Several North American regions are seeing a surge in oil and gas production. The United States has seen growth from east to west in the Marcellus Shale in Pennsylvania, Ohio’s Utica Shale and the Eagle Ford Shale in Texas. Canada’s oil sands in Alberta have caught the eyes of energy producers, and the Bakken Shale – which spans North Dakota, Montana and Saskatchewan – has brought growth to both countries.
Not to be outshined however, South America – and particularly Brazil – is gaining energy in the oil and gas market, as well. According the U.S. Energy Information Administration (EIA), Brazil has 14 billion barrels of proven oil reserves hosted mainly in southeastern offshore regions in the Campos and Santos basins. More than 90 percent of Brazil’s oil production is in deep-water offshore reserves and consists of mostly heavy grades. The EIA expects Brazilian oil production to hit three million barrels of oil per day by the end of 2013.
“There are five major countries in South America but Brazil represents 50 percent of the continent,” stresses Lew Weiss, director of sales and marketing at All Metals & Forge Group Inc.
“There are 190 million people in Brazil and it’s the South American country most like the U.S. in terms of industry,” Weiss continues.
“It has a very strong oil and energy program there and they found this huge reserve there about a year-and-a-half ago,” he adds. “[In] my opinion, Brazil in three years may be the third-largest oil producer in the world, so that’s the place I want to be.”
According to the EIA, Brazil is first in South America and the third-largest oil producer in the Western Hemisphere, following the United States and Canada. Weiss’ prediction, however, would have Brazil surpassing both countries, and All Metals & Forge has made investments to become a key supplier in the market.
All Metals & Forge is an ISO 9001- and AS 9100-certified company specializing in open die forgings and seamless rolled rings. In addition to the oil and gas exploration, energy and petroleum markets, the company supplies ferrous and non-ferrous materials to the aerospace, aviation, construction, defense, energy, manufacturing and general metalworking industries.
In the oil and gas market, its components are used in down-hole drilling and fracking equipment. The company’s two U.S. plants in Los Angeles and Cleveland produce smaller shafts ranging from 27-inch-diameters to 6- and 7-foot-diameters. In its China facility, All Metals & Forge can produce shafts weighing up to 80,000 pounds and as large as 40 feet in diameter.
The rising price of oil and gas has fueled exploration and increased All Metals & Forge’s business, and Weiss says it can only go higher.
“In 2012, we did $25 million,” Weiss explains. “We are looking to take that revenue to $40 million within the next 18 months based on expansion into South America and aggressive selling in the United States and Canada.”
Into New Territory
Last summer, All Metals & Forge began researching Brazil’s oil and gas market and setting itself up to attract business from this market. Weiss says the key is to develop one-on-one relationships.
“When we started discussing this expansion, we had someone in our New Jersey office who speaks Spanish and Portuguese and who is from Brazil to do some old-fashioned cold calling and introduce ourselves to the large companies,” he says.
The company launched a separate website designed specifically for the Brazilian market. It sent out direct-mail and email promotions. The exposure has already begun to pay off: All Metals & Forge began receiving RFPs five months ago and the company is preparing for a meet-and-greet and business conference in July to foster even greater relationships. Weiss says the company is also expanding its view and not just dealing with end-users.
“As opposed to only dealing with one customer at a time, a faster way to get into the market is working with distributors,” he says.
“There are over 1,000 distributors down there and we are preparing to do this broad-based business conference in July to present who we are, what we do and what our plan is in South America, starting with Brazil,” he adds.
As the company perfects its approach to break into the Brazilian market, Weiss says it will gain knowledge on how to expand even further. All Metals & Forge wants to build operations throughout the continent.
“Expanding into Brazil is the first step, but we have four other countries that we’re looking to target after Brazil: Argentina, Colombia, Chile, and since there’s been a political change there, Venezuela,” Weiss says. “Our goal today is to improve our position in North America and expand into South America.”