Does it make sense for a trailer manufacturer to produce its own axles, brakes, suspensions and other components?
Probably not if that manufacturer is located in the United States where multiple companies compete with one another to deliver a quality product as efficiently as possible. But building trailers in Brazil is a different story.
The market is smaller. The supplier base that manufacturers need, while growing, has not always been there in years past to provide the components that trailers must have. As a result, the manufacturer that has been best able to meet its own needs has had an inside track on meeting the needs of its customers.
That ability has been a major factor in the growth of Randon Participacoes SA based in Caxias do Sul in Brazil's southernmost state of Rio Grande do Sul. The 50-year-old company has grown into a conglomerate containing more than 10 companies. It is the largest trailer manufacturer in Brazil and one of the largest outside North America.
"The effects of World War II were still present in the Brazilian economy when my brother Hercilio and I started our company in January 1949," says Raul Randon, president and chairman of Randon Participacoes SA. "The supply of spare parts for trucks and machines was short, and they had to be imported. We decided to take advantage of opportunities."
The opportunities included manufacturing the components Randon needed to build trailers. However, Randon has gone beyond meeting its own needs and is supplying components for other trailer manufacturers and for the nation's growing truck-manufacturing industry. Randon and its affiliated companies supply such truck customers as General Motors, Scania, and Mercedes Benz.
Among the components Randon produces-either independently or in partnership with other companies-are trailer axles, drums, hubs, air brakes, brake chambers, slack adjusters, suspensions, landing gear, fifthwheels, kingpins, refrigeration units, curtains for curtain-side trailers, and rail gear for bimodal trailers.
Astor Milton Schmitt, corporate director, says vertical integration has made Randon's growth possible.
"The first impression people from North America have when they visit us is that we are crazy," Schmitt says. "But if we didn't build components, we couldn't build trailers.
"That is changing now-for us and for all of Brazil. We are progressively derating vertical integration. In those cases where we as a company are not as efficient as an outside supplier, we will outsource that component."
Schmitt and Norberto Fabris, industrial director, look back on times when Randon was even more vertically integrated than it is today. Some of these outsourced products include wetline kits for dumps, hydraulic cylinders, pumps, valves, and tank trailer manholes. At one point, Randon even made the discharge valves for cement tanks-a product that now comes from an outside supplier.
Forming Partnerships Many of the components that Randon produces are the result of partnerships the company has established with other companies, including Meritor Automotive and Carrier Transicold from the United States and Jost Werke AG of Germany. For example:
* Freios Master Sistemas Automotivos Ltda is a joint venture between Randon and Meritor that has been in business since 1986. The operation produces S-cam brakes, air chambers, spring brakes, and slack adjusters in a separate 8,500 m2 (91,500 sq ft) plant built on the same property in Caxias do Sul where Randon manufactures trailers.
The facility has the capacity to produce 300,000 brake assemblies and 1,800,000 brake shoes annually. Almost one-third of production goes to South American truck manufacturers. Randon consumes 25% of what Freios Master produces, with another 13% going to other trailer manufacturers. Freios Master exports 35% of plant output-30% to the North American market and the remaining 5% to Europe and other South American countries. The operation received its ISO 9001 certification in 1996, QS 9000 in 1998, and ISO 14000 in 1999.
* Fras-le SA. In January 1996, Randon added Fras-le to its roster of companies. The 45-year-old friction material manufacturer produces more than 9,000 items, including brake pads, brake shoes, and clutch linings for a wide range of transportation equipment such as trucks, trailers, railcars, subway cars, and industrial equipment. The company has a plant in Caxias do Sul and another in Argentina. It also has four sales offices in Brazil, another sales office in Europe, and a distribution center in the United States.
* Jost Brasil Sistemas Automotivos Ltda is a Randon joint venture with Jost Werke AG of Germany. Its plant, also located on the Randon site in Caxias do Sul, was completed in 1996 to produce fifthwheels, landing gear, kingpins, and container twist locks. In addition to supplying Randon trailer production, the facility ships product to other major trailer manufacturers in Brazil, including Facchini, Gotti, Guerra, Krone, Noma, Pastre, Recrusul, and Schiffer. Truck manufacturers that Jost Brasil supplies include Ford, General Motors, International, Iveco, Mercedes, Scania, Volkswagen, and Volvo. The plant, with the production capacity of 17,000 fifthwheels per year, received its ISO 9001 certification in 1998 and its QS 9000 certification in 1999.
* Carrier Transicold Brasil Ltd, a joint venture with Carrier Transicold of the United States, specializes in bus air-conditioning and transport refrigeration. Randon used to manufacture its own refrigeration units but discontinued that product line after the joint venture with Carrier was formed in 1993. Located at the Randon campus in Caxias do Sul, the plant assembles rooftop air conditioners for buses and offers specialized metal fabrication.
Carrier Transicold Brasil Ltd no longer manufactures transport refrigeration units, choosing instead to import them from the US. However, the company continues to represent the Carrier line through a network of 65 distributors throughout Brazil.
