Argus' first major contract in Latin America was with NEXTEL Brazil, valued at USD $3.5M. This contract took two full years to implement followed by four lean years as a result of the Telecom bust.

In 2004, DELTA began manufacturing systems in Brazil, thereby making an existing low cost manufacturer even more competitive. Canadian manufactured goods could not compete against competitive products manufactured in Brazil. In addition, as a market share protection strategy, Brazil had long established high tariff barriers of 48 percent import duties. Therefore, through 2004 and 2005 Argus lost its lead position and market share to DELTA.

With the Telecommunications market again beginning to surge in 2005, Argus had to implement a strategy to access Mercosur, a preferential trading block in South America. This block consisted of Brazil, Argentina, Uruguay, Paraguay, Chile and Venezuela. In the late 1990’s American and European Cell operators such as AT&T, Bell South, Telefornica, and TIM (Telecom Italia Mobile) invested heavily in this expanded region, creating a great opportunity for The Alpha Group.

The catalyst for Argus to make a move was when TELMEX, our largest Latin American customer, began to acquire mobile operators throughout South America under the banner of AmericaMobile. AmericaMobile now has a strong presence in every country in South America and Central America. The decision to open a South American facility to access Mercosur was made in October 2005. Candidate countries included Brazil, Argentina, Paraguay and Uruguay. Brazil was the obvious choice, being a current Argus market along with several other influential regions.

The strategy behind opening an Alpha/ Argus facility in South America was to improve business in the Latin American market and more specifically access the Mercosur region. Argus made the business case to establish a facility in South America on its own merit and any incremental sales or manufacturing of Alpha Group products would be considered encouraging.

But why Brazil? Brazil is the ninth largest economy in the world and the largest economy in Latin America. Its industrial sector accounts for one fifth of the South American economy’s production. The country’s scientific and technological development shows remarkable growth, which makes it attractive for direct foreign investments. Brazil has a highly qualified metal industry that successfully combines cheap labor with good quality materials. Brazil also has enormous potential for our products because of its large population and multitude of telecom companies. With a factory in Brazil, it allows us to save on importing and exporting, therefore passing those savings onto our customers in countries within the Mercosur Agreement.

This was a “start from scratch” process and not an easy undertaking. With the assistance of Leo Kleiman, Peter Turnquest and Luis Galvis, the city of Santos, located 1.5 hours from Sao Paulo, was selected because of it being the largest port city in Brazil with a reasonable cost of living and adequate workforce.

After a lot of hard work, particularly on the part of Leo Kleiman, we were ready to accept our first contract in just over 12 months. This process involved the hiring and training of technical staff and the intense research of vendors that would meet the high level of quality required to serve tough markets throughout South America and potentially even the USA and Canada.

In addition to these challenges, new supplier relationships would need to be developed, some Argus designs would need to be altered so as to use local manufactured parts, and more equipment would need to be purchased in order to open the plant. Finally, the facility that was a dilapidated warehouse would need to be transformed into a manufacturing facility that would better suit our needs.

Today we can proudly say, “We are in business.” First, we developed prototypes of Canadian products that could be customized at a reduced cost to meet the needs and applications of the South American market. Today, we have shipped the VISTA line of products, seismic racks, box bays, various outdoor enclosures, and customized products for Brazil, that meet the unique requirements of the Latin American market.

We are on the right track. We have won back NEXTEL Brazil with an initial order for 210 systems valued at USD $600K. Other contracts include Argentina NEXTEL with 76 systems valued at USD $700K, MOVISTAR a subsidiary of Telefornica in Uruguay, Spain with 45 systems valued at USD $200K, Paraguay TELMEX CTI MSO with systems valued at USD $250K, MOVILNET in Venezuela with an open contract of 72 indoor and outdoor systems designed in Brazil, valued at USD $850K, COGA the gas utility in Peru with 20 systems valued at USD $200K.

Under the leadership of Leo Kleiman as Operations Manager, the new facility is staffed with a finance manager, a production manager, an administration person and four technicians. Additional technicians are being hired as demand increases, while Peter Turnquest provides financial oversight and Bryan Locker provides Operations oversight.