Amiantit, a Saudi giant in the pipe sector, is investing US$ 9 million to expand the productive capacity of Amitech, a large diameter pipe and fitting factory the group controls in the city of Ipeúna, in the interior of the southeastern Brazilian state of São Paulo.
The objective is to supply the demand of the Brazilian market, as production is at a limit. "Throughout 2006 we worked in four shifts," said Roberto Roselli, the president at Amitech.
The company is eyeing the potential created by the Sanitation Law – recently approved by the National Congress and that provides the greatest security for private companies to invest in the sector – and the Growth Acceleration Program (PAC) promoted by the federal government of Brazil, as the products made are turned to infrastructure works, like the construction of water and sewage networks, for the transport of industrial waste, irrigation and hydroelectric power plants.
Each year, Amitech produces 75 miles of fiberglass-reinforced polyester pipes with diameters ranging from 400 to 1,200 millimeters. The new line, to start operating in July, will have a capacity for production of 112 miles of pipes per year, with diameters ranging from 300 to 3,000 millimeters. The number of employees at the plant should rise from the current 85 to 110.
Currently, a large part of revenues come from irrigation and industrial waste transport projects, but Roselli believes that in the near future the sanitation sector should answer to around 80% of the business.
The faith in the increase in demand on the Brazilian market is so large that a 70% expansion in revenues is forecasted for this year. In 2006 the company had revenues of 30 million reais (US$ 14 million).
The Saudi group started operating in Brazil in 2002, after purchasing 38% of the capital of the G-Tec factory and taking control of the plant. The Brazilian pipe factory had started operating two years before. The name was changed to Amitech and Amiantit now has 98% of the capital. The Saudis invested US$ 5 million in the purchase of shares and in capitalization of the company.
"In 2000 Amiantit noticed that the time had come to become a global company, as the market in the Gulf was saturated," stated Roselli. The strategy used by the group was acquisition of companies in other countries, not just factories, but also companies that had different technologies.
The first acquisition was of the North American Flowtite, which owned technology for the production of fiberglass-strengthened pipes and belonged to Owens Corning, the main fiberglass producer in the world.
In the case of Brazil, the G-Tec business was not doing too well and at the end of 2001 the company board decided to seek a partner that had capital to invest.
"We were fortunate to add both needs: the G-Tec search for technology and capital and the Amiantit process for becoming a global organization," stated Roselli.
"Brazil was a logical option, as a global player cannot be left out of the largest country in Latin America," he added. Although Brazil is the main focus, Amitech already exports to Venezuela and Argentina.
Apart from Brazil, in the Americas Amiantit have operations in the United States, Argentina and a partner in Colombia. In all, the group has 34 of its own factories or joint ventures with other companies in 18 countries. The group controls six technology companies and has clients in 70 countries.
The group dominates 14 different technologies for the production of pipes, including the use of material like steel, concrete, PVC and polyethylene, among others. The products are for varied use, including construction of oil pipelines. The group was established in 1968.
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