An innovative partnership for local manufacture has seen AGD Systems break into the ITS market in Brazil.
In 2014 AGD Systems identified an exciting opportunity to introduce its enforcement radar to the Brazilian market. The result is a creative approach to partnership working that has seen AGD share its expertise in an innovative collaboration that enables some parts of the radar to be manufactured in Brazil while others are supplied from the UK. Without this unique solution, says AGD’s commercial director Ian Hind, entry into the Brazilian market would not have been possible.
In at the Start
Car ownership in Brazil is on the rise. The world’s fifth most populous country has more than 90m vehicles on the road, but it also ranks fifth in terms of annual road traffic mortality, and in recent years the government has ramped up its efforts to impose stricter laws and improve enforcement.
With the fourth-largest highway system in the world and a mandate to improve road safety, Brazil presents ITS solution providers like AGD Systems with a great opportunity. Unlike the saturated UK market, there is still much scope in Brazil and other South American countries, where most speed enforcement still centres on loop-based technology.
Until recently, few enforcement systems in Brazil had incorporated radar, but with new legislation taking shape, AGD identified a huge market segment opportunity.
When its UK team originally visited Brazil in 2014, the government’s specification for manufacturers was still at the approvals stage. Now, with radars being specified in more and more government tenders, AGD is in a strong position.
The Need for Speed
AGD’s experience in Brazil shows that there are no ‘quick wins’ when tapping into new markets overseas. “The challenge is to find the best way of introducing your products by taking the time to understand the culture and create the right working relationships,” explains AGD’s commercial director, Ian Hind.
AGD’s parent company was recently renamed The Traffic Group (originally it was AGD Group Limited), and the group’s commitment to enforcement was underlined with the acquisition of MAV Systems, whose intelligent camera systems already incorporate AGD’s radar technology. AGD Systems has a history of successful export endeavour, which stands it in good stead to help achieve The Traffic Group’s ambitious export sales objective.
Having previously worked with the Department for International Trade on export opportunities, AGD commissioned an Overseas Market Introduction Service (OMIS) to explore opportunities in Brazil. This led to various industry introductions and several visits by a team from AGD, with local support from the Brazilian Embassy.
“We quickly identified that the sheer scale of the market makes it a very exciting prospect for us,” continues Ian Hind. “Brazil has a much larger population than the UK, with significantly more suppliers of enforcement systems. Car ownership is increasing all the time. With cars comes the need for speed, and with that comes greater emphasis on road safety.”
From its early visits AGD began to develop its understanding of the market in Brazil and make vital contacts: “It took many man hours and a lot of work to get to where we are now,” says Ian. “It’s not something that should be undertaken lightly.”
He compares conditions in the market with the evolution of the now-familiar yellow speed enforcement cameras in the UK. “In 2006-7 our technology went into the early radar-based speed enforcement systems used in this country. Because we have prior experience of helping solution providers achieve homologation around the world, we know how important it is to build relationships – it puts us ahead of the curve when the time is right for that particular solution.”
Local Solution
AGD quickly identified that it would need to form a partnership with a Brazilian firm – importation taxes and local taxes for imported products in Brazil are high, which meant AGD would need a local manufacturer to build and comprehensively test its radar under licence.
ITS image capture manufacturer Pumatronix was the natural partner, as it already supplied the majority of the system vendors with cameras and had the right manufacturing quality and environmental ISO accreditations in place. AGD has an excellent reputation for its commitment to the success of its partners, and has developed a close relationship with Pumatronix. A team from Pumatronix has visited AGD’s Gloucestershire headquarters, and one of AGD’s bilingual commercial specialists is now in communication with them on an almost daily basis.
“Pumatronix has an ambitious and capable team with experience drawn from working for a range of enforcement system providers,” explains Ian Hind. “The relationships they have in the industry are crucial. Building on their considerable knowledge, they decided to start their own company to develop a camera system that was in advance of what was available in the market at that time. Their predominant products are lens-based – cameras, flashes and ANPR systems. Pumatronix is very successful and growing fast, having just moved to new premises in Curitiba. They also market their solutions in Chile, Mexico and other South American countries.”
He believes Pumatronix is a great partner for AGD because it has developed cameras and manufacturing processes and it knows how to sell technical products, and has an excellent reputation in its home market. “It’s a very natural fit for both companies. We’re both ambitious and successful, so if you put the two together you are going to get a better result. Pumatronix and its customers also recognise how good AGD’s solutions are, and the value we bring to the partnership. They already supplied many of the existing photo enforcement manufacturers, so we had a ready-made distribution channel straight through them.” The solution that AGD focused on for the Brazilian market was its 350 enforcement radar.
Working Together
The partnership with Pumatronix is something both parties were prepared to invest in. “They brought three of their senior people over here to meet our team. Their MD, technical director and operations manager each made a radar here and then they went back and shared that experience with their team. We supplied kits of parts to assemble the radar over there, so they had already undergone all that learning in preparation for making bigger volumes.”
AGD also created a set of test equipment, Oberon, which was used to train one of the Pumatronix team in the UK, in a controlled environment, before it was sent to Brazil. “Our CEO wanted to see the performance of the radar once it had been made by Pumatronix, and they need to go through the process because they will have to be able to tell their customers that the radar has been tested to a specific level of performance,” explains Ian.
This bespoke test equipment is fundamental to the arrangement for Pumatronix to manufacture the 350 ENF radar under licence in Brazil – a first for AGD Systems. Capable of testing speed accuracy up to 250kph, with true ranging and speed simulation, Oberon gives Pumatronix a complete calibration system traceable to national standards, which means AGD’s high levels of product assurance are maintained for the South American market.
Emphasising the importance of creating mutual understanding, Ian Hind continues: “It’s a meeting of different cultures – the way they do business and what they expect, and it can take some time to get used to it from both sides.”
Commercial administrator Cristina Riveiro has played a crucial role in the AGD team, not just because she speaks fluent Portuguese but also because she has lived in Brazil and understands the culture.
“There are still very few international business norms,” concludes Ian. “It would be different again in, say, Taiwan or South Korea. We wouldn’t have got anywhere without clear planning objectives from the team here, plenty of patience and a good sense of humour. Also the in-country support from both embassies and the Department for International Trade has been excellent. And of course, having knowledge of the language and culture has opened doors for us.”
Persistence Pays Off
The hard work has certainly paid off. AGD has received its first volume order, via Pumatronix, as part of a tender from a leading speed control system vendor that has now successfully homologated with the AGD radar (the approval process, conducted at a third-party testing facility, for the entire photo-enforcement system, including the AGD radar).
“It’s a very demanding process for any company to get across the line with these tenders,” explains Ian. “Tender winners typically have a very short timeframe to supply equipment, so we have to turn the product around very quickly. But this is just the first order, and as we understand it there are more to follow,” explains Ian.
“Provided it goes smoothly and the units are installed this summer, we’re optimistic that we are going to take some substantial orders from Brazil in the next financial year. Pumatronix will invest more time, effort and money into its own supply chain, in order to be much more agile at meeting market demand. The whole region is a big growth area for enforcement – not just Brazil but the wider South American continent.”
He concludes: “This was a big step for us – not many other companies of our size are so proactive. It’s the first time we have allowed a local firm to partly manufacture our products. There were some concerns about whether manufacturing under licence was the right way to go for us, but we recognised it was the only way if we wanted to enter the Brazilian market. We’re now looking ahead to further export opportunities in the enforcement sector and in other sectors where The Traffic Group companies operate – for example, pedestrian detectors. It’s a very exciting time for us.”