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[Music]
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[Music]
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We have today the genuine honor to have
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um here Marcelantes and Fenon Muza from
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Brascan. Brascan is the second largest
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private company in Brazil, the largest
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petrochemical in Americas and the global
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leader in green plastics. Um, Marcelo is
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the VP of personal organizations at
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Prescan. He has a background in business
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administration. Has worked for many
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multinational companies in Brazil, uh,
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ABB and the Fiat and Veron Muza. He also
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um has a lot of experience working for a
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number of multinationals in Brazil for
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Mckenzie, for monitor. And we here today
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to talk about this company, a Brazilian
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company that now is really becoming a
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global player.
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Why don't we start and you tell us a
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little bit how you become this global
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player from a Brazilian petrochemical
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company to really a global player? Well,
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company started a consolidation process
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in Brazil uh back in 2002 and uh after a
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few years uh it was clear that uh we
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would uh reach a dominant position in
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the local market uh and uh that we would
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need to find new avenues for growth and
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the internationalization was a an
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obvious choice. we could expand doing
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what we were very good at which is I
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mean producing uh polymers uh running
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the prochemical centrals and this is the
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the path we chose to grow through
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internationalization
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and how was the decision to start your
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globalization process in the Americas in
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the United States. uh we did a very
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detailed analysis about all the
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opportunities globally and uh we quickly
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came to the conclusion that uh the
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Americas was uh a market that was
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somewhat insulated from the other uh
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regions. Uh uh there was a lot of trade
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going on north south but not a lot uh
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with other regions and this is uh this
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was one driver. The second driver was
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being from an emerging country. Uh we
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were looking for more mature markets. Uh
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to risk manage the profile of the
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businesses we have uh uh and um this
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made the US a natural choice and this is
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how we started the process through the
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acquisition of uh a company here in the
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US. Uh which company did you buy here?
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We bought the polyropene businesses of
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Sonokco Chemicals which is a very large
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uh oil company and uh had decided to
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divest the chemicals uh and we bought
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the polyropylene which is uh comp
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comprised of uh three plants in the US
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uh with headquarters here in
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Philadelphia. Okay. And nowadays we do
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have 35 plants and 28 plants in Brazil,
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five plants United States and two plants
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in Germany. So the decision to come to
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to United States is what the natural
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path uh for our growth in America is not
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to become a global payer. uh we are we
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do have a strong position in Latin
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America some years ago but in order to
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to have a a better competitive uh
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position it's it's a natural to come to
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United States and a mature market in
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order to to continue our growth right
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and I mean both of you you joined Rascan
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2010 and you are kind of one of the two
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of the leading executives kind of behind
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this globalization process in those two
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years kind of what are the good and best
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surprises in your internalization
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process Uh it's it's interesting of
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course we joined the company in the same
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time but Fernando has worked with a lot
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of different proxy bras previously uh
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one bad surprise for us during the
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internalization process for us to deal
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with the strike in United States. We
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just started operation here in May 2010
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two months after that we own a strike
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one plant here without too much
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negotiation without too much uh contact
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with the employees. So it surprised us
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to just arrive United States and deal
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with the strike and the strike takes
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took took seven months to finish and the
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good surprise in the other other hand
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that they that the engineers uh was
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extremely they were extremely committed
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with our uh philosophy and start to run
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the plant. So at the same time we have
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some people from the shop floor uh stop
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working and the people from engineers
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getting outside of the office entering
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into the plant and operating the plant
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for seven months. It it was a good
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surprise for us and I mean you mentioned
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about Brascan's philosophy bras culture.
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Can you tell us a bit bit what is what
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is this Brascan's culture? Oh it is easy
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to tell about our corporate culture. Uh
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we do have a consolidate corporate
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culture in our organization that easy to
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understand. Our philosophy is based in
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some key principles. One of them is
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trust. Uh as soon as you join our
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company, we trust on you. Uh it's a
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basic of our organization. Delegation.
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It's another point. We empower people to
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deal with the activities to run their
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business. It's another point. All of
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this delegation and uh trust is based on
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humility and simplicity. So to deal with
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the people that like to to make the job
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run and to feel confident to run our
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business and to have empowerment to deal
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with the business. This is our key
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message from our culture and this is one
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of the key drivers in the uh
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international relationship process. When
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we acquire companies we apply that. So
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we keep the teams and we use a very
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limited number of expatriots to be the
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role models and the the the the pillars
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for the culture to really be embraced by
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the new organization and through trust
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through delegation through a very
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thorough planning process uh we are able
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to have the teams operate in in our our
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way of doing business really fast. Yeah.
