Marie Thomas discovers the humble origins and metamorphic growth operations of SIMISA, Brazil’s largest supplier of steel castings and turn-key plants for the sugar and alcohol industry.
If you ever thought that turning a small sugar mill into a heavy metal castings factory, quadrupling the size of operations, and then selling your product to international markets was merely an exercise in futility, you’d be wrong, because this is the story of Simione Metalúrgica Ltda. (SIMISA).
In 1982, the Sao Geraldo Sugar Mill opened in Sertãozinho in the state of São Paulo, Brazil. Located in Brazil’s largest sugar and alcohol hub, it was close to state highways with easy connection to major industrial centers. An aerial view shows mills and refineries dotting the countryside and acres of cane fields with small roads linking fields to mills and mills to refineries. Like most sugar mills in Brazil, Sao Geraldo was mostly self-sufficient, using steam power for the mill and electricity for operations, both generated on site.
The grinding mill, as a juice extraction process, is used in 98 percent of Brazilian sugar mills and distilleries. Brazil produces more sugar cane, more sugar, and more sugar ethanol than any other nation in the world. The insoluble part of the cane, the bagasse, is recycled, usually burned, which can easily provide more energy than is needed to power the mill, so excess energy is sold to the national grid.
Although this is sugar country, the mills here produce ethanol as well, the source of power for most of the automobiles in Brazil. Brazil also produces more sugar ethanol than any other country, leading the world with a production of 12.5 million cubic meters out of a total of 33 million cubic meters globally.
Forty-six percent of primary energy production in Brazil is sourced from renewable energy and nearly 15 percent comes from sugar cane. Every step in sugar cane processing is timed to keep the cane and the liquid sugar moving, minimizing the potential for sediment and residue buildup in the equipment.
A breakdown can cause crucial delays. Early in the process, the cane may spoil if not processed quickly. Later, the boilers full of sugary syrup may not heat to the right temperature or may cool at the wrong point, so until broken machinery is fixed, time is serious money.
ON-SITE REPAIR BECOMES PROFITABLE
Fortunately, a young manufacturing worker at Sao Geraldo by the name of Adelino had a unique mechanical aptitude and a genius for fixing things. As a friend of the mill’s owner, he built a small machine shop in a back room to permit the factory to repair its own roll mills. When something broke, it helped him quickly get things running again. As his skills grew, so did the savings Sao Geraldo reaped from his equipment repairs. This soon put him in demand to repair equipment at other sugar mills throughout the area. So Adelino became a traveling repairman – but he was already thinking about settling down.
Over time, Adelino had worked for every sugar mill for miles around. Keeping the machines running was the life blood of the area’s mill industry. And this gave him an idea. He had refined his little work shop into a fine large machine shop. So, he thought, instead of Sao Geraldo’s machine shop being used just for its own equipment, why not multiply its profitability by using it to service all the mills in the area?
It was an ambitious idea, but a well-equipped machine shop with a man like Adelino at the helm could accomplish fast, efficient repairs that many companies simply couldn’t get at any price. This idea opened the door to a period of explosive growth for the mill. The fine performance attained by the parts that were cast and machined for Sao Geraldo’s machine shop customers proved the plan. Adelino was as clever a businessman as he was a machinist.
A FRIENDLY TAKEOVER
In 1986, with the backing of collaborators and shareholders, Sao Geraldo’s one-time machine technician made an offer to buy the company and take it in a different direction. He saw a future in building up the company’s mechanical capabilities to become an active service center for the area’s sugar mills. The sale was approved and Sao Geraldo’s new owner and president, Adelino Fortunato Simione, took over and changed the name to SIMISA – Simione Metalúrgica Ltda.
SIMISA started its official operations by supplying spare parts for the sugar mills and refineries. Since then, SIMISA has become one of the leading companies in the sugar and alcohol industry, both in Brazil and abroad, serving some of the most important segments of the “siderurgica” market – businesses within the industries of alcohol and sugar production, steel, mining, ironworks, cement, minerals and metals, machinery, hydro-generation, sanitation, chemicals, and automobiles.
PRIVATIZATION OF SIDERURGICAS
In 1992, privatization was becoming common in Brazil. For some siderurgicas like Cordinorte – Cia. Siderúrgica do Nordeste, a large company in the Northeast that had fallen into financial trouble, it spelled disaster. When its bank foreclosed, Cordinorte was bought by the Gerdau group, an investor in siderurgica. Cordinorte’s aluminum manufacturing plant was located near Gerdau, so buying up the ailing company eliminated the competition and split up its assets.
