International Organization
In the 1990s, Odebrecht entered the US market and began managing petrochemical companies in Brazil. These and other movements led to the consolidation of a global organization focused on meeting its clients’ local needs with globally leveraged technological, financial and political resources

In the 1990s, Odebrecht experienced major changes in its external business environment while undergoing internal transformations. Norberto Odebrecht played a leading role in two milestone events. The first was when he addressed the Shareholders’ General Meeting in May 1991 to announce that he was leaving the post of President and CEO of Odebrecht S.A. and being succeeded by his son Emílio Odebrecht. On that occasion, he spoke about the past, present and future, looking back on his 56 years of experience, which began when he started apprenticing at the workshops of Emílio Odebrecht Cia., his father’s contracting company. He also expressed his desire to continue helping the next generations by providing advice based on his professional know-how.

He also spoke about Brazil, which was on the threshold of a new era in its history, and the world order, which was undergoing a sea change. “Now, at the turn of the century, humankind is faced with once unimaginable prospects of building the future in a climate of world peace, cooperation between peoples and environmental preservation. On that basis, the human race can develop with greater security, survive with dignity, grow in an organic and sustainable fashion, and thereby ensure its perpetuity. To transform these prospects into concrete results, we must work with tremendous courage, creativity and discipline in a climate of dignity, respect and appreciation of the value of human beings.”

Through his own example, he taught Odebrecht Members a lesson that he is determined to disseminate, because it is essential to any company’s perpetuity: new entrepreneurs must always be groomed so they are qualified to succeed the previous generations.

Seven years later, in May 1998, it came time for Norberto Odebrecht to hand the chairmanship of Odebrecht S.A. to Emílio Odebrecht, marking the founder’s definitive retirement from business after 60 years of work and over 50 years at the helm of the Odebrecht Group. During that period, he had overseen its transformation from a small construction firm founded in Bahia in the 1940s into the Odebrecht Group, which in 1998 had 45,000 members, was present in several countries worldwide, and had annual revenues in excess of BRL 6 billion.

According to Norberto Odebrecht, these tangible assets were less important than the formation of Odebrecht’s main intangible asset: the hallmark of a large company with the spirit of a small firm. “It is the small firms that start building quality for an organization, because they are the basic source of image, productivity, profitability and the resulting liquidity. And the small firm is also the starting point for defining the large company’s business,” he said in an interview with Odebrecht Informa, published in its May/June issue that year.

With these and other lessons in mind, Emílio Odebrecht embarked on the third stage of a process that since the 1970s had been preparing the next generations of entrepreneurs to spearhead the construction of a Large National Company.

In the 1980s, they had transformed Odebrecht into a Large Brazilian Business Conglomerate. Their mission in the 1990s was even bigger – building an International Organization focused on identifying and serving clients around the world.

By 1993, the conglomerate had extended its entrepreneurial activities to 19 countries: Germany, Angola, Argentina, Bolivia, Brazil, Chile, China, Singapore, Colombia, Costa Rica, Ecuador, the United States, Great Britain, Mexico, Paraguay, Peru, Portugal, Uruguay and Venezuela. In 1995, the Odebrecht Group expanded even further, beginning operations in Malaysia and other Southeast-Asian countries.

The organization consolidated its international standing with the help of increasingly qualified Entrepreneur-Partners. The intense exchange of people, technologies and methods between the Group’s subsidiaries in several countries made the concept of an international organization migrate to that of a global organization. It was vital to meet clients’ needs at every construction site (the local component) while leveraging strategic, technological, financial and political resources wherever they could be found (the global component). Fully integrated into their local countries, Odebrecht subsidiaries were to grow in this context, while grooming new Entrepreneur-Partners. In their turn, these partners expanded their activities in that nation or other countries.

This was the spirit with which the Group in 1991 entered the world’s most competitive market, the United States, where its teams won a contract to expand Metromover, a monorail system in downtown Miami, Florida, making Odebrecht the first Brazilian contractor to build a public works project in that country. The next step in the USA was winning contracts in California, including construction of a stretch of Route 56, between San Diego and Los Angeles, and the Seven Oaks Dam, built to prevent floods in San Bernardino County. The client for that project, the US Army Corps of Engineers, recognized Construtora Norberto Odebrecht’s work by presenting it with the Contractor of the Year award in 1999 for the quality of the dam’s construction. CNO was also hailed by the California Occupational Safety and Health Administration – CAL/OSHA, the most important agency active in that sector in the US, for the extraordinary occupational safety ratings it obtained on that project, which involved up to seventeen 85-ton trucks working simultaneously on top of the dam, with about 350 men working nearby.

