By Carlos David Mogollón, WC&P Executive Editor
When people think of Brazil, they often envision white sandy beaches, sambas of Carnival or Brazilians undying fervor for fútbol—known as soccer in the United States. What they don’t realize is that Brazil is a huge market that encompasses 60 percent of South America—and a unique market at that.
Portuguese-speaking Brazil is the largest country in the Americas southern continent covering 8.5 million square kilometers (3.28 million square miles) and boasting a population of almost 170 million people. Due to its large land area, it has regions with vastly different climactic conditions, precipitation levels and water quality. Today, the southeast has a severe shortage of water because of low rainfall in recent years, caused mainly by the El Niño phenomenon. In the northeast, water shortages are perennial.
As in any other country, water is essential for the population. In Brazil, it’s even more important because of the fact that 85 percent of the electric power generation comes from hydroelectric power plants. Due to low levels in rivers and reservoirs nationwide, however, the government is actually rationing electricity consumption to the public currently.
“Heavy investments are being made over the next few years in new hydroelectric plants, and especially in thermal power plants burning natural gas,” said Elio Pietroban Tarran, managing director of Tech Filter Indústria e Comércio Ltda. of Indaiatuba, Brazil, near São Paulo. “This way, we will be less dependent on water for electric power generation in the future.” He notes that this is also a big market for industrial water treatment, an area in which Tech Filter specializes.
Tech Filter was founded in 1993, operating in the water filtration, disinfection and treatment markets. Its focus is to find water treatment solutions for clients in industrial, commercial and residential markets. About 80 percent of the company’s sales fall in the industrial category, followed by commercial at 15 percent and residential at 5 percent.
To cover the market effectively, the company counts on distributors in several regions, exclusive representatives and its own sales staff. Its primary efforts are centered on industry and population centers around São Paulo, the largest metropolitan area in the country with almost 15 million people.
Tech Filter manufactures stainless steel and carbon steel filter housings for bag, cartridge, basket and activated carbon filters. It also represents and distributes a lineup of products to complement its own, such as those from Parker Hannifin (air filters), Kinetico Inc. (softeners, filters, reverse osmosis, ion exchange systems), Canada’s Trojan Technologies (ultraviolet systems), USFilter/Plymouth Products (polypropylene filters, cartridges) and UltraFilter Process Division (industrial filters), of Haan, Germany.
“With our extensive product lines and technical capabilities, we tend to focus on a variety of applications in the market,” Tarran said. “First, and most obvious, is the treatment of well water sources that have been growing over the past few years as the cost of municipally supplied water rises.”
Such well sources typically are high in iron, manganese and, depending upon the region, hardness and total dissolved solids (TDS)—particularly silica. Bag filters may be recommended to reduce particles and oxidized iron, followed by softeners to remove ions of dissolved iron, manganese, hardness, etc. RO is used for high TDS levels. And, for final disinfection, UV reactors or chlorine feeders are employed.
“We also have begun work with several fruit juice and soft drink processors in Brazil,” Tarran said. “For these applications, source waters can be drastically different. In general, we utilize bag filters for prefiltration of particles, softeners to reduce positive ions, chlorine feeders for disinfection and oxidation, granular activated carbon filters for dechlorination and organics reduction, cartridge filters for final filtration and UV sterilizers for final disinfection.”
Common areas Tech Filter has done business include shopping centers, restaurants and public drinking fountains—as well as commercial boilers and cooling towers.
Representative to distributor
Before founding Tech Filter, Tarran worked as a representative for U.S. companies doing business in Brazil. These include Asco Valves of New Jersey, for which he sold solenoid valves, and Parker Hannifin, where he sold pneumatic cylinders and valves, automation equipment, etc., for its filtration division. At Parker, he was sales engineer, supervisor, marketing manager and general manager for industrial filtration products.
“With Tech Filter, I became a Parker distributor in Brazil and I started to deal with other companies like AMETEK, which is now a division of USFilter, Trojan and Kinetico. We then started manufacturing cartridge vessels in stainless steel. Today, we make here in Brazil vessels for bag and cartridge filters. It’s a line comparable to CUNO and GAF in the United States.”
As its line of offerings expanded both in-house and through foreign representation, he said, Tech Filter began pursuing additional markets such as wastewater recycling for industrial customers on closed-loop systems.
“We are basically in food and beverage,” Tarran said. “This is a great part of our most important customers. Like water bottlers and breweries, we sell very well to people that make Coke, guarana (a local caffeine beverage) and other soft drinks. Every day appears one to 10 more small manufacturers of beverages. These people need filters, water treatment, UV. Besides the big ones, such as AmBev, we’re selling to these.”
