|From the factory to the world
|Bold sales strategy and policy make Braskem’s
exports grow a record-breaking 49%
Program encourages exports
|Written by Simone Goldberg
Photos by Eduardo Moody, Eneida Serrano & Niels Glogowski
Petrochemicals is a highly globalized industry. Like all commodities, its products are shipped around the world, and no major petrochemical company can stand out in that sector by thinking just locally. The formula for success is a focus on the international marketplace. Braskem makes insertion into the global market a pillar of the company’s strategy. Created less than two years ago, the company integrates upstream and downstream operations, a model that has allowed Braskem to achieve operational and financial synergy gains and made the company more competitive. Furthermore, an increasingly active sales policy focused on seizing any and all opportunities to create value enabled Braskem to earn USD 617 million from exports in 2003, up 49% from the previous year. “These figures are no accident. They are the result of a business vision that seeks to prepare the company for growth and expand its international presence,” says José Carlos Grubisich, Entrepreneurial Leader (COO) of Braskem.
The company’s celerity in seeking out new business opportunities outside Brazil coincided with the beginning of an upturn in the petrochemicals price cycle, which boosted profitability. However, the international experience and track record in the global markets of Copene, OPP, Trikem, Nitrocarbono, Polialden and Proppet – the companies that came together to form Braskem – were key to growing the company’s exports. The merger increased the capacity of Braskem’s manufacturing plants by making their day-to-day operations more efficient and enabling the company’s sales teams to keep a close eye on every business opportunity that arises in the domestic and international markets.
“That volume of international sales can only be achieved with the help of a high-quality, competent structure that is thoroughly familiar with the market and our clients. The merger has leveraged exports and consolidated the company’s presence on the international market. Our clients have come to view Braskem as a long-term partner,” analyzes José Carlos Grubisich.
Long-term partnerships are one of the company’s basic tenets. Due to the pace of the Brazilian economy, which generally consists of lows and euphoric highs, the companies that merged to form Braskem once specialized in using exports to minimize periods of weak demand in Brazil. For Braskem, international sales are more than just a way to compensate for low domestic sales. They are a strategic position that drives the company’s growth.
“We don’t want to sell our products abroad just to increase our sales volume and gain a share of the market. We want to export because that activity is an integral part of our business process. Our presence outside Brazil must be profitable and lead to the creation of value,” says José Carlos Grubisich. He stresses that, for Braskem, operations in the global marketplace must be built into the company’s structure and not just a stopgap measure to overcome Brazilian market slumps. The company proposes to create a lasting relationship with its partners, and to achieve this, it is striving to improve the quality of its export services, modernize processes and make room for selling a larger number of products with more value added.
Foreign sales ensure that Braskem has the operational flexibility needed to counterbalance the deficiencies of the domestic market, contribute to the company’s profits and bring in hard currency, which gives the company more financial flexibility and enables it to obtain financing at more competitive rates. There are also advantages for Brazil’s balance of trade: boosting petrochemical exports helps reduce the sector’s deficit, which totaled USD 6.2 billion in 2003, according to data from Abiquim, the Brazilian Association of Chemical and Derivatives Manufacturers. “Even when the domestic economy is more robust, the company must be prepared to make 15% to 20% of its earnings come from exports,” underscores Grubisich.
Braskem exports more than ten products to nearly 50 countries, but there are more clients on the horizon, such as China, India, Ecuador, Chile, Bolivia, Belgium, South Korea and Taiwan. The European market grew in 2003 and Argentina’s recovered substantially, but the US is still the company’s main client, responsible for 33% of its export revenues. The list of products Braskem sells on the world market includes gasoline, basic petrochemicals and aromatics, polyethylene products and polypropylene, PVC and the intermediate EDC (used to make PVC).
Aiming to maintain and expand the position it has achieved in the world market, Braskem is devising new strategies through high-level partnerships in the area of logistics, seeking to make deliveries timelier and improve the quality of client service. These initiatives will improve the company’s export results and ensure the success of its international undertaking. The idea is to increase sales of petrochemicals with more value added, and sell a few more product lines – such as resins – to final consumers, the companies that process Braskem products.
Braskem’s business units have the autonomy seek out international opportunities independently but they all share the same corporate philosophy: creating value for the company. “Our strategic objective is to make Braskem the regional market’s leading supplier, occupying more and more space with high value-added products such as Utec (an engineering plastic) and the Flexus and Symbios resins, which are polyethylene and polypropylene specialties launched on the market in 2004,” says Cleantho de Paiva Leite Filho, Responsible for Exports at Braskem. Last year, Argentina, Belgium, China (including Hong Kong), the United States, Italy and Spain were the main international markets for Braskem resins.
>> Main export destinations in 2003
Braskem uses a number of channels to increase market share in these countries, as well as in South America. The company’s plans range from opening branch offices – in the USA, for example – to having representatives and agents in several South American countries and appointing distributors in other regions. Each country and region requires a different approach. Braskem has assigned five company members to its office in the United States, working in sales, logistics and administration. In other regions, salespeople periodically travel to evaluate the line of action being taken by the company’s local distributors and agents.
At the Basic Feedstocks Unit, the list of exports has increased as a result of an additional effort to drive sales of other basic petrochemicals such as butene-1, isoprene, DCPD (dicyclopentadiene) and xylenes, as well as traditional products such as gasoline, MTBE, benzene and propene (propylene). “In addition to offering a diversified range of products, we are seeking to partner with specialists to enter new markets,” says Ricardo Barbosa, the unit’s officer responsible for Sales. As their name implies, these specialists specialize in production chains and are therefore better qualified to identify the best business opportunities in their fields of expertise. Today, the company has three specialists on board and is closing a deal with another specializing in a geographic area rather than a specific production chain. “They are experts on Asia. We think this is the best strategy for winning over the Asian market,” says Ricardo Barbosa.
The US is the main market for basic petrochemicals, but Europe’s share is growing. Asian nations import four of the new products in Braskem’s export portfolio: butiene-1 is shipped to India, DCPD to South Korea and xylenes (orthoxylene and paraxylene) to South Korea and Taiwan. The unit also sells isoprene to Europe.
Following the same line, the Vinyls Unit has increased its share of the international market and helped overcome a downturn in domestic demand. South America has played a major role in this performance as a result of the company’s decision to bolster its position as a regional supplier. The unit exports PVC and EDC. The main importers of the company’s PVC are Argentina, Chile, Bolivia, Uruguay, Ecuador and Paraguay. Other markets for that product include Europe (Italy and Spain, as well as the Netherlands and some northern European countries) and China. However, the priority is South America. “Many of our Brazilian clients are also present in other countries on this continent. The idea is to provide aggregated services,” observes Luciano Guidolin, the unit’s officer responsible for Marketing and Development. As for EDC, the unit primarily exports this product to Japan, but it also has clients in India and South Korea.
The excellent results Braskem’s exports achieved in 2003 led the company to win the Brazilian Marketing and Sales Managers Association (ADVB) Export Prize in Rio Grande do Sul for the sixth year running. Braskem received the Export Highlight award, bestowed on companies that have won the Export Prize more than five times and bolster the state’s exporting tradition.
According to Guilherme Guaragna, the Polyolefins Unit’s officer responsible for Manufacturing, the importance of this award goes beyond the recognition and prestige it confers on the winner. “It reinforces the image of Braskem, which has a strong local presence, a modern technology center, and is one of the major economic agents in Rio Grande do Sul, a leading state for exports,” he concludes.