January 3 (Bloomberg) -- Juan Carlos de la Llera was sleeping soundly with his wife in the early morning of Feb. 27, 2010, when the earth off the coast of central Chile convulsed in the sixth-largest quake ever recorded. As the temblor broke windows and tossed books and dishes from the shelves, he, his wife and their 14-year-old daughter sheltered in a fortified area that de la Llera, a civil engineer, had built in the center of their two-story home outside Santiago. The quake lasted almost two minutes. De la Llera, safe with his family, feared the worst for Chile's capital. "I thought the whole city was down," he says.
The 8.8-magnitude quake left more than 520 people dead and wrought $30 billion in damages, equal to 17 percent of Chile's gross national product. Later that morning, de la Llera, president and co-founder of engineering company Sirve, drove to Santiago to see if the quake-resistant technology his company designed had saved what was then the city's tallest skyscraper, the 52-story, $200 million Torre Titanium La Portada office building. Although the tower had swayed three feet from side to side, it suffered no structural damage other than a balcony that had separated -- but not fallen -- from the building.
The quake was a milestone for Sirve. The Titanium Tower, completed last January, was the Santiago-based company's grandest project. To help win the contract, Sirve did the work for $500,000 -- roughly cost -- in order to use the building as a showcase for its technology, de la Llera says. The company's reputation from the Titanium Tower has helped Sirve, which was founded in 2003, win contracts to protect apartments and other structures. The 50-employee company expects revenue of $6 million in 2011, a 50 percent increase over 2010, and revenue of $8 million next year.
Sirve's shock-absorbing steel dampers were built into every third floor on two sides of the oblong Titanium Tower. The X-shaped, story-high devices twisted in every direction with the quake, absorbing roughly 40 percent of the earth's movement before returning to their original shape. Joseph Colaco, president of Houston-based CBM Engineers, was the structural engineer on the Titanium Tower project who helped the owners select Sirve's technology. "It really paid off in spades," Colaco says of choosing Sirve. "From what I understand, the building was occupied the very next day."
Technology such as Sirve's does more than prevent a building from collapsing. By diminishing the shaking, the devices greatly reduce interior damage. As a result, government facilities, hospitals, manufacturing plants and office buildings can continue to be used after an earthquake. "You don't want a whole bunch of buildings and the whole community closed down, because then it shuts down the economy," says Michael Cochran, a spokesman and former president of the Structural Engineers Association of Southern California, which sent representatives to Chile after the quake.
Chile, with one of the most active earthquake faults in the world, is a fertile market for quake-resistant technology. Since 1960, when the country suffered a 9.5 magnitude quake, the largest ever recorded, Chile has steadily improved building codes to protect lives and property. In 2010's temblor, only five commercial buildings designed with the help of structural engineers were destroyed, according to a report by the U.S. Geological Survey. The report credits the low failure rate to a law that encourages building owners to invest in quake-resistant improvements by making owners liable for earthquake damage for 10 years after a building is constructed, even if the building has been sold.
While new buildings did well during the quake, older structures -- particularly housing units -- didn't. More than 370,000 homes were destroyed, or one of 10 houses in the affected area, where 80 percent of the country's population lives. Sirve's mission, beyond profit, is to prevent such losses. The company is currently designing quake-resistant technology called seismic isolators for 20 government-funded, low-income apartment buildings under construction.
Sirve competes with local firms and international corporations, such as Tokyo-based rubber company Bridgestone, Nevada-based Dynamic Isolation Systems, and Vallejo (Calif.)-based Earthquake Protection Systems. De la Llera is banking on the patented technology that covers elements of Sirve's designs. Within its seismic isolators, Sirve has developed a unique system of rollers sandwiched between two metal platforms. The rollers move during a quake to absorb enough of the earth's movement to prevent major damage to the building sitting on top. With its dampers, as with those used in the Titanium Towers, Sirve has patented the physical shape of the device and the construction process that gives it the flexibility needed during an earthquake.
While quakes have cost Chile tens of billions of dollars over the last 50 years, they have also exposed the copper, iron and precious metals that bring in much of the country's wealth through mining. During the next two years, Sirve plans to sell its technology to mining companies looking to protect warehouses and processing plants in northern Chile, which hasn't been hit by a significant quake in 20 years. Given the faults in the area, a quake is inevitable, de la Llera says. During the same time frame, the company hopes to find work with mining companies in Peru while expanding into Mexico's housing market.
De la Llera, 49, earned his doctorate in civil engineering from the University of California, Berkeley. He started Sirve with less than $50,000. As a professor at the Pontificia Universidad Catolica de Chile, he convinced the college to let engineering faculty work with him in return for 35 percent of the profit on joint projects. Last year's success brought Sirve a $2.2 million investment from a foundation formed by Empresas Copec SA, Chile's largest fuel distributor, and Pontificia Universidad to back promising startups. The foundation owns 30 percent of Sirve.
The investment gives Sirve a chance at growing as Chile recognizes the value of spending money today to prevent much greater losses in the future. "It's hard to convince owners sometimes," Colaco says, "but the cost without the technology can be monumental."
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