The duplexes and triplexes that CSI builds are different from the average U.S. starter home. They come without fixtures and appliances, and the new owners fill out the rest.
Life After Turblex: Mace building homes in Brazil
Jennifer Muzinic
Posted online
Since Guy Mace sold his minority interest of Turblex Inc. to Siemens in fall 2007, he's been spending more time at Incline Village in Lake Tahoe, Nev. But his retirement hasn't exactly been quiet.
Mace befriended the man who sold him a home in Tahoe, and now, Mace and Bob Huff are business partners in the midst of building hundreds of homes in Brazil.
Early this year, Mace and Huff partnered under the name CSI Incorporacoes Imbolilarias LTDA and began building homes in Curitiba, Brazil, about 200 miles southwest of São Paulo along the South Atlantic coast. CSI plans to build nearly 500 homes in two subdivisions, said Mace, now in his late 60s.
Building in Brazil was Huff's idea, Mace said, noting his partner had experience in developing properties on the U.S. West Coast. Huff already was living in Brazil part-time and was looking to move there permanently and begin a development project. Mace wanted to move some capital offshore, he said, declining to disclose the amount of money tied up in his international plans.
"It was just to diversify investments and get away from the present mess of economics in the U.S.," said Mace, who's no stranger to foreign business.
He started Turblex in 1989 in a partnership with Denmark-based compressor company HV-Turbo, which later was sold to Siemens. Mace held 49 percent of the company until the October 2007 buyout. His son, Guy Colby Mace, now runs the 130-employee Springfield plant that produces industrial blowers for its Germany-based parent Siemens.
Know the markets
The U.S. economy has caused many business owners to reduce rather than expand, according to Loretta Wallis, past president of the Greater Ozarks International Trade Association. However, that may change for some companies, she said.
"The belief is that the recession is behind us, and that's optimistic, but I think it has some considering expansion," she said.
For those with capital to invest, Drury University finance professor Paul Nowak believes international investments can help diversify funds.
"The foreign markets have come back a little faster than ours, so it's worthwhile to get into," said Nowak.
According to the city of Curitiba's 2008 Investor Guidebook, the local economy fares well compared to national averages. The investor guide notes the city's population was 1.8 million and its gross domestic product was approximately $20.2 billion USD in 2007. ($1 is worth approximately 1.75 Brazilian reais.) Mace said Brazil, which is preparing to host the 2016 Olympics in Rio de Janeiro, is self-sufficient in terms of raw materials and interest rates are around 9 percent.
"(Brazil) has a forward-thinking government, and the new middle class has far outpaced available housing," Mace said, noting that the country is facing a housing shortage of about 7 million homes.
The greatest need is for starter homes, Mace said, and CSI is building duplexes and triplexes that are about 800 square feet per unit and sell in the mid-$50,000s.
"The starter homes in Brazil are interesting because essentially, there is one large room on the first floor, two rooms on the second floors, and one and a half bathrooms," Mace said.
There are no fixtures or appliances, although the homes are wired for electricity, and the homeowners finish the spaces themselves, Mace said.
Currency risks and rewards
In January, CSI began building homes in the Vitoria Regia subdivision, where about six contractors are building on 1,800 lots. About half of the 30 homes the partners plan to build there have sold, Mace said. The homes are selling within a week of completion, he added.
The second subdivision CSI is investing in, Ponta Grossa, is entirely driven by the partners. Mace and Huff are working on the infrastructure and expect to start building homes in March or April - about the time they expect to finish at Vitoria Regia.
There will be approximately 460 homes built in Ponta Grossa, and Mace said he expects the project to take about three years to complete. The income from sales will be reinvested in additional phases, he said.
"It's pretty much self-perpetuating, because we're building so many homes at a time, and they're selling very quickly. We're hoping to turn our money three times a year," he said.
Keeping earnings within a country reduces some of the risk of international investments, Nowak noted.
"One of the biggest issues is dealing with the currency. I've worked in some countries where inflation was so high it was ridiculous," he said, adding that by bringing foreign earnings back into the U.S., investors risk devaluations of their dollars.
Nowak said though the work is hard - often dealing with infrastructure, shipping and development issues - the rewards on international investments can be great.
"If you don't believe that, go to a McDonald's in Moscow," he said. "You'll be waiting in line for 45 minutes."
Even with the risks, Mace said he feels confident in his investment in Curitiba. In a way, he said, the region is a lot like the Ozarks.
Average salaries and costs of living are comparable, Mace said.
"You don't go offshore and invest a ton of money unless you have a pretty good idea of what the area is like and what you're investing your money in," he said.Economywatch.com forecasted the countries expected to have the most growth in 2010 based on data from the International Monetary Fund, which comprises 186 countries, working to foster global monetary cooperation, according to www.imf.org.
This installment of Springfield Business Journal’s Architects & Engineers Project Report showcases 26 endeavors by area design and engineering professionals.
