and products in the vanguard. “We’re always in contact with the R&D centers in Germany,” says Moldes, pointing out that KSB is part of the GMN (Global Manufacturing Network). “Most of our products are often designed here – after consulting with clients whose requirements are often specific to Brazil – and then we send the project to Germany for revision. However, we also have our own very highly regarded labs and technicians in Brazil and our testing center is a reference within the industry.”
Located at its 72,000-square-foot Varzea plant, KSB’s pump testing center is one of the biggest and most modern facilities of its kind in Latin America. Here, technicians carry out tests on all types of horizontal pumps, with a potential of up to 5,000 MW. KSB has also earned ISO: 9001, ISO: 14000, and OHSAS-18001 certification, high standards that are important testaments to the security and reliability of KSB’s products. “Our clients are very demanding, but they know they can trust us, and this leads to us being called to take part in very large projects,” says Moldes. “We make really large pumps – one or two of which may supply an entire factory. You can imagine what would happen if there was a problem. We never have problems.”
Moldes is quick to point out that investment in technology is useless without investment in its work force. A significant number of KSB’s 1,000 employees are highly trained engineers who not only contribute to projects, applications, and in-the-field service, but also work directly with clients on new projects. “Our international reputation really helps us a lot in terms of customer confidence,” says Moldes. “But the only way to be competitive is to be up to date. We have the best equipment and technology. But most of all, we have the best team. Our management strategy really focuses on workers and the fact that we have so many long-term collaborators is invaluable.”
Concurrently, the company’s marketing strategy is to focus its attentions on certain important industries that are really taking off in Brazil – namely sugar (due to the production of ethanol) and oil (boosted by the recent discovery of major offshore reserves). “The fact that we’ve been supplying these markets for over 30 years gives us a lot of leverage,” confesses Moldes. “We are able to help our partners stay on the vanguard by providing technology for new applications that are emerging, particularly in terms of offshore platforms and refineries.” Moreover, KSB’s expertise in these areas is now proving to be a major asset internationally as both ethanol and oil have become increasingly coveted commodities in the global marketplace. “A lot of the equipment and technology that we created over the years for the Brazilian market are now sought after by other countries as well,” says Moldes. At the moment, exports – to the U.S. Germany, Asia, and Latin America – represent 20 percent of business, but this figure will undoubtedly increase over the long run.
Although KSB’s future may be tied to expanding along with key emerging markets, the company’s staying power is due to the fact that its products are present in all markets. “The competition in this area is very tough,” admits Moldes. “In Brazil, our biggest rivals are also major multinationals with highly recognized names and lots of experience. Sulzer specializes in the petroleum sector, Floserve focuses mostly on water supply, and Weir is the leading maker of pumps for the mining segment. However, overall, our participation is larger than anyone else’s. In terms of total market presence, we’re number one.”