In addition to the joint ventures, Randon also has an agreement with Hesse Corporation to manufacture that company's beverage body design for the Brazilian market and Tafesa of Spain to produce bimodal rail gear.
Manufacturing Trailers The joint ventures occupy a significant part of the Randon complex in Caxias do Sul. However, Randon is first and foremost a trailer manufacturer. The company offers a wide range of models, including dry-freight and refrigerated vans, dumps, platforms, and tanks. The company produces about 10,000 trailers annually. Trailers, combined with other on-highway and off-road vehicles make up 57% of the $405 million the company sold in 1999.
"We sell in almost all continents," says Norberto Fabris. "We sell mainly in South America, but we also do a fair amount of business in Africa, Europe, and North America. Each country has its own set of rules and regulations. They all have their own design preferences. To be successful, we have to produce trailers specifically for that country."
Even within South America, customer needs vary significantly.
"Tank trailers built for use in Chile, for example, will have a different shape from the tanks built for Brazil, and the welds will need to be X-rayed," Fabris says.
The mix of products includes hundreds of models of grain semitrailers, dry-freight vans, dump trailers, tanks, refrigerated vans, bimodal transtrailers, and lowbed heavy haulers."
New Models Randon continues to expand its trailer line. The company recently introduced its first B-train silo set with a capacity of 43 cubic meters (1,518 cubic feet) between the two trailers and a payload capacity of 36,210 kilograms (79,829 pounds) when pulled by a tractor weighing 8,700 kilograms (19,180 pounds).
In 1999, Randon began offering its Bimodal Transtrailer System that enables trailers to double as railcars. The decision to market the system came after several operational tests on Brazilian wide-gauge (1.6 meters between the tracks). Built under a licensing agreement with Tafesa of Spain, the Transtrailer system includes a special air suspension. It complies with Brazilian and European railroad standards.
The Bimodal Transtrailer System allows axles to be interchanged. With interchangeable axles, trailers can operate on different railway gauges.
Randon will be offering bimodal versions of its trailer line, including refrigerated and dry-freight vans, grain trailers, and tanks.
Multiple Plants Including the trailer manufacturing operations and the plants of the various joint ventures, Randon's campus has a combined 82,600 square meters (889,000 square feet) under roof.
In addition to its manufacturing operations in Caxias do Sul, the company operates a trailer plant in Guarulhos, a suburb of Sao Paulo and another plant in Argentina. The 135,626-sq-ft facility in Guarulhos produces aluminum dry-freight vans, curtainside vans, and beverage bodies.
The Caxias do Sul plant supplies what essentially is a platform trailer, to which the Guarulhos plant adds the sidewalls and roof. However, when it is advantageous to assemble vans in Caxias do Sul, Guarulhos can supply completed sidewalls-if the customer wants an aluminum trailer. Caxias do Sul produces sidewalls for steel van trailers.
The Guarulhos plant has separate lines for dry-freight and curtainside vans. Beverage bodies have their own dedicated production area in the Guarulhos faci lity.
One of the recent changes in Guarulhos is the company's new curtain manufacturing cell. Randon previously built a platform trailer and contracted with an outside company to convert the platform to a curtainside van. The outside company, however, had financial problems, leading Randon to bring the work in house. A Belgian company supplies the fabric which Randon assembles into curtains and installs on trailers.
Randon sells its trailers through a network of 60 dealers in Brazil, 12 in Argentina, one in Chile (with locations in the north, central, and south regions of the country), and one in Uruguay. In addition, the company has representatives in Colombia, Peru, and Paraguay. Another dealer is in the process of being signed in South Africa.
Argentine Operation Randon opened a separate trailer manufacturing plant in Argentina in 1994-the company's first outside Brazil.
"There were a lot of reasons for a plant in Argentina," Astor Schmitt explains. "We were eligible for incentives from the Argentine government. Local content regulations provided another reason. But mainly, if we were going to do business in Argentina, we had to have a personal presence there."
Argentina and Brazil are two countries with a strong spirit of nationalism. Marketing successfully in the other country can be challenging-regardless of which nation the company is based. Schmitt offers three reasons why Randon has done well in Argentina.
1. The product. Randon tailored its designs to meet the preferences of the Argentine market. "When we first began our operations there, our plant wanted to build trailers the way we build them in Brazil," Schmitt says. "That would be the easy way, but if the market prefers steel, you don't try to sell them wood. We wanted to offer the Argentine market a product with an Argentine face."
2. Commitment. Randon used its substantial investment in the plant and equipment to convince the market that the company was committed to provide Argentine trailers to the Argentine trailer market. "We wanted to make sure that no one thought we would just come in here with a parachute," Schmitt says.
3. A new approach. Randon entered the market with spare parts available and a warranty beyond what the market expected, he adds.
"We have been successful in Argentina," he says. "That is because we have done there what we have done here-provide the customer with what he needs. When you are in business, you have to respect the majesty of the market."