From the Ashes of Bankruptcy Employees Create a Stove Company in Brazil

A cooperative from the southernmost Brazilian state of Rio Grande do Sul has started selling wood stoves outside Brazil and also plans to become an international supplier of gas stoves.

The Cooperative of Guaí­ba Steel Industry Workers (Geralcoop), established in 2001 by former employees of a company that had gone bankrupt, the Companhia Geral de Indústria, started exporting wood stoves to Paraguay and Argentina at the end of last year.


Now Geralcoop is after financing or investors so as to start producing gas stoves to sell on both the foreign and domestic markets.


The cooperative used to produce gas stoves when it began its operations, but production had to stop due to the technical norms that were put in place. The same happened to the company gas water heaters.


Apart from the wood stoves, Geralcoop produces sanitary metals and has a smelting division, where they produce all the parts for their stoves and also outsource production. The intention, however, according to Niro Barrios, the president of Geralcoop, is to expand the total productive capacity.


Geralcoop, which has 170 associates, is negotiating a US$ 4.1 million loan with the Brazilian Development Bank (BNDES). The funds will be used for working capital, investment in technology and also for the purchase of the estate of the factory that went bankrupt.


The group currently have a lease contract for the factory, which is valid up to 2007. So as to proceed with the productive activities, when the Companhia Geral da Indústria went broke, the former employees managed to get a US$ 300,000 loan from the Rio Grande do Sul State Bank (Banrisul).


“It was not enough, but we decided to begin the activities anyway,” explained Barrios. They really needed US$ 2.2 million.


Lack of capital was one of the reasons for which the cooperative did not continue producing gas stoves and water heaters, as the new norms required investment and changes in the production. Despite being after loans, Geralcoop is also open to investors.


The cooperative currently produces 18,000 wood stoves a year. The Geralcoop objective, however, is to produce 25,000 starting next year. Gas stove production should begin at 5,000 units per month in August this year.


For the heater division, the cooperative is still studying whether they will produce locally or whether they will establish a partnership with some foreign company. According to Barrios, at this moment, the cooperative is discussing with a foreign factory the possibility of importing heaters and distributing them in Brazil.


The cooperative’s production of wrought iron parts is between 15 and 20 tons per month. This sector should also be expanded, with the investment of capital, to 1,248 tons per year as of 2006.


The company also started producing bathroom taps and fixtures at the beginning of this year, and is producing around 600 items a month. Today, exports are no more than 5% of Geralcoop production. The cooperative’s factory is in the city of Guaí­ba, close to state capital Porto Alegre.


Geralcoop – www.geralcoop.com.br


ANBA – Brazil-Arab News Agency – www.anba.com.br

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    ali sharoun
    i wont cookers haous

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