March 26, 2010 Jet Setters

Volume 13 | Issue 2

For both domestic and overseas clients, Brazil’s Hidro Jet flies high as a top supplier of electrical hardware components. Michael Sommers l

Hidro Jet is not only Brazil’s leading manufacturer of electrical hardware parts, but it’s also a top global supplier. This is both impressive and surprising when you consider that the company started out as an equipment manufacturer for its home country’s famous gold and diamond mining industry.

When Hidro Jet opened its doors in 1980, its plant – located in Caxias do Sul, a town in Brazil’s southernmost state of Rio Grande do Sul – specialized in producing pumps and other equipment for prospectors in regions such as the Serra Pelada. Located in the Amazonian state of Pará, this world’s largest open-air gold mine gained global notoriety as it accommodated the feverish 1980s gold rush. For 10 years, mining equipment constituted Hidro Jet’s bread and butter. Then, in 1990, in an effort to address serious environmental issues, the Brazilian government began cracking down on miners and prospectors by passing sweeping legislation and implementing industry standards.

Negative publicity combined with a major drop in the global price of gold sent Brazil’s prospecting sector spiraling into serious crisis. As the industry’s fortunes plunged, Hidro Jet found itself struggling to stay afloat. To survive, the company underwent substantial corporate restructuring. It recruited professionals such as Osni Volani, Hidro Jet’s commercial director, who eventually left the company in 2007 to start his own business. A dynamic figure with significant experience in the electrical hardware field, Volani developed a new product line for the new step of Hidro Jet. In 1992, the company’s first electrical hardware units rolled off its assembly lines.

Hidro Jet’s timing couldn’t have been more perfect. In 1994, a globally renowned manufacturer of foundry metal components for the automotive industry closed down its electrical hardware production. At the time, it was Brazil’s electrical hardware segment leader. Its withdrawal left the market wide open. Hidro Jet filled the void. “We became the viable alternative,” recalls Hidro Jet Chief Executive Officer Roberto Eron Rizzi. “We recognized the big moment and sought ways to leverage the opportunity and, in turn, our growth.”

A GLOBAL LEADER
While the domestic market offered Hidro Jet substantial opportunity, the company also set its sights on the global stage. As early as 1992, with foreign markets in mind, the company’s engineers began developing products geared towards the needs of international clients. Although the processes involved in the manufacture of electrical hardware are fairly standardized, Hidro Jet made it a priority to respond individually to each client’s particular product specifications.

Today, exports represent 50 percent of the company’s business. Hidro Jet’s major trading partner by far is the United States, an association that absorbs 75 percent of all company exports. In addition, important clients include businesses in Europe, Canada, Mexico as well as in India and South Africa. “Excluding China, we are the world’s leading individual producer of electrical hardware,” says Hidro Jet Commercial Director Felipe Guilherme Saueressig, “and we’re definitely leaders when it comes to quality.”

Indeed, over the last few years, as the Brazilian real has seen its value increase against the U.S. dollar, focus on the quality of products and services – regular restocking of inventory, door-to-door sales and after-sales calls, technical assistance – have been key to Hidro Jet’s continuing global expansion. Saueressig identifies two main reasons for the company’s staying power in the face of currency fluctuations: “First, we’ve worked very closely with our clients to minimize the impacts of any readjustments due to unfavorable exchange rates. Secondly, and most importantly, we’re constantly investing in the segment to guarantee that our process and services are the best.

Ultimately, he adds, Hidro Jet focuses on maintaining it stature as a global company. “While other Brazilian companies are reducing overseas trips, we’ve intensified trips abroad in an effort to inspect products and get customers’ feedback, provide technical assistance, and drum up new business,” he points out.

FOCUS ON QUALITY
Quality is also a major concern in Brazil, where Hidro Jet is the segment’s undisputed leader. During its existence, and in recent years, the company kept a leg up on primary competitors by investing heavily in new processes and technology. In Porto Alegre’s capital of Rio Grande do Sul state, the company possesses a 40,300-square-foot plant where it deploys state-of-the-art technology such as a Disamatic automatic molding machine and a green sand casting process to produce the large casting components it supplies to the electrical hardwares and automotive segment.

Meanwhile, having outgrown its original Caxias do Sul plant, in 2005 the company moved into a new and much larger 77,000-square-foot facility located in the town of Feliz. Aside from possessing a foundry, this new plant also boasts machining and galvanization areas.

The move coincided with the company’s decision to begin manufacturing hydraulic valve bodies. This highly differentiated product line allowed the company to extend its reach into the agricultural, automotive and civil construction segments that, until Hidro Jet came along, hadn’t had quality options on the market, as Saueressig relates.

While developing the valves, Hidro Jet’s engineers also devised an innovative Cold Box technology for core processing that ensures its products’ resistance and durability while reducing negative effects on the environment.

Hydraulic valve bodies account for between 20 and 25 percent of Hidro Jet’s business for agricultural, automotive and construction equipments. The other 75 to 80 percent consists of electrical hardware for the energy segments. In terms of market trends, the boom experienced by Brazil’s electrical insulator segment has created serious demand for Hidro Jet’s products and know-how. “Moreover, we’re able to supply the parts required for this segment on a small or very large scale,” says Saueressig.

Currently, Hidro Jet’s total monthly production capacity is 1,500 tons. Prior to the global economic crisis of 2008, the company was experiencing average annual growth rates of between 15 and 20 percent. “Our expectation for 2010 is to return to our 2008 levels with increments of 10 percent in terms of both revenues and production levels,” says Rizzi. “In seeking continued growth, our strategy is to launch new products in new segments without shifting our main focus from our basic lines.”

As far as branching out into new areas, Hidro Jet isn’t wasting any time. In 2010, when it celebrates its 30th anniversary, it will initiate a new step by producing parts for truck suspensions as well as excavators, loaders and other construction equipment. Expectations are that this year’s revenues will reach R$85 million (US $50 million).

“Our intention is to not only be the largest but also the best in quality in our markets,” declares Rizzi.

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