Brazilian-based Ambev is the world’s fifth largest beverage maker and fourth largest beermaker and was formed in April 2000 by the mega-merger of Brazil’s two biggest drinks companies, Brahma and Antarctica. Tarran said AmBev has some 70 percent of the Brazilian market.
Built for competition
Tech Filter works mostly with medium-sized companies, also concentrating on textiles and chemical industries. It leaves larger projects such as auto manufacturers and pharmaceutical firms to bigger French competitors Vivendi and Degremónt, a subsidiary of Suez Lyonnaise des Eaux.
“Locally, we have competition, of course,” he said, “but we have a big line and so can treat all kind of water. When I say a big line, I mean equipment that we make here as well as those we serve as distributors for in the United States, Canada and even Germany.”
Among other Brazilian companies, Tarran noted that Brasfilter is largely in domestic filters while Hidro Filtros operates mostly further south near Porto Alegre and makes only cartridges. Both are good companies, but don’t offer the breadth of Tech Filter’s product and service capabilities, he said.
In fact, the company is expanding now, breaking ground on a 1,500-square-meter (16,000 square feet) expansion of its facilities in July. It will have nearly 3,000 square meters (32,000 square feet) when completed at the end of the year. Sales are between $1 million and $2 million, with nearly 50 percent growth from 1999-2000, Tarran said. This year, it expects 30-40 percent growth, despite the previously mentioned energy crunch’s impact on the economy.
“The problem is no rain,” Tarran said. “It’s not normal. Usually, we have rain on a regular basis. A bad thing always comes with a good thing, though, which is that—after this crisis—the government decided to let coal companies from all over the world come here and make (power-generating) terminals using natural gas from Bolivia. We have a pipeline from Bolivia… With that and more hydroelectric systems as well, the problem will be over in two or three years. And if the rain comes tomorrow, it is over already.”
Another negative factor is the high value of the dollar.
“This is a big issue for people that import. In March, during the WQA convention, one dollar was worth 1.9 Reals—the currency here. Today, it’s 2.5 Reals to the dollar. That makes U.S. products more expensive to import and ours less expensive to export. It’s good for our country to export, but we need to import as well, parts and equipment.”
Since the Argentinian peso is linked to the value of the dollar, this has only served to delay economic recovery for Brazil’s southern neighbor and impacted the regional economy as well. Still, there are signs of opportunity as recent investment reports showed that Latin American mutual funds outperformed many other funds in the past year.
Investing in the future
Tarran said he invests himself in his staff’s expertise through attendance at industry events such as the Water Quality Association seminars, company training workshops and an affiliation with UniCamp—Universidade de Campinas. A doctoral engineer from the university will work at Tech Filter exclusively for the next two years to develop wastewater equipment innovations. And by the end of the year, he expects to have completed requirements for ISO 9000:2000 certification of the company’s facilities.
Tarran sees the Brazilian government’s efforts to develop a National Water Agency (ANA for its Portuguese acronym) as another investment that will benefit the water treatment industry, particularly well drilling and metering equipment providers. He lauded ANA’s plan to write a new law to regulate use of water and wastewater by the entire population (see www.snirh.gov.br/ana/acervo/abrief.htm and www.tradeport.org/ts/countries/brazil/mrr/mark0128.html).
Likewise, the creation of Associação Brasileira dos Fabricantes de Filtros e Purificadores de Água (ABRAFIPA) may well benefit the industry, Tarran conceded—although he has not yet joined.
“We are waiting to see what’s going on.” he said. “There are a lot of distributors and low quantity manufacturers. They’re more related with filtration mostly for domestic use. We are more in water treatment, ion exchange, RO, UV, ultrapure water. We’re an industrial company. This is a problem for Brazil in that we do not have too many manufacturers. I hope we have a bigger group in the future and then we’ll have a commercial association perhaps.”
Tech Filter Indústria e Comércio Ltda
Rua Quatro, 161 – Distrito Industrial Nova Era
Indaiatuba, SP, Brasil
Cep.: 13.330-970 Cx.P.: 2069
Tel: +55 (19) 3894-6399
Fax: +55 (19) 3834-4107
e-mail: [email protected]
Managing Director: Elío Pietrobon Tarran
Sales: $1 million+
Quotable: “We’re not very big yet, but we’re working to be No. 1 in Brazil—not in size but in quality of work and expertise of the people. What we’re trying to do is make the best Brazilian parts. Everything you import, you try to make here.”