Tessler Engineering: Project and Construction Management in Brazil

Interview with Marcelo Tessler, President of Tessler Engineering

Could you give us an overview of the construction sector in Brazil?

Contrary to all information and impressions that people may have from outside the country, Brazil is a country that still has a lot to build and there is a lot to be done. Outside the government, our roads, our ports, our telecommunications system and electricity, and many other things should be built. We have a lot of areas for airports, roads, and systems that need to be built. I think we still have a lot to invest in this country, especially for private companies.

Could you present Tessler Engenharia?

Our company was created by me and my brother 18 years ago for a simple project which was an American chain of cinemas called Cinemark. They hired us to do what they called a tropicalization of their projects. They were coming to Brazil at that time. So far we have built 65 complexes over the past 18 years. At first, we were only doing cinemas. After three or four years, they declined a little bit and we started renovating small shopping malls. Strongly and slowly, we built and grew by about 5 to 10% per year. Twelve years ago we did our first shopping mall from the ground up which was a big construction project in the north of Brazil.

We have been growing steadily since then and in the last few years we have been doing a lot of malls and construction all over the country. We started with two employees and today we have 160, including 100 architects and engineers all over Brazil and administrative staff. Four or five years ago, we decided to not only be in shopping malls and commercial construction, but also the industrial sector. We moved our company a little bit for the markets and industries and today we have 50% of our company in industrial and 50% in commercial construction.

What are the main projects that you have completed in the past and that you are currently working on?

In the shopping mall business, we have been working on the biggest shopping mall chains in Brazil like Iguatemi, BR Malls, an American chain, and Multiplan, which we did in the past. Today, in the Brazilian shopping mall business, you have small investors in little malls outside the country which is also very good. We did one for a big investor in Sao Paulo called Cyrela.

On the industrial side, we are working for international companies like Novartis which is a Swiss pharmaceutical company. We are working for a German company call B Braun, doing a nice climatized warehouse. We are also working for a German company called Fuchs, an oil company, Japanese companies for auto parts, and so on. Concrete and steel are the same for every type of construction, so any type of construction they want to build, we are here to build.

Please tell us about the philosophy of your company and what makes your company different?

We started growing small and strong, which is the main goal of our company. We are three partners and we deal directly with our clients. The clients talk to us; there are no intermediate people between our company and the clients. Of course there are engineers at the job site. We are very concerned about two things: quality and financial support. We invest a lot in quality. We do not work with any kind of money other than our own money. We are a very financially-strong company. Another main characteristic of our company is that we don’t build for government, only for private clients. Government construction is very complicated and we decided not to go down that path. Our main concerns are quality and cost control.

What about your growth strategy? Do you plan to move outside of Brazil?

Because of the country’s situation and the fact that it has been growing a lot in the last 10 years, even during the 2008 crisis we had a lot of work, our clients are slowing down a bit. The growth of our company is based on strongly-secure financial support and we are not going too strong outside the market and we don’t think too big. We don’t want to be the biggest company; we just want to be the best company and be strongly supported. What we are thinking and seeing right now is that we are investing a lot during this crisis in quality control. Our clients and new clients are hiring us because of our quality. Sometimes they even pay a little more for us but we give them back the quality that they want.

What are your challenges?

Our main challenge is to grow with these qualities. If you want to grow a little more, and we have been growing a lot in the last years, the challenge is to keep the quality and keep our clients satisfied, especially in this new time we are experiencing now. After the World Cup and the Olympics, we are pretty sure the investments are going to drop a little bit for private investments. We have the challenge to keep on growing, so to do that we are investing a lot in the quality of our services. This is our main challenge.

Is the company open to foreign investment?

Sure. We are actually doing a partnership now with a German engineering company, although I can’t disclose who the party is because of a confidentiality agreement. They are bringing three new clients – their clients in Germany – which is very good. They don’t want to build a company here. We only have to sit down, talk, and find a way to live together, and they will bring their clients and their knowledge of the market in Europe and the United States. We are open to that and it is a good way to grow. It is partnership with foreign companies.

How do you see the evolution of the sector over the next few years?

Brazil desperately needs to prepare its infrastructure. We have a nasty infrastructure and everybody knows that, especially the roads system and logistics. We have a lot of clients in logistics right now. Harbors and transportation also require a lot of work. We are now investing our commercial targets on those sectors which are the challenge. I think in the next four or five years there will be a lot of work to do in these areas. We are currently working heavily in logistics; we have two big, new projects in logistics and we are investing commercially in that area.

What is your dream for the company over the next five years?

We have been growing in the range of 30% per year over the past years which is outstanding. We keep maintaining our profit and margin. Our challenge in the next five years is to keep growing. Our past growth was very unusual but we would like to grow 10 to 20% per year, keeping our quality and our profit margin for our partners. Of course, if we have investors or outside partners, we want to keep our profit margin for them as well.

What would be your message to an investor as to why they should invest in your company?

Brazil is a very weird environment for everyone outside, not only for investors with money but for infrastructure and engineering. The benefit for investors is that we have been in this market for 35 years. My partners and I have been working as engineers for 35 years and we know the market well. We used to say “this is our island” – we know the tricks and the roads. We know exactly which way you can do things in a very clear and honest way. This is our main thing for people who want to come and invest in Brazil. We are an open door for them.

Would you like to add anything?

The only thing I would like to add is that in spite of everything, this is a good country to be in and a good place to work. For foreign people who have heard a lot, if you want to work honestly and clearly, this is the place to come.

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