Volume 10 | Issue 3 | Year 2007

Steel Service Center, Industry Today

The lack of a structured water supply system in the late 1920s became a goldmine opportunity for Mangels, founded in 1928 to manufacture galvanized buckets in São Paulo, Brazil. Buckets were in strong demand to carry water and the existent supply on the market was imported. Just four years later the company started to diversify, producing hardware for electric power distribution and transmission lines. And 10 years from its creation, Mangels pioneered the market by launching cylinders for the distribution of Liquefied Petroleum Gas (LPG).

The birth of the national automotive industry in Brazil in the 1950s led Mangels towards a new direction. Wheels, cylinders and auto parts started to be included in the company’s repertory of products, creating new divisions and a wider range of diversification. With the acquisition of cold rolled steel companies such as Baukus in 1974, Mangels stepped into more advanced technologies, preparing itself for higher standards of quality recognized worldwide. The resultant international acclaim placed Mangels among exporters in Latin American, North America, Europe, Middle East and Africa.

“Mangels’ vocation for innovation and pioneering approach guarantees it to be always in tune with the demands of the market,” says Adelmo Felizati, director at Mangels. The late 1980s and early 1990s was marked by a big change in the automotive industry: the introduction of aluminum, which made wheel frames lighter and more beautiful. The company didn’t waste any time to adapt to the new challenge, making deep changes in management and production facilities, and later creating a new division. Between 1994 and 2000 Mangels received an injection of over US$70 million for the modernization of its factories. The strategic move, which coincided with the globalization of the Brazilian market in the 1990s and deep changes in the country’s economy, was determinant to make Mangels an important player not only nationally but also abroad.

Under favorable exchange rates, the exports can represent over 10 percent of total sales of Mangels. “We have a special concern with quality. Our company obtained ISO: 9000 in our divisions to compete. All the other business that didn’t relate to those were sold,” explains Felizati. Mangels also invested heavily in human resources management to generate ethics, participative leadership and professional excellence.

In addition to its main office in São Paulo – the capital city of the state by the same name – Mangels has four plants: one in São Bernardo do Campo, another in Guarulhos – both in the State of São Paulo – and two others in Três Corações, in the State of Minas Gerais. The plants occupy a constructed area over 50,000 square meters. Mangels also has four cylinder requalification workshops at strategic locations in Brazil, and two steel distribution centers. The company operates in a variety of segments and its structure comprises four operating divisions: Steel, Wheels, Cylinders and Galvanizing.

The constant search for technological advancement and quality propelled Mangels to obtain further certifications such as ISO: TS 16949:2002, ISO: 14001:1996, ISO: 9001:2000,for the steel division, among many others in progress such as OHSAS 18001 e SA 8000. The wheel division has earned ISO 14001:2004 and cylinder unit obtained the GMV-203/2004
certification. The effort helped to place the company in a top position in the international market for its high quality cold rolled steel strips.

Diversifying Strength
The steel division is located in São Bernardo do Campo, São Paulo, where it produces high, medium and low carbon cold rolled steel strips, steel strapping and stamped steel parts for automobiles, motorcycles, tools, cutlery, construction, electronics, electric household appliances, agricultural machinery, saws and industrial packaging. Such a diversity of products and markets has ensured sales growth even in years with no economic growth. The division represents over half of Mangels liquid revenues.

The wheel division is located in Três Corações, Minas Gerais, representing almost 30 percent of the total company’s revenues. It produces aluminum automotive wheels for the domestic and international markets. The Division serves both the original equipment market (OEM) and the after market. Mangels’ entry into the OEM wheel market in 1998 was crucial both for guaranteeing high volumes – thus optimizing its production capacity – and developing highest technology products.

The cylinder unit produces low-pressure cylinders, as well as air and fuel tanks for trucks and buses, in addition to providing requalification services for LPG cylinders. The cylinder division is also located in Três Corações, Minas Gerais and is responsible for 10 percent of Mangels’ liquid revenues.

The galvanizing unit produces highway guardrails and provides hot-dip galvanizing services for steel parts. The galvanizing unit is located in Guarulhos, São Paulo. This unit became a key to guarantee Mangels’ product differentiation facing competitors.

Steel Management
“We believe that a strong organizational structure is fundamental for our success,” says Felizati. Last year, Mangels hired a consulting company to reevaluate its organizational model, elaborating management strategies and structural changes for the next five years. During an intense process of analysis, clients, suppliers, competitors, associations, market specialists and executives at Mangels were interviewed and a series of debates took place. Cost structures, financial reports, sales and production history related to the company were scrutinized. The strategic planning aims at the development of a company more flexible, competitive and in lean shape. Mangels also bets on investing more on its product lines, increasing its growth and profits potential.

A complete update has been taking place in Mangels’ organizational structure, including the elimination of some positions and titles, such as the vice-president of operations and the director of supplies. This way, consultants believe the changes will provide Mangels with more agility facing market competitors, mainly abroad. With the return of Robert Max Mangels to the frontline management, the higher level of directors will be responsible for integrating the operational process in the factories, including sales, technology, productivity, quality and production management.

Mangels has experienced steady growth in the last five years, and the steel division estimates to sell 108,000 tons in 2007. The company is projecting to manufacture 1.6 million aluminum wheels this year and growth is also expected for the cylinder and galvanization division.

Robert Max Mangels also believes that the combination of organizational and production measures will accelerate the company growth, increasing and stabilizing its financial results. “Mangels is a company that is ready to face new challenges of a growing competitive international market,” concludes Felizati.

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