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issue: April 2003 Whirlpool Special Section

Whirlpool Special Section
Latin America Operations: The Transformation of a Regional Appliance Power


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APPLIANCE Magazine traveled to Sao Paulo and Joinville, Brazil, to tour Whirlpool Corporation's Latin American Operations.

Multibras, with the largest white goods line in Latin America, is being transformed into a more customer-oriented, innovative, globally connected operation.

Why change? That question might have been raised by some at Brazilian appliance producers Brastemp and Consul a decade ago. After all, the brands were long established and strongly placed in the Brazilian market. Certainly not a bad place to be, considering Brazil had more than 150 million consumers - about as many as in Russia - and good prospects for economic growth.


"We are Whirlpool in Latin America," says Paulo Periquito, executive vice president of Whirlpool for Latin America. He is overseeing significant changes in this important Whirlpool subsidiary headquartered in Sao Paulo, Brazil.

But change they did. Today, the two companies are not separate entities but brands of Multibras S.A. Eletrodomesticos, headquartered in Sao Paulo. Multibras, along with Whirlpool Argentina and Chile, and compressor maker Embraco, constitute the operations of Whirlpool's Latin America Region. Brastemp and Consul have radically altered their cultures, becoming more customer oriented, thinking more innovatively, and operating as an integral part of a global Whirlpool Corporation.

The changes Multibras has made in the past decade have kept it a strong competitor in the increasingly multinational Brazilian market. Bosch, Electrolux, LG, and GE in recent years have bought local manufacturers and/or are importing appliances. Besides capital and established brand names, the new entrants provide world-class technology. And they offer competition even in the current weak economic climate. Despite this, the mid-line Consul brand remains the top seller in Brazil, and the premium Brastemp brand is among the most recognized brands in the country (ranked fourth in spontaneous awareness among all consumer product brands).

Early Whirlpool Involvement

Brastemp had its beginnings as a brand in 1954 in Sao Paulo, as part of Brasmotor S.A. Initially it produced only refrigerators, but over the years diversified into other appliances. It currently makes a complete line of home appliances for kitchen and laundry, and has a new line of small appliances. Its products are aimed at consumers who look for technological innovation, practicality, and style. Among its firsts are refrigerators with polyurethane insulation, frost-free refrigerators, self-cleaning ranges, vertical freezers, and dishwashers.

 


Consul brand air-conditioners include models, like this one, with a timer function. The brand's Eficiência Master line meets the Brazilian government's Procel standards for excellence in energy efficiency. Consul and Brastemp air-conditioners are produced in Manaus. This facility also produces microwave ovens.

Consul had its start a few years after World War II, when a group of friends decided to make refrigerators. The main facility was in Joinville, about 300 miles south of Sao Paulo. Consul, too, diversified over time. In the 1970s, it added air-conditioners, and in the 1980s, clothes dryers and vertical and horizontal freezers. The 1990s saw such products as self-cleaning ranges and top-loading automatic washers. Microwave oven production was added in the beginning of 2000.

Through most of their histories, the companies operated separately and directly competed. This situation continued even after 1976, when Brasmotor acquired Consul. It was not until 1994 that Brasmotor integrated Brastemp, Consul, and another appliance company, Semer, into the new Multibras entity. Also associated with Multibras was an operation in Argentina and Chile.

Far from being a newcomer to the Latin America market, Whirlpool Corporation first bought a minority stake in Brasmotor some 40 years ago. It was not until 1997, however, that Whirlpool acquired majority control. Today, Whirlpool Latin America includes Multibras, Whirlpool Argentina, and Chile and compressor maker Embraco. Whirlpool Latin America had U.S. $1.5 billion in 2001 sales, while employing some 16,000 workers. More than 6,000 of these are at Multibras in Brazil.

Paulo Periquito is executive vice president of Whirlpool for Latin America, which includes the whole Brasmotor Group and its companies: Multibras and its subsidiaries, Embraco (compressors), Brascabos (electric systems, cables, and cords), and Multibras da Amaz™nia (plastic parts). Mr. Periquito points out that "being connected to one of the world's top appliance companies is a major advantage."

"In Brazil, people want to know where your technology comes from, how healthy your company is, what kind of support you have. We can tell them we are a strong Brazilian company associated with a strong parent company."

New Vision

The 1994 merger offered advantages, such as consolidation of manufacturing and administration, and better economies of scale. But it also provided a major challenge: the need to integrate the company cultures. Some of the cultural differences were derived from location - Brastemp and Semer were centered in urban Sao Paulo, while Consul was located in less populated Santa Catarina state.

To address these and other anomalies, and to develop a new company culture, Multibras took part in what was called the Vision Brasmotor Project. All workers participated in a structured discussion, and worked out a unified view of the company and its goals. In 1998-1999, the project focused on aligning the company with the global Whirlpool Corporation strategy. By all accounts, the project has been successful, with all employees sharing the same values and company culture. Beyond that, these values are now aligned with Whirlpool Corporation's, in what has become a worldwide model.

