One of Brazil’s leading manufacturers of products and accessories for cargo vehicles, Librelato is on the road to serious growth. Company President José Carlos Librelato spoke to Michael Sommers about what’s new: products, sales centers and opportunities, as well as a new plant and plans to take the 70-year old family-owned company public. But one element will never change, and that’s the company’s commitment to its clients and its workers.
The global economic crisis of 2008 spelled catastrophe for many companies. But for Librelato – a Brazilian manufacturer of trailers, platforms, chassis and other cargo truck products and accessories – it provided an opportunity. “We decided not to reduce any of our investments when the crisis hit,” reveals company President José Carlos Librelato.
The decision wasn’t hard; after all, Brazil has already faced many financial crises. “This was merely one more,” comments Librelato,” and as it was with all of the others, we believed that this would only be temporary.” His optimism wasn’t misdirected or imprudent. “Brazil’s construction segment was booming and foreign investment was still strong,” he observes. “Our experience was also strong, so we continued full speed ahead.”
Results can speak for themselves, but Librelato is happy to describe the upshot. “Just look at what happened,” he enthuses. “In 2008, we grew by 90 percent. The following year, we grew by yet another 90 percent.”
RIDING THE INCOMING TIDE
After performing so well during tough economic times – and bolstered by Brazil’s recovering economy – the company is gearing up for even larger scale growth.
Traditionally, one of the company’s most important segments is its civil construction center, which is headquartered in Orleans, a town in the southern state of Santa Catarina. Recent circumstances bolster Librelato’s position: Over the last few years, spurred on by foreign investment, government incentive programs, and increased buying power of Brazil’s lower socioeconomic classes, the country’s real estate segment has taken off like never before. “Because of the enormous potential present in Brazil, our civil construction branch has realized significant growth in recent years,” says Librelato. “Unlimited opportunities present themselves between the upcoming 2016 Olympic games and the 2014 World Cup tournament, as well as the governments growth acceleration program,” says Librelato.
The second phase of that program – called PAC – involves the investment of billions of U.S. dollars in areas ranging from energy to housing and sanitation. “Again, this involves unlimited opportunities, and all projects involve the erection of structures that, in turn, require the kind of transportation solutions that we offer,” describes Librelato.
HISTORY OF INNOVATION
Founded in 1940 by Berto Librelato, the company actually began life as a sawmill positioned in Santa Catarina’s interior. By the mid-late 1960s, this modest family enterprise forayed into the transportation segment when it began making wooden bodywork and accessories for trucks at its newly constructed factory in Orleans. Eventually, in the early 1990s, the company began producing its own line of products (such as container chassis, transport platforms, and tilt-off trailers for the transportation of rubble and debris as well as specialized trailers for the transport of specific goods).
Subsequently, Librelato’s product portfolio expanded enormously to include hydraulic tilt trailers, tow trailers, dump and transfer trailers, and mechanized waste disposal trailers, as well as lightweight trailers on chassis. During the course of the company’s evolution, its innovative designs and technology revolutionized it market segment, specifically by introducing cutting-edge solutions such as the first articulated semi-trailers (launched in 2000) and the articulated open-load semi-trailer (introduced in 2007).
“We don’t develop products just to transport goods. Rather, we develop products designed to solve problems, and that is one of our biggest strengths,” declares Librelato.
Indeed, product design pinpoints specific needs related to:
- Those who drive the trucks;
- Those who load cargo;
- Those who unload cargo.
In each case, the cargo may remain the same but the logistics, requirements and culture of the involved professionals and businesses may be quite different. “Ultimately, we’re not just selling a product, we’re selling a technology,” says Librelato.
Currently, the company focuses on developing technology specifically geared to markets previously untapped or underexploited. These include sugar/alcohol, grains, liquids/combustibles, and lumber segments. With this goal in mind, Librelato’s engineers create prototypes for models that fill out pre-existing lines and introduce new designs such as box trucks and siders. “We constantly improve our products,” says Librelato. “In Brazil, key transport issues relate to security and weight. If you reduce cargo by 200 kilos, you’ll significantly impact speed and safety. That’s why our engineers constantly strive to come up with new solutions.”
