With a booming economy and increasingly valuable currency, Brazil is not only under the watchful eye of cautious economists, but the focus of international investors. For Dânica Corporation the interest in the country’s emerging market has been long-standing. When the Danish-based holding company decided to take its 20 years of expertise in the thermal insulation segment and apply it to an emerging market of great potential, it immediately thought of Brazil.
Strategically targeting emerging markets, Dânica is essentially securing its future. The company is looking ahead to 2035, when according to Goldman Sachs the global macro-economic scheme will have significantly shifted, placing emerging markets in a position of current developed markets, and eventually overtaking them. Government benefits and a more stable domestic economic climate have increased the standard of living in Brazil and the nation’s middle class is growing. “As people move out of the poor end of the population, they start buying more meats and medicine,” confirms Steffan Nevermann, Dânica’s managing director. “Increased demand for food and medicine translates into growth potential for Dânica, as the products our divisions produce are geared toward those areas.”
In 1998, the company purchased a plant in Joinville, Santa Catarina, where it began manufacturing thermal insulated panels and doors for industrial and commercial cold stores. Actually, manufacturing these units was only part of what the company did – it also custom-designed, delivered, and erected them, offering clients a complete turnkey solution while transforming its operation into a totally vertically integrated production process.
BUILDING IN BRAZIL
With determination and conviction, Dânica wasted no time in building its brand in Brazil. The company immediately began injecting a lot of capital into the enterprise with the aim of quickly conquering the market and achieving (and maintaining) aggressive growth rates. The strategies were successful.
In the last 13 years the company has opened three more plants and three distribution centers in Brazil, strategically located throughout the country. In addition to its original facility in Joinville, Dânica has plants in Taboada, located in the Central-West state, Mato Grosso do Sul, Lucas do Rio Verde, in Mato Grosso state (neighboring São Paulo state), and in the state capital of Pernambuco, Recife. The factories, offices and distribution centers are all positioned to allow the best market access. Currently employing 850 people, Dânica’s structure is constantly growing in its desire to service the entire country.
Expansion has been one of the keys to sustaining remarkable growth rates that average 30 percent a year. “The reason we opened the Mato Grosso plant in 2006 was to take advantage of the sweeping expansion of chicken farming in the region,” explains Nevermann. A partnership with Brazil’s two largest food giants, Sadia and Perdigão, that year meant that the plant was supplying seven million square feet of panels and doors for cold storage units within a year. “Brazil is one of the biggest meat manufacturers in the world and we service all the big billion-
dollar conglomerates,” he continues.
Today, Dânica has five divisions in Brazil: Industrial Cold Stores, Commercial Cold Stores, Civil Construction, Clean Rooms and Marine & Offshore operations. Production and installation of Cold Stores was Dânica’s main primary focus until 2008, at which time the industrial segment represented more 60 percent of its business. However, the diversification has come in the last three years in the bid to dominate three of Brazil’s most thriving markets.
The naval and offshore division specializes in making accommodation modules and it ships quarters for tankers and oil platforms (in 2009, it supplied work and living units for Mexilhão, the largest boring platform ever produced by Brazilian oil giant Petrobras). Although currently accountable for the smallest percentage of annual revenue, the civil construction sector is growing the most rapidly in accordance with the building boom Brazil is currently experiencing.
CLEAN SWEEP SOLUTIONS
As each of the divisions sweep into the market, Dânica assumes its usual prominent position. Responsible for almost a quarter of total sales, Dânica’s clean room division makes units for pharmaceutical giants such as Abbott, Pfizer, GlaxoSmithKline, and Sanofi-Aventis as well as a growing number of national pharmacy companies that are currently driving the Brazilian market.
Nevermann refers to the Clean Rooms division as an example of the technological value that Dânica provides, “Traditionally, pharmaceutical companies’ plants were built with drywall (with Styrofoam thermal insulation), now with our market penetration such plants have been transitioning market toward modular, polyurethane panels.” The modular solution provided by the company is particularly vital in the pharmaceutical arena. “There is a higher risk of contamination with drywall,” explains Nevermann. “The modular solution is safer and cleaner, and we can sell it at the same price as drywall.”
In most places in the world, polyurethane would be 25 percent more expensive than Styrofoam, he explains. “But with our strategy of setting up low-cost plants in emerging markets, we sell modular solutions at the same price as drywall. If clients can buy the ‘Volkswagen’ or the ‘Mercedes’ at the same price, they go with the ‘Mercedes,’ or the modular solution.”
The results speak for themselves: When Dânica’s clean rooms entered the pharmaceutical market in Brazil in 2002 around 90 percent of plants were made from drywall. Today, 90 percent are modular, and 70 percent of the clean room structures have been supplied by Dânica. “In essence, we pushed a better product at a lower cost in an emerging market and, in the process, transformed the market demand with our technology,” adds Nevermann.
Dânica produces all panels, chemical formulating, doors, hinges, windows, erection accessories and electrostatic painting, internally. “The fact that we’re extremely vertically integrated is a big differentiating factor for clients – and a barrier for competitors. Contrary to other parts of the world, turnkey solutions are still very rare in the Brazilian market. Most big companies in this segment are content to just build and deliver panels.”
FREEZING OUT COMPETITION
Dânica produces 33 million square feet of panels and 15,000 doors a year, equating to 5,000 to 6,000 medium to large-sized buildings. However, the company’s production capacity is actually double this, ensuring substantial potential for the future and competitive advantage.
Market response to the turnkey concept has made the clients more demanding. This is good news for Dânica, whose interest in developing the Brazilian market is not merely the result of recent economic surge. “Once you are constructing instead of just manufacturing, the business becomes much more complex. Manufacturing the same panel every day is quite easy, but in construction there are so many variables that could go wrong. Unlike the many international companies that now want to move to Brazil, we have spent years setting up this structure,” confirms Nevermann.
With 36 years of experience in the market, Dânica’s value-proposition spans project design, manufacturing, and installation. The vertically integrated company offers fully engineered turn-key solutions across all cost-spectrums, depending on the client’s individual needs.
Dânica’s mission to continue expanding into a global leader through continuous investment is well on track. With an unbeatable service and complete thermal insulation solutions, the company is proving time and time again that the best answer to chilled storage construction needs is Dânica.