January 26, 2010 Reinventing the Steel

Volume 13 | Issue 1

Since going national, Metasa, a former local manufacturer of steel structures, hasn't stopped growing. As Michael Sommers discovers, expandi

There is an inherent paradox in Metasa’s success in the Brazilian market. While this leading designer and producer of steel structures manufactures products that are reputed for their stability and durability, the company’s growth and staying power are a result of its flexibility and willingness to constantly change. In the words of Metasa’s commercial director, José Elizeu Verzoni: “We’re always reinventing ourselves.”

FROM LOCAL TO NATIONAL
When Metasa first opened its doors in 1976, it was as a small factory that produced steel frames and agricultural implements. Located in Marau, a small town in the interior of Brazil’s southernmost state of Rio Grande do Sul, at first the company worked to supply the local market. It was only in 1981, with the opening of an office in the state capital of Porto Alegre, that Metasa sought to conquer the entire state of Rio Grande do Sul. Its aspirations to go national were fulfilled in 1986, when it landed a contract to build a hangar for VARIG, Brazil’s once glorious national airline, founded in 1927 in Rio Grande do Sul, (VARIG’s initials stand for Viação Aérea Rio Grandense); the project gave the company such prominent visibility that important clients from all over the country came knocking.

“At first, we specialized in shopping centers,” recalls Verzoni. “During the early ‘90s, we won major contracts in capitals throughout Brazil as well as in Argentina and Chile. Then, in the late ‘90s, we went after heavy industries; this led us to go beyond producing light structures and took us into the manufacture of industrial pavilions and overhead cranes for clients such as Vale do Rio Doce (Brazil’s largest private company and the second largest mining corporation in the world).”

“More recently, in 2003, we began expanding into Brazil’s lucrative offshore sector, developing structures for the nation’s petrochemical segment and becoming an important supplier for Petrobras (the world’s second largest oil company), which has since become one of our most important markets.”

FOUR DISTINCT MARKETS
Today, the company specializes in four distinct markets. Steel structures – such as platforms and towers – for Petrobras alone account for between 50 and 60 percent of revenues. Also significant are structures for steelworks and mining companies along with infrastructure (gates, ramps, walkways, overpasses and suspension bridges, industrial pavilions, and other buildings) for both the public and private sectors, each of which, respectively, is responsible for between 15 and 20 percent of revenues.

Until recently, the paper and pulp industry was also a significant market for Metasa. However, the segment itself was hit hard by the global economic crisis, which led to a decrease in production accompanied by a fall in global prices. On a more micro scale, one of Metasa’s major clients, Aracruz, ran into financial troubles that have delayed by two years the construction of a new cellulose plant in Rio Grande do Sul, for which Metasa had been contracted.

While it waits for the paper and pulp industry’s fortunes to improve – Metasa expects the segment to recuperate within the next year or two as investments resume – the company is enthusiastic about the increasing number of infrastructure projects in the works throughout Brazil. A result of the federal government investing in essentials such as roads and bridges, the company predicts that the substantial increase in projects will result in many new contracts next year.

However, Metasa’s biggest bet for 2010 involves its latest “reinvention” of itself as a supplier to the naval industry. “The plan is to start off by manufacturing metal structures for Petrobras, which is building eight FPSO’s (floating oil production, storage, and outflow platforms) to be used for offshore prospecting and exploration. To meet this demand, we’re going to install a whole new plant in Rio Grande do Sul next year. We already have the financing. All we need is the permit to go ahead and within a year, we’ll be up and running.”

RECORD GROWTH
Aside from the new naval plant, Metasa recently completed a major renovation of its main facility in Marau. Apart from expanding the size of its plant to 108,000 square feet, the $53 million (approximately US$25 million) investment also included the purchase of new equipment and software, and the training of personnel. The overhaul upped the Marau facility’s production capacity from 2,500 to 4,000 tons a month (with a maximum capacity of 6,000 tons). The company also rents a second 26,000-square-foot plant in Santo André, a suburb of São Paulo, which has a monthly capacity of 500 tons.

The Marau expansion was partially responsible for the company’s fantastic performance over the past year, which was all the more spectacular in view of the global crisis. Although Verzoni estimates that annual growth rates in recent years have averaged 20 percent, between 2008 and 2009, revenues soared from R$214 million (roughly US$100 million) to an estimated R$310 million (US$150 million).

“Right now, we’re probably ranked between the top three and top five position in the market,” says Verzoni before pondering the question of what sets it apart from its competitors. “It seems really commonplace to say this, but what distinguishes us most is the caliber of the people who work here together with our constant investments in technology, equipment, infrastructure, and software.”

“In this industry, product quality is a given,” he continues. “It’s the minimum that clients demand. So what we really focus on is making sure our deliveries are on time. And we’ve become so good at this that we really stand out in the marketplace. All operations at Metasa are geared toward meeting deadlines; we really spare no effort. Ultimately, aside from striving to meet our clients’ needs, we don’t really have a corporate philosophy. Our philosophy is simply that we just work very, very hard.”

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