Brazilian Jewel

Industry players looking to profit from the boom in water and gas supply projects in Brazil need strong partners locally. GF Piping Systems is now perfectly poised to make its mark in the region thanks to the acquisition of pipe manufacturer FGS.

Brazil is currently one of the world’s most dynamic markets for water and gas supply. The country is experiencing a boom in infrastructure projects in spite of the COVID-19 pandemic. On the one hand, this has been the result of a governmental drive to privatize state companies, and on the other, it has been girded by an upswell in interested investors expecting good business and growth in the region. Only 10% of Brazil’s utility companies are currently in private hands. “In this sector, we’re expecting an investment volume of around USD 130 billion by 2035,” says Chris Blumer, Head of GF Piping Systems South America. “There is enormous potential there.” The December 2020 acquisition of pipe manufacturer FGS Brasil Indústria e Comércio from the municipality of Cajamar in the state of São Paulo strengthened GF Piping Systems’ position. The division has been active in Brazil and other South American countries for more than 20 years, but its activities had been limited to importing and selling GF Piping Systems products and providing local service to customers. “Our growth strategy for 2025 calls for us to increase our global market share and strengthen collaborations,” explains Chris. “We will continue to add partners on the ground to help us expand our business in South America.”

Chris Blumer (65) understands the South American markets for GF Piping Systems products and applications. Blumer began his career at GF's textile machinery division in Ruti (Switzerland) in 1971 and has worked at GF in several divisions and countries for over 50 years to date. Blumer has lived and worked in the US for over three decades now, the last 5 years as Head of GF Piping Systems South America, he is responsible for the business in the countries of Mexico, Central and South America.

Producing locally

In Brazil, the largest utility market in South America, any company aiming to win contracts for infrastructure and public building projects needs to have in-country production sites. “That is largely due to high import costs and associated taxes,” says Chris. “These make imported products and services much more expensive,rendering international suppliers far less attractive than domestic producers.”

ACCESS FOR ALL

In 2018, only half of all Brazilians were connected to the wastewater management system, resulting in environmental and hygiene-related problems. The government plans to implement long-term improvements by 2033.

Percentage of Brazilians with access to wastewater management

38.5 percent of Brazil’s drinking water never reached consumers in 2018. The main reasons were aging pipes and leakage.

_{Sources: GWI, Switzerland Global Enterprise}

Market data for GF FGS in Brazil

Market volume for gas: USD 10 - 15 million
Market share of GF FGS: Fitting 40–50%/Pipe 75%
Market volume UT water: USD 1.2 billion (all materials, excluding waste water)
Market share of GF FGS with HDPE products: Fitting 10 - 20%/ Pipe 30%
Market volume for industry: USD 1.1 billion (all materials)
Market share of GF FGS with non-corrosive/plastic materials: 10 - 15%

Significant water loss

Particularly when it comes to the country’s water supply, pipes need to be reliable with leak-free connections in order to combat the very common problem of potable water loss. The current rate of non-revenue water in the country is 38.5%. GF Piping Systems has in the past worked very closely with SABESP, the largest water utility company in Brazil, for example, collaborating on a largescale project to improve the efficiency of water use in São Paulo. “We completed an important first phase of this project in 2019, with more phases to come,” says Chris. He estimates that GF FGS – the name of the new company – holds a 75% share of the Brazilian market for HDPE piping systems. The acquisition “has dramatically improved our chances for expansion in Brazil and all of South America,” says Chris. “GF FGS now has two local production sites.” FGS opened an additional plant in the eastern region of Recife in 2019, in addition to the plant in Cajamar. The company numbered among the most influential manufacturers and suppliers in the Brazilian utilities market for HDPE piping systems. The same management team and the employees responsible for past successes have taken the reins at GF FGS. “Never change a winning team,” says Chris Blumer.

billion Brazilian real (R$): The projected market volume for the expansion of water supply and wastewater management in Brazil by 2033. That is equivalent to CHF 118 billion.

km of new piping systems must be built to ensure efficient wastewater management in Brazil. An additional 200’000 km would be required to supply the country with drinking water.

Number of employees at GF Piping Systems in Region South America. Around 260 of these employees are in the Brazilian market.