April 26, 2015 Steady Build-Up

Volume 18 | Issue 2

The heady heyday of Brazil's real estate boom may be over, but as one of the country's most rock solid - and highly reputed - construction c

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In an interview with the company’s president and financial director, Michael Sommers discovers how the company is using both tradition and technology to build a stable future.

It’s not because it’s in the business of constructing residences that Colmeia is named after the Portuguese word for “beehive.” “‘Colmeia’ alludes to an ensemble of worker bees as well as to a group of people brought together to work as a highly qualified team toward a common endeavor,” explains Otacílio Valente, Colmeia’s president.” With this beehive symbol in mind, Construtora Colmeia, a civil construction company headquartered in the Northeastern city of Fortaleza, has been creating a buzz ever since its foundation in 1980.

The “Colmeia Concept”
Two key tenets of the “colmeia concept” are professionalism and meritocracy – and Valente himself is a prime example of both. When he joined the company in 1985, it was as an onsite engineer who, over the years, worked his way up to supervisor, technical coordinator, partner and director, before finally, in 2000, becoming president. Valente is proud of the fact that he is an example instead of an exception to the rule; today many members of Colmeia’s team entered the company as interns or engineers, who were nurtured, and promoted.

“Every year we host a convention for all the company’s architects and engineers to get together and brainstorm. Last year, there were 49 professionals present and almost 90 percent of them had started out at the company as interns,” declares Valente. “Many of the top positions at Colmeia are held by people who came to us on internships. This focus on merit – and professionalism – is what really sets us apart in the marketplace today.”

The marketplace to which Valente is referring is Brazil’s real estate market, specifically the high-end residential market that caters to Brazil’s upper and upper-middle classes. Due to Brazil’s current economic slump, the real estate market as a whole has seen a marked slow- down in comparison with the heady historic boom that held sway between 2007 and 2012. During those years, surging economic growth combined with government housing incentive programs and unprecedented access to financing, meant that millions of Brazilians could suddenly afford to purchase the house of their dreams – which in turns spurred construction to record levels. Easy credit combined with a surfeit of hastily constructed new properties and a flood of first-time buyers led to many consumers making what Valente refers to as “impulse purchases.”

“Back then the market was very irrational,” explains Ronaldo Barbosa, finance director of Colmeia. “There was a real necessity for real estate since you had consumers who hadn’t purchased property in 20 or 30 years. Because consumption had been repressed for so long, many people were buying without looking at the reputation and history of the construction company and its track record, without verifying it had a credit line in order to complete a project, without studying the level of workmanship and services offered.”

“In 2015, however, the market is more rational,” continues Barbosa. “Today’s buyers have learned how to research and compare products, prices, and payment options. Although the boom is over, demand is still healthy; sales of residential and commercial real estate in Brazil increased by 14 percent, in 2013, and 11 percent, in 2014. However, due to the vast range of products, the consumer is privileged with respect to negotiating terms. Competition is fierce and construction companies have to work like never before to differentiate themselves.”

Traditional and Technological
Fortunately, Colmeia has spent the last several decades differentiating itself in the quartet of regional markets in which it operates. These consist of Fortaleza, capital of Ceará, where its headquarters are located; Natal, capital of the neighboring Northeast state of Rio Grande do Norte; Manaus, capital city of the state of Amazonas; and Campinas, a thriving satellite city of São Paulo that serves as an entry gate to the Rio, São Paulo, and the rest of the Brazilian Southeast. “Despite being regional, we’re a large-scale company, but our structure is limited,” explains Barbosa. “Over the last four years, we grew by 50 percent, however looking to the future we expect annual growth rates to hover at around 5 percent. We don’t want to sacrifice our reputation for quality and customer services.”

Barbosa adds that in each city, the company is viewed as a local business rather than a regional affiliate. “To be seen as a local company is important. In recent times, many construction firms funded with stock market capital opened in São Paulo and their service departments are still based in São Paulo. Clients have to call 1-800 numbers to contact representatives and are treated as if they are mere numbers. In contrast, we have offices in all four cities. Clients can drop by, sit with a manager, have a coffee or cappuccino, and leave with paperwork in their hands. They can also call us and we’ll know them by name. Everything’s very personalized.”

Colmeia’s emphasis on personalization isn’t just traditional – it’s also technological. Indeed, the company recently finished making major investments in communication channels aimed at strengthening relationships and increasing added value to clients, suppliers, and even employees. Via laptops, tablets, and Smartphones, clients and suppliers can log into the company’s portal and, from there, access an endless array of sites. Clients, for example, can check on a building’s progress, make a monthly payment, download tax declaration forms and interact directly with agents. Suppliers can access goods or services that Colmeia requires and bid on them.

Meanwhile, on site, technology has myriad uses. For example, if a safety inspector sees a worker performing a job on high scaffolding, he can use his tablet to instantly verify that the employee has completed appropriate training and is using the proper equipment; in the case of any non-conformity, he can take a photo and send it to the foreman. “Very few of our competitors have the tools that we use,” says Barbosa. “Only the elite – and we’re among the elite.”

Colmeia’s elite status is recognized across the board. Valente points to the fact that in each of the four cities in which Colmeia operates, surveys place it among the top two or three most recognized – and reputed – builders in the marketplace. Among its suppliers, it counts major global firms such as ArcelorMittal, the largest steel manufacturer in the world, Alcoa, the world’s leading producer of aluminum, and Incepa, owned by Rocca, one of the world’s top makers of ceramic tiles and porcelain wares.

Its sterling reputation also explains why Brazilian banks provide Colmeia with inexpensive credit lines that ensure financing of 100 percent of its projects via a federal government program, Plano Empresário, whereby the Central Bank subsidizes credit lines to a select number of businesses deemed solid enough to deserve them. “A very exclusive group of companies in Brazil are selected to benefit from the program,” states Barbosa. “The fact that we’re among them is a testament to the solidity of our financial management and our corporate stability. These days banks only give credit to companies they’re sure can deliver projects on time and sell all units.”

“Colmeia has a hard-won reputation for being a very ethical company,” chimes in Valente. “And we’re recognized as such by our employees, suppliers, and clients. In a country such as Brazil, that is suffering from a real ethical crisis, being a company that people can trust really sets us apart.”

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