In 1991, Odebrecht became the first Brazilian contractor to build a public works project in the USA

Odebrecht had established a presence in the United States to develop a permanent business base and bolster its expertise, and never stopped growing in that country, particularly in Florida. The Group later concentrated its operations in that state, where it won several contracts in the transportation sector, such as construction of the Golden Glades interchange and the expansion of Miami and Orlando airports. In the building segment, Odebrecht’s teams constructed Fortune House in Miami, a 29-story apartment hotel, and Ocean Steps, with 15 residential floors, as well as the Ritz-Carlton Key Biscayne Resort & Spa, comprised of two eight-story towers and one fourteen-story building, with a total of 498 hotel rooms and suites. The Group’s activities in the United States expanded at the end of the decade to include construction of the American Airlines Arena, a sports and entertainment venue that is home to the Miami Heat basketball club, and the award the following year of contracts to build the Center for Performing Arts in Miami, designed to host ballet, opera and symphony performances, and the next stage of the expansion of the city’s airport.

The 90s also witnessed the intensification of Odebrecht’s presence in Latin America. In Peru, the Group carried out the second stage of the Chavimochic, begun in 1990, to irrigate desert areas of the country, including over 200 km of irrigation channels, water distribution and drainage systems, and supplementary projects. In 1992, Odebrecht began working in Venezuela, by constructing the EL Lago Shopping Mall, as well as continuing to build the Santa Elena irrigation project in Guayaquil, Ecuador. The following year, the Group won a tender to build the La Loma-Santa Marta Railway in Colombia, and the Santa Cruz de La Sierra-Trinidad Highway in Bolivia.

CBPO continued working on the Pichi-Picún-Leufú hydroelectric plant in northern Patagonia, a milestone in the economic integration of Argentina and Brazil, and one of the seeds of Mercosur. In Chile, the Odebrecht subsidiary built a water transmission tunnel for the Pehuenche hydroelectric plant, and as a joint venture with other companies, including Tenenge, it constructed a new passenger terminal for Santiago Airport.

In 1992, CBPO went to Mexico, where it began building a multi-purpose dam called Los Huites to prevent flooding on the Fuerte River, irrigate 70,000 hectares of land and add 400 megawatts to the country’s energy supply. In 1993, perceiving the potential of a consumer market of 1.5 billion people and an economy growing at over 10% per year, the company opened an office in Beijing, the capital of China. During that period, CBPO was also responsible for two major milestones in the Group’s history: winning Odebrecht’s first concession contract outside Brazil –to build the Buenos Aires Western Access Route in Argentina – and returning to Odebrecht’s ancestral homeland in Europe.

In 1993, CBPO began working in Germany, from where Emil Odebrecht had departed for Brazil 137 years earlier. Initially created to operate in the former East Germany, which was experiencing an intensive privatization program, Odebrecht Bau intended to expand its presence to other Eastern European countries.

Tenenge won the Petrobras Award for Quality in the Services category in 1990, bestowed on service providers that distinguish themselves with their pursuit of quality. The Odebrecht Group was winning this award for the second time in four years: in 1986, Petrobras had singled CNO out for the honor.

In the oil drilling sector, Odebrecht won its first international contract in 1990 when Petrobras issued a call for tenders for construction of a jack-up platform in the Campos Basin (offshore Rio de Janeiro), while OPL was awarded contracts to drill for oil in the Coral Field in Santos Basin (São Paulo) in partnership with The Western Company of North America. OPL also joined forces with US and Norwegian partners to drill three deep-water wells off the Brazilian coast at depths of 600 to 1,000 meters.

That same year (1990), Tenenge began operations in the UK. The decision to establish a presence in Britain was guided by the aim of operating as a local firm, based on the fact that the North Sea had become a worldwide hub for the oil and gas construction, installation and offshore services business. Odebrecht acquired SLP Engineering Ltd., a leading British offshore construction company, with 1,500 members. SLP’s clients included Agip, Amerada Hess, British Petroleum, British Gas and Elf Aquitaine. The Group’s presence in Great Britain was due to Tenenge’s solid track record built up in Brazil and Portugal, where it fabricated decks for the Cabo and Pacassa platforms, and in Chile, where it made jackets for oil platforms, and installed pulp and paper mills and transmission lines.