Since the end of the Vision Project, Multibras has continued to look at ways to change mindsets and spark innovative thinking. "We are now embarking on a new process," remarks Ricardo Acosta, vice president of Innovations and Service, who once headed the Vision Brasmotor Project. "We are good at manufacturing, but our business acumen needs to be improved," he says. "To do so, we began training people in innovation tools and processes in January 2001 and eventually everyone will participate. In the training, we use innovative thinking to help us find customer solutions. Through the use of these tools, people are transformed - their power, energy, and emphasis are all different."

In the process, which may take 3-5 years, the company is looking at five customer loyalty drivers: service, the purchasing experience, communications (like advertising messages), the customer relationship (how, why, and when customers contact the company), and the product. These are the same drivers used elsewhere by Whirlpool.

Which Brands?

While the Whirlpool brand has been successfully introduced in Europe and Asia, there was a strategic decision not to market the brand in Brazil. Instead, Whirlpool Corporation acquired two strong Brazilian brands that have been on the market for 50 years. Consul offers the leading market position, while Brastemp provides a high return on equity and great brand awareness.

However, one North American brand - KitchenAid(R) - is making a limited appearance in Brazilian stores. That cultural icon, the KitchenAid stand mixer, is being marketed alongside a new "Professional Quality" line of Brastemp brand blenders, coffee makers, and other small appliances.

The brand situation differs in the area covered by Whirlpool Argentina. Here, the Whirlpool brand is the market leader, with the Eslab—n de Lujo and the Consul(R) brands.

The Whirlpool brand has successfully been introduced in the premium segment. Following up on a Whirlpool Corporation global initiative, Multibras is aligning its strategy to reach unmatched levels of customer loyalty.

Product Leadership

Throughout the year, Whirlpool Latin America launched a number of new and innovative products, addressing recently identified consumers' needs. Brastemp reinforced its innovation and trendsetter brand image through the introduction of Brastemp bottom-freezer configuration for refrigerators, conceived using the most modern and innovative ergonomic concepts, with great response from consumers. Brastemp successfully launched new premium cooking products (cooktops) and a new washer line (6- and 8-kg models), significantly improving robustness and broadening product offerings.

Consul updated its entire product line, highlighting: Consul's new 5K and 7K BTU air-conditioner models, with innovative features; a new split line; a 6-service dishwasher; and the entrance into the frost-free refrigerator segment.

Superior energy efficiency has been one of the hallmarks of many Multibras products. The main reference on energy efficient products for Brazilian consumers is the government-awarded Procel label. Multibras leads the ranking of awarded products. In 2002, it was awarded 77 Procel labels among refrigerators and room air-conditioners, up from 20 in 2001. Brastemp and Consul refrigerators now use 40-50 percent less energy than similar products manufactured until 1994.

As of 2000, all refrigerators manufactured by Multibras are CFC-free, 9 years ahead of the national deadline established by the Montreal Protocol. The company invested $8.8 million in this project, with $5.5 million funded by the Multilateral Fund of the Montreal Protocol. Refrigerators now use HFC-134a. Multibras also participates in a program in which qualified technicians collect CFC-12 or HFC-134a from old refrigerators.

Access to technology was one of the immediate benefits of Whirlpool Corporation's control of Multibras in 1997, reports Gersio Passerine, cooking technology director. "Today, we use the same databases around the world, and everyone is working under the same methodology. We are part of the Corporate Technology Organization. Because of the international interaction, directors, managers and others in the technology and other areas must speak and understand English.

"For the products we make here, we draw upon Whirlpool Corporation technology from all over the world. We do our share, operating technology centers for cooking and refrigeration products. Recently we helped develop a single door design that Whirlpool has introduced in Latin America and Asia."

Global Logistics

Whirlpool Corporation has several common suppliers for its operations around the world, for both raw materials and components. There is a joint effort in other regions to leverage Whirlpool's global procurement organization.

Within Brazil the supplier base is large and broad. It is made up of several large local companies and many multinational organizations. "Multibras interacts with these companies with a long-term perspective in mind," observes Jose Drummond, vice president of Logistics and Procurement. "The currency fluctuations in the recent year have forced us to use Brazilian companies as much as we can. Today, the direct import is only considered what really cannot be procured locally."

"It's a tough market now," points out Mr. Periquito. "The Brazilian economy has been lagging the last few years, and Argentina has had a dramatic reduction. With this in mind, we are exporting our appliances more. We have aggressively increased exports over the last 2 years, and plan to continue to do so. Multibras has global quality standards and a very productive and competitive structure. Our surplus capacity and the current Brazilian exchange rate, which make our export prices more competitive, help to support our tendency to export."

"We are Whirlpool in Latin America," summarizes Mr. Periquito. "We have strong brands in Brazil, and can bring a lot to the markets in Latin America and elsewhere. By sharing our experiences with Whirlpool Corporation, we are strengthening both our own operations and the rest of Whirlpool. By working closely together, I'm confident we can deliver a successful brand strategy for Whirlpool in Latin America."


APPLIANCE Magazine Whirlpool Special Section - April 2003

 

 

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