July 26, 2016 Steel Frontiers

Volume 11 | Issue 5

HZM is a Brazilian company working in the heavy metallurgic sector, and has provided some of the most important initiatives for economic development in its geographic region. Fabio Silva explains how the company has gone about reaching and expanding this privileged position.

HZM was established in the 1970s, when the Japanese company Hitachi Zosen Corporation crossed the ocean towards Brazil and started supplying heavy steel products to build industrial plants in the state of Espirito Santo, where it is located. With the slow economic growth and the lack of entrepreneurship the whole country experienced in the 1980s and 1990s, the Japanese felt they had no choice but put the firm up for sale. A pension fund and the locally based assembly company Engeman acquired the largest part of the stocks.

With a better tailored business platform and the momentum of the Brazilian economy, the next chapters in this story illustrate the company’s success. HZM became part of a business group called Metalmec, which encompasses two other firms. Engeman works
with maintenance and the assembling of industrial equipment, and Metalmec provides consultancy in project management. Thanks to the support of this broader structure, HZM was able to reach a higher number of potential investors who were seeking to either open new industrial plants or to implement more comprehensive
economic development projects in Brazil.

Indeed, for the past few years the company has advanced several projects not only in its geographic area but also in places as diverse as Sao Luis, in the northeastern state of Maranhao, and Joinville, in the southern state of Santa Catarina. And with a
recently installed plant in the city of Soretama, some promising opportunities for its business are already popping up in the states of Rio de Janeiro and Minas Gerais. Working at this pace, the company anticipates developing a nationwide business agenda.

ALWAYS THERE, AND ALWAYS COMPETITIVE
“What has been definitively acknowledged by the domestic market about HZM is our capacity to face challenges,” says Commercial Director Jose Maria de Novais. “Big firms are aware that they can count on us in difficult times, for instance when there is an emergency situation and the products are needed for the next day. It is this good
reputation that provides the basis for our current growth expectations.”

Besides promptness in delivering its products and services, HZM also offers lower costs as compared to its competitors. One of the reasons behind that is the easy access it has to its mainly needed raw material. Given the large scale of the company’s business, it got to the position of trading directly with first-hand suppliers
of steel, which eliminates costs with intermediaries and significantly reduces taxation.

Location also plays an important role in improving commercial conditions for HZM. Surrounding the state of Espirito Santo is not only a high number of already established industrial endeavors but also the sea and important sources of oil and gas. Conveniently situated on a route of economic progress, the company faces virtually
no constraints in terms of transportation.

For the most part, the design and the characteristics of HZM’s products are totally given by its clients. Among the few exceptions are the metal pieces going to clients that operate in the road transportation sector. But working on demand does not mean working passively. Quite the opposite. HZM puts a lot of energy in the development
of new manufacturing processes and in the acquisition of new technologies. Furnishing its plants are cutting edge pieces of machinery such as pressers, rolling machines, welding machines, and cutting machines.

Currently, HZM has more than 500 employees and is among the three biggest metallurgic companies in the state of Espirito Santo. With revenues of about $88 million per year, its portfolio of clients include prestigious firms such as Vale do Rio Doce, Arcelor Mittal Steel Mill Group, and Aracruz Celulose.

Sustaining this performance are two major plants. One is located in the city of Serra, in the greater Vitoria area, with a range of production of about 400 tons per month. The other plant, in Soretama, features a range of production of about 600 tons per month, and emphasizes boiler shops and structural components.

Overall, HZM’s main products are metallic structures, storage towers, ducts, belt transporters, pressure vessels and other heavy industrial apparatus. But as Novaes points out, the firm is up for much more, depending on what its clients and their projects are demanding. “We have been supplying firms in the transportation sector with hopper cargo wagons and road trailers and, more recently, we are building even the structure of a boat,” he says.

GOOD EXPECTATIONS AND NEW CHALLENGES
But even more exciting than the existing accomplishments of HZM are the possibilities that the company envisions for its near future. Brazil’s increasing investments in infrastructure will mean increasing demand for heavy steel products such as those the company has provided to the local market. “Energy, for example, is one of the most important issues for economic development nowadays,” says Novais, “and whether it will be addressed through oil, gas, ethanol or bio-diesel there will be always the need to construct and optimize plants and refineries.”

Faced with a “huge demand” for process equipment based on new PETROBRAS oil and gas projects in Espirito Santo and abroad, and the need for aggregate technologies to support bigger equipment, HZM recently signed a joint venture with KNM of Malaysia, along with other manufacturers, such as Borsig in Germany, Ellimetal in Belgica and FBM Hudson in Italia.

Of course, a series of new challenges also follows from such good expectations. Good quality and good price for the products are not enough to guarantee a satisfactory market performance. Besides economic efficiency, firms also have to meet various standards in terms of systemic operations, management, workplace health, safety, and environmental responsibility.

As such, HZM felt it important to garner certifications such as ISO: 9000 plus a number of other specific certificates of excellence in manufacturing complex products, in welding, and in environmental and safety management. It will next go after ISO: 11000 and the ISO: 14000 certifications.

All of these would be arguably hard tasks if the company had no clue about its goals in the business world. But when this question is raised to Novais, the answer is straightforward. “We want to be in the mind of whoever intends to implement a new industrial business and demands metal-mechanic products,” he says.

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