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Just to give an idea, we do have in
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United States 500,000 employ 5 uh 500
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500 employees 5 500,000 500 employees
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working here for us. Uh only five come
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from Brazil. Why a short number of
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people? Because we trust in the local
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people. Our cult our philosophy is to
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trust in the local people. The people
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locally know the culture of the country
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much better than us. But what our people
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bring to them uh our philosophy
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uh some part of our knowledge into run
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the business and some technical
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experience but we trust in the local
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people right and I mean and by knowing
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you maybe it's not kind of random that
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both of you kind of casually dressed
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very uh simple very humble uh how do you
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compare that with the culture of the
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North American companies you're being
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acquired because you know people can
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have a very different orientation, very
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different drive here. How you comparing
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kind of the culture that you bringing
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from Brazil with the culture that you
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encountering here in the US? It's a good
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good question, but it's very important
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to mention that not all companies in
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Brazil has the same culture as Brasin
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has. It's the our culture. I do believe
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that a lot of companies in Brazil has a
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different culture, more hierarchical,
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more bureaucratical structure than us.
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Uh I think that we are facing good
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situation in United States. uh as soon
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as we enter in our organization we have
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a strong communication with all of them
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about our philosophy and we were well
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received for the American employees here
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it's for us it's easier uh to merge the
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companies because of our philosophy is
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to delegate to to trust and people so
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for us it's easier we're not here to
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implement another completely different
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culture so it's easy to deal with the
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different culture for us right and I
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mean I know it's very Mexico is also
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very important to
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How do you compare your experience in
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Mexico visa v the United States? Mexico
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is a very different situation because we
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are entering the country through a green
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field project. I.e. we are building a
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new plant. We did not acquire any
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company. So we started with two people.
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Now we have probably I don't know 50 or
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60. Uh the number of expatriates is
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larger because we're building the
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project. So uh we didn't have time yet
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to uh uh hire locally and we are in the
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process of doing it and we decided to do
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the project with a local partner. So we
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do have uh one of the largest
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petrochemical companies in Mexico as a
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partner in the project to help us bring
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the local knowledge, the local uh
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understanding, the connections with the
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uh clients, the suppliers etc.
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So the challenge in Mexico is very
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different is I mean how are we going to
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build a team and in the process of
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building this team create uh and install
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the culture that we're used to. Uh and
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um personally I think it's going to be
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more challenging in Mexico than in the
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US. Uh the our culture is very similar
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to the
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traditional work ethic uh that you would
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find in a typical North American or or
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US-based company. Uh Mexico is much more
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hierarchical. Our our culture is
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everything but hierarchical. It's about
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trust. It's about delegation. It's about
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having people doing what they need to do
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and going after the necessary resources
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and fighting for what is right and not
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waiting for somebody from headquarters
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to give them orders and this will be a
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big challenge in Mexico from my point of
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view and based on my experience there. I
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mean we know that going abroad and the
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internationalization process is a long
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process and you guys started recently
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but if you were to tell us what were the
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key lessons learned in those kind of
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initial years of operating abroad.
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I I think uh one key lesson is that I
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mean the cultural transfer is possible
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is doable.
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uh we are uh testing this in two
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different scenarios when we acquire when
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we enter uh as as a startup in a country
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and I think we're learning from the two
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processes so this is one of the the key
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points the other uh important learning
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is that a very good analysis and
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detailed understanding of what we are
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buying the how the market we are
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entering operates is crucial. uh we see
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that uh for example now uh we started to
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operate in Germany when we acquired the
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polyropylene business from DAO uh our
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key strategic interest was in the plants
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in the US uh but we acquired the overall
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business and we had the two businesses
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uh two plants in uh in Germany uh which
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is a market that we did not know well we
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did not go into a lot of detail
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analyzing it before and now getting to
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this business understanding how it
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operates is more challenging than I mean
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what uh we are experiencing in in in the
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US with the two plants we acquired here
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that's what we have learned but of
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course we do have a lot of room for
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improvements in our organization we do
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have a lot of question that we don't
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have an answer at this time for example
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how we going to organize our uh
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structure for the next periods uh what
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will be the next uh what what type of uh
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challenge you going to have to deal with
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different countries and that you're
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going to uh having in the near future.
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We don't know uh for example what what
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type of leadership style should we have
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to to implement in our organization in
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order to continue our growth. That's why
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we are here at Watu in order to develop
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our leaders to have a global mindset. At
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this time we don't have a global
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mindset. We just start our globalization
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process. So we do have a room to
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improve. Wonderful. And I mean if you're
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talking about improvement and
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leadership, I think one area that a lot
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of people have been praising you and
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Brascan is you are the global leader in
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green plastics. Can you explain to us
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first what green plastic is and and
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second how you achieve that leadership
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position? Sure. Uh green plastics are
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products made from renewable uh um feed
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stock. So instead of using uh feed stock
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coming from oil or gas, we use feed
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stock that comes from uh the biomass
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produced in Brazil through the ethanol
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production in Brazil. Um so this is the
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the the key and driver of our uh
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renewables green plastics ethanol for
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sugarcane, right? Ethanol for sugarcane.
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And when you think about oil and gas as
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the key feed stock for the traditional
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plastics, uh you have uh the Middle East
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as the most competitive place and Brazil
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is the Middle East for ethanol. It's the
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most competitive place for the ethanol
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production in globally. uh all of the
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big players are moving there and trying
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to position themselves in the ethanol
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production and this is the key feed
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stock for uh green polymer
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and uh we do believe that being a
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Brazilian company we will be able to I
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mean uh reap the benefits of the very
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good competitive and comparative uh
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advantages that we will have uh in the
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biomass ethanol production in Brazil.
