There are many Brazilian companies that manufacture steel structures for industrial works and buildings, but Brafer is one of the top five in Latin America. Co-founder and vice president Luiz Carlos Caggiano Santos explains to Michael Sommers how the company has remained structurally sound for over 30 years.
I used to work as a civil engineer,” explains Luiz Carlos Caggiano Santos, vice president of Brafer Construções Metálicas. “So did the founder and current president of this company, Marino Garofani. When we started Brafer in 1976, we had vast experience in metallic structures, and ultimately it’s this knowledge that that has given us a major advantage in the markets in which we operate.”
The markets in question are both vast and varied. From its main plant and head office in Araucária – a suburb of Curitiba, capital of the southern state of Paraná – Brafer designs, produces and assembles steel structures for clients that range from automobile factories, sports facilities and stadiums to supermarkets, shopping centers, and airports. It even made the stunning Wire Opera House of Curitiba, whose inspired domed-shaped structure of polycarbonate, and 2,400 seats fashioned out of tubular structures and wire cloth, helped transform the building into the postcard emblem of Panana’s capital city and one of the most celebrated examples of contemporary architecture in the country. More recently, it has also had success in the energy and telecommunications field, supplying pre-manufactured pieces for most types and heights of telecommunication poles and towers, transmission line towers, substation steel structures, and platform structures for petrochemical reactors.
Sources of Growth
“The telecommunications and energy industries have been an interesting source of growth for us in recent years. And one of our biggest clients is Petrobras (Brazil’s national oil company),” says Cagggiano Santos. “However, most of our business revolves around making structures for industrial buildings.” Aside from fixed structures such as roofs and sheds, when civil construction companies require structural elements such as columns, beams, bracings, and stairs to help ensure quality and safety in the erection of multiple-story buildings, Brafer supplies them with structural pieces. Among its specialties are carbon steel grates for platforms, passageways and stairs, a wide range of welded profiles, and zipped roofs, a new concept in which steel panels, fixed to a structure with clips, create a roof system that allows for thermal expansion and shrinkage, while offering protection and resistance.
Says Caggiano Santos: “Around 15 years ago, we took a serious look at Brazil’s industrial sector and we predicted that certain segments – namely mining, paper and cellulose, energy, and steel industries – were going to experience major growth. In order to take advantage of this phenomenon, we really changed our tactics. We decided to become much more aggressive in conquering new clients. We imported state-of-the-art machinery from the United States and Italy that allowed us to manufacture metal parts with numeric control in terms of cutting, drilling, laminating and all other processes. As a result of these changes, we experienced an enormous boom in business, with these expanding sectors really leveraging our growth over the past decade. Today, between 70 and 80 percent of our sales volume comes from private companies in these industries.”
Indeed, in recent years the company has enjoyed annual growth rates of between 10 and 20 percent across the board: in terms of production capacity, sales, and revenues. Moreover, for the periods of 2005-2006 and 2006-2007, the company enjoyed annual increases in revenue of 30 percent. This year, it expects revenues to approach $70 million. Says Caggiano Santos: “Both the Brazilian and global markets are undergoing major expansion and our products are very much in demand. For this reason, we are working at full capacity.” For Brafer, this translates into the production of 2,000 tons of steel equipment per month at its 270,000-square-foot Araucária complex, which includes a special service center for welding profiles as well as a plant for hot dip galvanizing, a low cost process that significantly increases the durability of steel pieces.
Says Caggiano Santos: “Every year, we’re modernizing with new equipment and we’re hoping to expand our manufacturing facilities. We are very First World, capable of competing in terms of technology and quality with companies in the United States and Europe. In fact, until recently we were having success in exporting to the U.S. We only stopped because of the currency crisis (brought on by the plummeting U.S. dollar, which over the last two years has lost close to 40 percent of its value against the Brazilian real). Moreover, in terms of the rest of Latin America – we have major clients in Chile and Uruguay – we have to compete with suppliers from the Pacific Rim. Until 2006, exports made up 20 percent of our total business. This year, however, due to the exchange rate, exports are down to zero. Even though we improved in terms of efficiency and diminished our margins, our prices were too high. So, instead, we are focusing on the national market which, after being stalled for a few years, is now really making up for lost time.”
To compete with the handful of other firms that make up its stiffest competition in the domestic market, Brafer has a few aces up its sleeve. One of these is the company’s complete verticalization. “The only thing we don’t do is make steel,” jokes Caggiano Santos, “although we do buy our steel sheets from Brazilian suppliers. We also buy paint and screws, but everything else we make ourselves.” As a result, Brafer´s structures are galvanized, mounted, painted, and fully assembled at its plant, before being delivered – in record time – to its clients.
Indeed, speedy delivery is another one of the company’s fortes. Declares Caggiano Santos: “We’re constantly focusing on how to provide better service to our customers, particularly in terms of deadlines. In the Brazilian market, everyone has more or less the same technologies and products, so what really makes a difference is the services you can offer. We are very, very rapid and this is a major advantage to doing business with us.”
Meanwhile, another company strong suit is not what it offers, but what it is: a firm owned and operated by three engineers, which, according to Caggiano Santos is not only a rarity, but a trump card. “All of our major Brazilian rivals have corporate directors that are hired from the outside, whereas we are owners who not only run the company hands-on, but also possess mechanical know-how. Our clients appreciate that the people in charge of the company grasp the technical aspects of the products as well as the fact that we, the owners, are actually taking care of them personally. This accounts for the fact that they keep coming back to us for subsequent projects. After all, there’s nothing like being attended to by the actual owner of the company.”