In a country where distances are enormous and railways are virtually non-existent, it’s hardly surprising that the cargo truck segment continues to grow in leaps and bounds. Last year, Brazil sold 100,000 trucks. This year the number is expected to rise to 120,000. Librelato is positioned to expand along with the market. Forward movement is further driven by the fact that its client base is uncommonly diverse. “On one hand, we have Vale, the largest mining company in the world,” indicates Librelato. “But we also cater to a small town bakery. No matter their size, all clients are equally important.”
Librelato further differentiates itself from competitors by making itself quite active in the public sector. Indeed, the company considers this its trump card. It portfolio includes contracts with numerous municipal, state and federal government organizations. All of these entities invest in cargo vehicles. “In this segment, we’re the company that has experienced the most growth in the last seven years,” reports Librelato.
The company is the fifth largest company in the sector. It then pursued fourth-placement ranking within a year. This wasn’t a great stretch. After all, Librelato has grown more than 1,000 percent in the last several years. This growth has not only resulted from the enlargement of it national distribution network; the company is also investing in enlarging its output lines (via new machines and equipment). Moreover, it has invested in new production units in Criciúma and Içara, both in the south of Santa Catarina. But, it doesn’t stop there: Company planning includes the valorization of the human capital, presented by the contracting and the qualification of hundreds of collaborators reached after courses and training.
Growth indices were presented by Fábio Zomer, head of Librelato’s Finance Department. Statistics indicate that new markets are being conquered each day, and Librelato is leaving many competitors behind. In the months of February, May and July of 2010, it stamped in the fourth placement and closed last month with a participation in the market of six percent.
Comparing the first quarters of 2008 and 2010, the market had a fall of -2.42 percent while Librelato achieved growth indices of 52.57 percent. Regarding the comparative of license plate (emplacamentos) after 2004, Librelato registered a growth of 131.84 percent, while the sector’s first-placed company registered barely 21.10 percent.
In the last eight years (2001 to 2009), the indices of growth intensified significantly. Librelato demonstrated more than 1,000-percent growth and the chart of collaborators with a growth of over 1300 percent from 2002 to July/2010. The company is already working on its strategic planning for 2011 and will soon toss new products into its catalogue.
In the current year, the company expects to take in R$300 million (roughly US$175 million) in revenues, having produced 300 units for heavy cargo vehicles and 200 chassis units (for light cargos) each month. The light cargo segment constitutes a big market in Brazil, particularly in Rio de Janeiro and São Paulo, where legislation forbids heavy cargo trucks from entering the city. “Brazil’s two market leaders, Randon and Guerra, don’t even deal with the light segment,” Librelato points out, adding that he sees a lot of potential in this line.
Meanwhile, Librelato has big plans. These include doubling monthly production levels of its heavy line products to 500 units by next year, building up its export activity. Exports currently represent five percent of business. It wants to increase this to 10 percent (although this goal depends upon stabilization of the weak U.S. dollar). This will help it reach revenue levels of R$1 billion (US$600 million) in the next three years. Lofty ambitions, true – but the company is well on its way to meeting its goals due to some massive transformations, including the decisions to take the family-owned company public and to expand its sales centers from 30 to 42 by the end of 2012. Such expansion will provide it with coverage in all major cities residing in all of Brazil’s states, including all-important São Paulo.
The company is also investing heavily in its production facilities. Aside from its three plants in the Santa Catarina towns of Orleans (323,000 square feet of constructed area), Capivari (215,000 square feet), and Içara (215,000 square-feet), the company is inaugurating a fourth unit in the town of Criciúma (270,000 square feet). It’s no coincidence that all four plants are positioned close together. “A big problem in Brazil is qualified labor,” concedes Librelato. “But we’ve been working with people in this region for generations.”
He continues: “Today, products in this segment are basically the same; the difference is that we’re a company that values its people. If we’ve grown more than our competitors, it’s because our workers are well trained and very motivated. We invest a lot in terms of our human resources and extend a great deal of respect to our workers. For instance, when the economic crisis came along, the first strategy the many companies adopted was firing its people.”
This is wrong, he feels.
“You can’t fault the workers when the economy hits a rough spot. In this company, we place people first. My father championed this vision when he started the business, and his approached continues to have a lot of value. It’s one of the reasons we continue growing. Everyone in our business – from the vice president to the receptionists and the cleaning staff – knows what goes on inside the company. Everyone has a stake in our success.”
Indeed, in the company’s vision, everyone is equal, as they make substantial contributions that keep Librelato functioning.