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Right. I I imagine that there must be a
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lot of research and a lot of innovation
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coming from Brascan to develop that. Can
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you give us some insight in terms of I
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mean you didn't reach the leadership
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position from one day to another. So how
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much time you invested to be able to
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create a green plastic? Uh the actually
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the the process we use it's a pretty old
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process from a technological point of
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view. It's a 50-year-old uh technology
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that we have been improving
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significantly.
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Um and we uh started in back in 2004
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2005 to invest in upgrading this
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technology to a process that where it
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would be very competitive which we
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reached by 2007 and uh but in 2007 the
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decision was made to invest in a large
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plant in the south of Brazil which is
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the current plant that we have that is
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able to produce 200,000 tons of green uh
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polyethylene. Um we uh have been
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investing both in developing this
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current technology but we are also
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investing in other uh biiobased uh um
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biotechnology based uh technological
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routes for uh uh different products uh
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that are not the green polyethylene.
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So it is a very intense R&D effort that
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is done in Brazil that is done in
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partnership with other uh research
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institutes or other companies globally
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and uh we are investing a lot through
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this partnerships we are investing a lot
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in building the team in Brazil and
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attracting talent in Brazil and from
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abroad to work with us there. It's a
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it's a key priority for us and we
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nowadays we do have two research center
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one located here in Pittsburgh and other
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one located in the south of Brazil. We
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do have approximately 250 employees work
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in innovation centers uh with us. We are
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continuously recruiting research and
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scientists to work with us. So we will
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continue to innovate in our company.
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It's crucial for us. 12% of our net
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having come from the innovation in the
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last three years. So it's very important
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for us if you look forward for our
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vision
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2020 is to lead the sustainable
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chemistry. So it means that we will
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continue to innovate in our business and
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green plastic is a crucial for us and is
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this still a niche market and what are
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the kind of prospects of green plastics
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becoming really mass market? Uh today it
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is a niche product. Uh I think the
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reality of green plastic as a mass
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market will depend on the development of
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technology to increase the production
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yield from biomass to the polymers which
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uh is part of a relevant part of our R&D
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efforts. Uh it will also depend on the
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consumer attitude
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uh today and for the foreseeable future.
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uh the cost uh of producing the green
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polymer is slightly higher than uh the
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alternative. So there is a a cost to to
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switch which the consumers need to be
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willing to pay for. Today we do have a
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very interesting niches where the
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consumers are interested in paying more
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for this more sustainable product. But
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uh as the consumer perception, the
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consumer interest in sustainable
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solutions increases globally, this will
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put more pressure and uh will help uh us
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uh increase the scale. uh we do not
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expect this to be um uh happening in the
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next two three years. This is a
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something for the decades to come. This
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change from a niche to to a more mass
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market type of uh of product. What is
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the current premium comparing the green
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plastic to traditional plastic?
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um it is uh relevant in the 20 to 30%
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uh price differential which is
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significant. Okay. I mean I think if we
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were having this conversation maybe five
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years ago we would have a story about a
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Brazilian company successful
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petrochemical Brazilian company but a
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Brazilian company. Now beginning of 2012
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we have this Brazilian company but which
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is already a global player largest
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player in America's kind of leader in
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certain segments. If we fast forward and
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look ahead where do you think you will
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be in five years time if we were having
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this conversation in
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2017 what's what do you envision for
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Brascan in this time frame? We will keep
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uh investing uh first in our home
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market. Brazil is a growing economy.
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There are still a lot of opportunities
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there. So we will keep investing in
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Brazil. Second, uh we will continue the
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uh globalization process of the company.
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The Americas is a key priority. We have
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the operations in the US. We have the
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project in Mexico. We have already
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announced that we are evaluating a
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project in Peru. So America's is a is a
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strong priority. uh we do now have uh
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two plants in Germany and given our
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culture of delegation of trust I'm
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certain that the the current leader of
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the uh European operations will come to
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us in uh one year two years time with a
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series of very interesting investment
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opportunities and investment ideas which
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we'll analyze and maybe in five to 10
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years time our presence in Europe will
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be uh much more significant um But
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uh we we do believe that we can be one
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of the global leaders in the prochemical
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industry and uh we will keep pursuing uh
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these avenues with the green uh polymers
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and the green chemicals at large uh as a
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very very important differentiator. um
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and uh a very interesting growth uh
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vector for uh the future of the company
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and otherwise of course in in the five
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years time I do believe that you'll be
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one of the best company to work for in
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the globally in a globally base. uh
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probably a lot of people from other
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cultures work with us. One of us will
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not be at this position here. Uh
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probably someone from India or someone
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from Germany or someone from United
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States, someone from Mexico or Peru or B
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will be here telling with you in the
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years time and of course with a lot of
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different innovation products in our
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organization and from different
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cultures, different manager styles
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building a unique culture.
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Fernando Aello, thank you so much. This
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is was a wonderful conversation and
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we're looking forward to engaging in
00:21:04
continued conversations with you and and
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[Music]