Adelino saw this as an expansion opportunity, and in September of that year he purchased the remainder of Cordinorte’s machines, boilers, and equipment from Gerdau. Until then, Simisa had only manufactured cast iron, but as a result of this acquisition it immediately obtained a permit to begin fabricating steel. At the same time, Simisa made numerous other investments in machinery, human resources, technology, and a new quality management program, as well as beginning exports of its sugar and alcohol to Mexico.
Simisa’s sales and workforce grew as both workers and experienced management were hired. By the end of 1994 the company was ready to enter another new market: exporting steel to Europe. Domestic sales were also building, both in the sugar and alcohol industry, and for steel products of all kinds for the siderurgica markets of machinery, equipment, and automobiles. New technology in grinding equipment enabled Simisa to increase its mill output and machining capacity, which played a major role in bringing siderurgica into its own in Brazil’s Northeast. By 1995, Simisa’s astounding growth meant reinventing itself from a family business operation into a professional company.
The evolution undergone by cane grinding mills in the last 30 years substantially transformed their grinding capacity. This was especially marked with the advent of SIMISA/Empral grinding mills, which incorporated advances made through 1995 as well enhancements from later technologies aimed at reducing maintenance costs.
In April 2003. SIMISA sold the largest sugarcane roll mill ever built in the Americas, measuring 53 inches by 100 inches, to Coratexas Sugar Mill, Lousiana, USA, for delivery in spring of 2004.Today SIMISA’s exports average about 30 percent of its products. The company has installed 42 sugar roll mills since 1995 and sales were $21.7 million dollars that year, a 34 percent increase over 2002.
In the booming Brazilian economy of 2005, Simisa joined with other specialized companies in Sao Paulo and Riberao Preto to create a consortium to build cutting edge turn-key sugar and alcohol plants for Venezuela based on a model sugar mill with a grinding capacity of 7,000 tons a day and a 600-ton/day alcohol refinery. This model was duplicated for domestic factories in Brazil and is today used for those exported to North American and Europe.
In the castings market, SIMISA supplies steel parts weighing between 600 kg (1,320 pounds) and 24 metric tons, which can be delivered roughed or fully machined, and exports its steel and cast parts to more than 20 countries. Simisa’s technical partnerships include Empral, Fundação de Desenvolvimento Gerencial FDG, ADDN, Usimeta, Vemag, Dimagri, Starmil, Sermatec, Sertemaq, Elétropolo, and Morais Modelos, which have enabled it to develop new products and services annually for the needs of the sugar and alcohol industry.
In 2007, SIMISA moved into the biomass (renewable) energy market. The company has three lants now with a total of 29,000 square meters of space: two in Sertonzinho, Sao Paulo, with a machine factory area of 9,000 square meters and a boiler factory measuring 5,000 square meters. Simisa’s industrial facilities in Cabo de Santo Augustinho, Pernambuco have 15,000 square meters. This is in the Brazilian Northeast’s sugar and alcohol hub, close to the Suape port and federal highways, which facilitate the delivery logistics to the Brazilian Southeast, the United States, and Europe.
Along with its consortium partners, SIMISA has recently developed an orange bagasse drying mill, marble and granite cutting machines, and a rubber grinding mill. With sustainable energy in a major growth curve in Brazil, the company is making boilers to process bagasse into electric energy and also provides high quality rotary presses, rotating systems, mechanical equipment and components, castings, and machined products with the costs and quick delivery that have always attracted their customers. An ISO 9001 certified company, SIMISA commands 39 percent of the entire market, with an annual income of R31 million (US$17,001,214.00). Its production has grown by 30 percent per year over the last five years and its income by 36 percent.
SIMISA currently has 845 employees in all three plants, and is actively hiring. It projects over 960 employees by year’s end.
“Our highest priority is to take care of our employees,” says Director Superintendent Jose Luis Aguiar. “Our people are everything to the company. We place a high value on them and have many programs to invest in their training. As a result, each employee’s production increases by an average of 16 percent per year.
“We encourage a focus on results, so we select individuals for high profile projects and let them show us what sort of excellence they are capable of. If they accomplish fine results, which is usually the case, they are honored and receive bonuses for their performance.
“Further, our goal is to eliminate employee illiteracy. We encourage and subsidize higher education. We give everyone the opportunity to go to school, finish high school, and go to college. This is what the company needs. All our employees now have a high school education, and a large number have college degrees. So far 10 employees have gotten their MBAs and four more are working on them. This is how SIMISA will continue to grow as a successful company into the future.”