Heil Trailer Opens Argentina Plant

HEIL Trailer International put an extra emphasis on the "international" in its company name recently by opening a new tank trailer manufacturing plant just outside Buenos Aires, Argentina.

The 5,000-square-meter (53,820-sq-ft) facility joins similar plants that the company has opened in recent years, including one in Thailand and the acquisition of another operation in the United Kingdom.

Based in Chattanooga, Tennessee, Heil significantly strengthened its ability to serve the South American market by opening the plant outside Ca-uelas, a city located approximately 40 miles from the Argentine capital.

The company could supply Central America and the northern tier of countries of South America from its plants in the United States. But the Andes Mountains and the Amazon rain forest put a lot of distance between such northern markets as Colombia and Venezuela and the continent's large markets of Brazil, Argentina, and Chile in the southern half of South America.

"This plant follows the same pattern we have used elsewhere," says Jim Sanko, vice-president. "It is convenient to major markets, yet it is located in a rural area where land is more readily available."

The plant also uses the same types of fixtures and follows the same basic assembly process as other Heil plants. Material flows in a U-shaped pattern. Parallel assembly lines straddle sophisticated automated fixtures so that the same equipment can serve both lines. After the tank is fabricated along the main assembly lines, the running gear is installed, and the trailer moves to a bay in the finishing area for final assembly.

The new operation, Heil Trailer Internacional SA, currently is producing 15 tanks per month with one shift. The plant has a maximum monthly capacity of 30.

Heil began looking into the feasibility of a South American plant about five years ago. The study, which took between two and three years to conduct, culminated with a grand opening November 1998.

Actual construction of the plant went quickly. Heil broke ground in July 1998 and had the building ready to go four months later.

"Our contractor was not local, but it was a firm that had experience working internationally," Sanko says.

Between November and February, the company bought equipment and set it up. The plant produced its first trailers in March 1999.

"We have a Swiss pyramid roll, but a lot of our equipment came from the United States," says Enrique Sagripanti, general manager of the Argentina operation. "And some of it we built ourselves."

Concurrent with the process of equipping the plant, Heil also equipped the team of production workers it had assembled. In October 1998, a group of 10 people, hired by Heil to be group leaders at the Ca-uelas plant, flew to the US for training at the company's headquarters plant in Athens, Tennessee. A second group followed in February 1999.

When these employees returned to Argentina, they began training the members of their group. In addition, supervisors from the Athens plant traveled to Ca-uelas to help plant employees learn what they needed to know to produce tank trailers.

Language barriers were reduced through the help of Cecilia Garavaglia and Flavia Gagnia, Ca-uelas staff members who served as translators and assisted in the training process.

The training apparently paid off quickly. The Ca-uelas plant received its ISO 9002 certification in September, seven months after the start of production.

"We were happy to get our certification so quickly," Sanko says. "ISO certification is necessary for companies wanting to do business here."

Sanko says Sagripanti played a key role in getting the plant up and running. A Heil employee since before the Ca-uelas project started, Sagripanti had built his own tanks for the South American market.

"I was looking for a US partner to manufacture tanks here at the same time Heil was researching the possibility of opening a plant in Argentina," he says. Certified Welders

The tank trailer market in South America is influenced by the United States and Europe. Nowhere is this more apparent than in the regulatory front, where tank trailer manufacturers may have to build to either European or US regulations-or both. If the tank is built for use in Chile, it is required to meet the same DOT regulations that US tanks must meet. Tank trailers built for Argentina must comply with standards developed by ADR-the European counterpart to the US Department of Transportation. Brazil is in the process of implementing regulations that combine DOT and ADR regulations. The nation's specific requirements for tank trailers may be finalized by the end of 2000, Sagripanti says.

Either way, employees who weld on tanks must be certified, and Heil developed a training program to provide welders with the skills they need.

Working with a trade school in Ca-uelas, Heil set up a welding course that would allow students to become certified welders. Heil gave the school a welding machine and provided one of the company's team leaders to serve as an instructor for the course.

Market Requirements The Ca-uelas plant currently manufactures only petroleum tank trailers. The design is basically that of the US market-but tailored to meet the needs of South American fleets.

The most common capacity of an aluminum tank trailer is 43,000 liters (11,360 gallons), with 38,000-40,000 liters (10,039-10,568 gallons) typical for steel tanks. The lighter weight of the aluminum tanks (equipped with triaxle suspension) makes it possible for fleets to transport the additional cargo and remain within Argentina's 45-metric-ton (99,200-lb) weight limit.

"A few tank trailers sold here are made of aluminum, but most are steel," Sanko says. "We believe the market will switch to aluminum because of the additional payload these tank trailers can carry."

Among the changes Heil made to its petroleum tank design include the use of a 5.5-mm shell, additional reinforcements, and an occasional bicycle guard.

Many of the components are from US companies. Hendrickson suspensions are standard, for example. However, Ridewell suspensions also are available from the Missouri manufacturer's plant in Buenos Aires.

"We offer options," Sanko says. "But we want to make sure that the options will perform as they should. Before we agree to do that, our engineering department in Athens must approve it."

Raw materials are available locally, including aluminum sheet and extrusions. Alcoa has operations in Brazil, and Aloar supplies aluminum in Argentina.

A Changing Market The tank market, like other aspects of the Argentine economy, is in transition.

"We have hundreds of companies that operate one or two trailers," Sagripanti says. "Trucking companies are starting to form."

These small fleets serve several major oil companies that dominate the Argentine tank trailer market. YPF, the former Argentine national oil company that recently was purchased by Repsol of Spain, has about 45% of the market, Sagripanti says. Esso and Shell have about 17% each, with EG3 owning approximately 12%.

The plant got off to a good start with an order for 80 petroleum tank trailers for Esso in Chile. The Athens plant delivered the first 10 trailers as the Argentina plant was gearing up and then turned the order over to the Ca-uelas facility. With the plant completed and its employees trained, Heil Trailer has increased its ability to compete internationally.

"We are an international company," says Bob Foster, president. "Our plant in Argentina adds a lot to our global presence."

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