Alumasa has spent the last 30 years producing aluminum and plastic products for Brazil's civil construction sector. Now, despite a stagnant Brazilian economy, as commercial director Rodrigo Fontanella confesses to Michael Sommers, hope is on the horizon with the dawning of an "aluminum culture."
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Sometimes ladders are more than a mere metaphor for corporate success. In the case of Alumasa, they quite literally constitute one of the key foundations of the company’s prosperity.
Based in Urussanga, a small town located in the southern Brazilian state of Santa Catarina, Alumasa started out in 1986 producing custom-made aluminum ladders for local construction companies. At the outset, products were made according to individual specifications. It wasn’t until 1990, that the fledgling business began making standardized items on a larger scale when it branched out into the manufacture of aluminum windows for hardware and construction supply stores as well as construction companies. As volumes expanded so did Alumasa’s markets. By 2000, the company was not only supplying aluminum windows to clients throughout Santa Catarina, but throughout Brazil as well.
Low Incomes, High Volumes
In 2003, an important turning point occurred when the company decided to begin producing plastic products for hardware and construction supply retailers. With a focus on items for bathrooms and gardens, the constantly expanding product portfolio runs the gamut from toilet seats and shower heads to buckets and garden hoses.
Along the way, Alumasa’s infrastructure also grew. Due to significant investments in the early 2000s, the company’s industrial facilities, which initially measured 8,600 square feet, grew to 430,000 square feet while its work force increased to 500 employees. Concurrently, the company invested in top-of-the-line equipment and technology such as two extruders and two reflow ovens, the latter used to melt aluminum and produce billets measuring four, five, six, seven, and eight inches. In order to make its own plastics and derivatives, Alumasa also acquired a complete line of injection and blow molding machines and extruders.
Today, in terms of aluminum, the company’s main focus is the civil construction market; standard-sized windows and doors constitute Alumasa’s principal product line, accounting for around 40 percent of its business. Low-priced and geared towards Brazil’s burgeoning lower-income housing market, the company banks on large sales volumes. “We’re very much involved in supplying products for public housing projects,” says Rodrigo Fontanella, owner, co-founder, and commercial director of Alumasa, referring to “Minha Casa, Minha Vida” (“My House, My Life”), the watershed federal government initiative committed to building millions of home for low- and middle-income families. “However, looking forward, we want to become more active in terms of supplying industries – with structural aluminum profiles, for example. We also want to concentrate more on aluminum billets for extruders.”
With respect to plastics – and ladders, which remain an important product line to this day – the company’s target market consists primarily of retailers of hardware and construction supplies. Although the products in this segment are very diverse – and the market is highly pulverized – together, they represent around 60 percent of Alumasa’s business. “The plastics segment is a very competitive market,” points out Fontanella. “Because the profit margins are so narrow, you really have to have a lot of volume. In terms of production capacity for our plastic items, we’re almost at 90 percent. By contrast, with our aluminum products, we’re only at 60 percent of our full capacity. As such, in terms of the latter, there is still lots of room for us to expand in the marketplace.”
When it comes to competitive strategies, Fontanella claims the company doesn’t really adhere to any. “We’re not at all aggressive in terms of marketing,” he confesses. “We work almost exclusively with commercial representatives. With respect to plastics and construction supply retailers, we focus mainly on the South and South-East regions of Brazil whereas with aluminum we work with civil construction reps throughout the country.”
An “Aluminum Culture”
Alamasa’s lack of a combative sales and marketing approach shouldn’t be confused with a lack of ambition for the future. In spite of the the recent economic slowdown that has brought overall growth in Brazil to a near halt over the last two years, Fontanella has great expectations for the future of aluminum, particularly with respect to its growth potential.
“Despite the fact that we expect 2015 to be a difficult year overall, when it comes to demand for aluminum, things are very promising,” declares Fontanella. “Currently, in Brazil, consumption of aluminum is very low. Annually, the average Brazilian purchases approximately 4 kilograms of aluminum goods compared to consumers in Europe and North American where average consumption is around 20 kilograms. Because the Brazilian market is largely untapped, there’s so much room to grow.”
Brazilians’ reluctance to embrace aluminum has traditionally been motivated by the high cost of aluminum in relation to other metals combined with the popular impression that aluminum is more fragile and less resistant than alternatives such as steel and iron. “Today, however, the price of aluminum has fallen and is more competitive with that of steel,” declares Fontanella. “Moreover, the notion that aluminum is weak is becoming debunked by a new generation of aluminum products that have much greater strength and durability and are far more resistant to corrosion.”
To underscore the strength of aluminum, Fontanella points to the fact that 90 percent of automobile and airplane wheels are made out of aluminum alloys – “not to mention our ladders, which are very resistant,” he claims. Increasingly, aluminum is also replacing wood, which in Brazil has become incredibly expensive (by law, in Brazil, only reforested wood can be used for manufacturing purposes). “The culture’s going to change,” vows Fontanella. “It will be slow, but it’s going to happen. Brazil is going to adopt an aluminum culture; and when it does, we’re going to be right there, at the forefront.”