The oil business also took the company to Singapore. After winning a tender held by Brasoil, an international subsidiary of Petrobras, Odebrecht teamed up with Fels-Far East Levingston Shipbuilding to build Petrobras 18, a semi-submersible platform designed to produce oil in deep waters. The platform began operations in March 1994, adding 100,000 barrels per day to Brazil’s oil output.

Odebrecht’s partnership with Fels in Singapore was a milestone in the Group’s strategy of forming partnerships with countries from other countries in order to supplement the Brazilian group’s competencies and enable it to seize new business opportunities dynamically. This strategy also enabled the Group’s teams to bolster their business and technological expertise and make a qualitative leap towards new achievements.

On the institutional level, the time had come for the Brazilian Government to relinquish its former prerogatives and withdraw from some productive sectors that were better managed by private enterprise. “The privatization of the economy is a recent historic lesson for all nations. It is necessary because, once free of extraneous responsibilities, the State can concentrate on the social sectors, giving emphasis to education for all,” said Emílio Odebrecht. He went on to explain, “Only a consistent educational program will make it possible to groom productive individuals who are aware of their freedom, responsibilities, and rights and duties – in short, full-fledged people. This is an investment that no nation that aspires to greatness can afford to overlook.”

In this context, the Brazilian government launched the National Privatization Program through which Odebrecht partnered with the Ipiranga Group to acquire control of Copesul, the Triunfo Petrochemical Complex ethylene plant in Rio Grande do Sul, and increase its holdings in PPH and Poliolefinas, restructured the petrochemical companies and integrated their operations. The 1995 merger of these two companies gave rise to OPP Petroquímica S.A. Through the National Privatization Program, Odebrecht also assumed control of Salgema and CPC, integrating their operations and later merging them with CPC’s subsidiary CQR to form Trikem S.A. in 1996. As planned, Odebrecht had reached the stage of managing chemical and petrochemical companies, contributing an attribute that had historically been the Group’s greatest intangible asset: managerial expertise based on an integrated set of philosophical concepts, systemized in the form of the Odebrecht Entrepreneurial Technology (TEO).

TEO was a key factor for the swift and extensive integration that Odebrecht carried out in the chemicals area, demonstrating the universality of the management method that Norberto Odebrecht created in the 1940s in the state of Bahia. The basic requisite for the merger was the presence of people who were qualified and motivated to take on new and increasing challenges in all of the geographic areas and segments in which Odebrecht was active.

Acting on the basis of this outstanding strength, the Group took increasingly audacious steps in the international scene. In 1996, CBPO partnered with ABB to win a contract to build the Bakun hydroelectric plant in the Southeast Asian country of Malaysia. Located in Sarawak State on Borneo Island, the power station was supposed to generate 2,520 megawatts, energy that was essential to the nation’s development. However, the financial crisis that erupted in Asia the following year brought the project to a halt. Meanwhile, in 1996 Odebrecht completed the Letsibogo Dam in the African nation of Botswana, a project that was key to overcoming water supply problems in a country that only has two perennial rivers.

As a result, by the second half of the 1990s the Group was actively growing in two of the strategic directions outlined in the late 1970s – international operations and business diversification. However, Odebrecht’s expansion strategy was feeling the impact of the new world order. The presence of several subsidiaries working in the same area, plus a capital-intensive business, went against the need to reduce costs and establish an increasingly concentrated business focus.

Development of the Odebrecht Entrepreneurial Technology (TEO)

Odebrecht had entered a new era. Its leaders saw the need to streamline the Group’s operational structures and be strictly selective when identifying new markets and ventures. The Engineering & Construction area launched the process of consolidating the operations of Construtora Norberto Odebrecht, CBPO and Tenenge, which began working as a single company under CNO’s leadership. In the Chemicals & Petrochemicals area, all the Group’s subsidiaries were merged to form two – OPP Petroquímica and Trikem. Odebrecht also eliminated its Electronics & Automation and Mining & Metalworking businesses and sold off its subsidiaries in those areas. The oil drilling business became part of the Engineering & Construction area. The end of the organization’s activities in Germany, Southeast Asia, and Africa, with the exception of Angola, strongly impacted Odebrecht’s global operations.

The Odebrecht Group’s new corporate structure concentrated on two businesses (Engineering & Construction and Chemicals & Petrochemicals) and investments in Infrastructure & Public Services, where the organization partners with other companies to manage public service concessions in Brazil and Portugal. Odebrecht also stayed in the pulp-manufacturing venture it had started in 1991, remaining a partner in Veracel Celulose S.A., and continued to invest in ventures in the Tourism and Oil & Gas industries.

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