|Leadership in Latin
|The arrival of the new millennium
broadened the Odebrecht Group’s horizons
"After consolidating its Vision for 2010, the organization’s 10-year plan, Odebrecht participated in the acquisition of Copene and the creation of Braskem, events that
took the Group to a leading position in Latin America’s petrochemicals market."
The Group’s leaders at the dawn of the new millennium took advantage of the favorable atmosphere for reassessing projects and renewing expectations, and concentrated on mulling over long-term plans and policies. They held meetings and seminars over the course of 2000 to formulate the Group’s Vision for 2010 and the Macrostrategy for carrying it out. The results of these ruminations reflect the audacity of a business conglomerate that is always in step with growth and seeking leadership in its core businesses. According to that Vision for 2010, Odebrecht will become one of the largest business groups in the Southern Hemisphere, the leader in its segments of activity, and a Brazilian multinational worthy of being embraced as a national campaign.
To make this happen, Odebrecht’s leaders identified basic points of reference: a path (Survival, Growth and Perpetuity), a corporate philosophy (the Odebrecht Entrepreneurial Technology), three basic agents (Shareholders, Entrepreneur-Partners and Clients), a political-strategic base (Brazil) and a permanent challenge (competing on the basis of world-class standards of excellence).
"Our Vision for 2010 will come true as long as that is what every single Odebrecht member wants. This is particularly true for the next generation of leaders being groomed within the Group,” said Emílio Odebrecht on that occasion.
At that point, aiming to concentrate its business focus even further, the Group sold its stakes in Veracel and Brazilian tourism and oil and gas ventures. In Engineering & Construction, the focus concentrated on countries and segments where Odebrecht could provide outstanding services to its clients. In Chemicals & Petrochemicals, the focus was now on the thermoplastic resins segment and restructuring the sector by creating a large Brazilian petrochemical company. The Infrastructure & Public Services area now concentrated on the road concessions segment.
The consolidated results the Group’s subsidiaries achieved in 2000 already showed that Odebrecht was entering a new cycle of growth. Operational performance steadily improved.
Odebrecht continued growing in the Engineering & Construction area, winning major contracts in Angola, the United States, Portugal, Venezuela, and other South American countries. Odebrecht was Brazil’s and Latin America’s largest contractor, and according to the US magazine ENR (Engineering News-Record), it was also the number one international contractor in hydroelectric plant construction.
The results achieved in 2000 already showed that Odebrecht was entering a new cycle of growth
But it was in the Chemicals & Petrochemicals area that the first major transformation took place in the Group in the 21st century, heralded by an event of extraordinary importance: a consortium formed between Odebrecht and the Mariani Group acquired control of Copene, the Camaçari Petrochemical Complex ethylene plant in the state of Bahia.
Following this acquisition, two major campaigns immediately got under way: on the external institutional level, the much-awaited and necessary restructuring of Brazil’s petrochemical sector began, meeting the long-standing need to have a strong Brazilian firm in that industry. Internally, a new corporate situation was developing and transforming the very nature of the Group.
Historically more focused on providing services, particularly in the Engineering & Construction area, the organization was becoming a new industrial powerhouse in Brazil. In 2000, gross revenue for the Chemicals & Petrochemicals business reached BRL 5 billion. The acquisition of Copene and the initiation of the process of merging it with other petrochemical companies controlled by Odebrecht and Mariani would increase the Chemicals & Petrochemicals business’s gross revenue to BRL 12.5 billion in 2003, consolidating Odebrecht’s commanding presence in the South American manufacturing scene.
The acquisition of control of Copene, which took place on July 25, 2001 at an auction held by Brazil’s Central Bank, resulted from the work of a team of over 100 people. For months, they dedicated themselves to realizing the dream of helping build a large Brazilian petrochemical company. To do so, they engaged in intricate legal and corporate transactions involving several companies and institutions, reconciled often-contradictory political factors and raised USD 500 million on the private international financial market at a time when Latin America was going through a rough patch economically. After the auction, this team’s efforts led Emílio Odebrecht to state, “The entrepreneurial accomplishments of the modern world reflect and will increasingly be a reflection of the work of competent, creative, integrated, aligned and motivated teams.”
The curious thing about the circumstances surrounding the purchase of controlling interest in Copene is that Odebrecht had initially decided to sell off its shares in the ethylene plant, but after two frustrated attempts to do so, the Group became a buyer of the assets the Central Bank had put on the auction block. It was not an easy decision. Between 1996 and 2000, Odebrecht had invested nearly USD 1.2 billion in its petrochemical businesses, mostly with loans taken out in foreign currencies.
Prudence advised putting a hold on investments, but fate, which thwarted the sale of Copene on two occasions, gave Odebrecht the opportunity to practice one of its strongest historical talents: opting for growth, even when the going was rough.
The Brazilian petrochemical industry earned USD 50 billion in revenues. However, most of its production was not integrated. Unlike the rest of the world, in Brazil different companies produced basic feedstocks and downstream products.
Once the Odebrecht/Mariani consortium had acquired Copene, the next step was consolidating a large and therefore more competitive Brazilian petrochemical company. This was done by undertaking a number of corporate and operational mergers and arriving at a name for the new company. The two syllables in Braskem reflect the origins of the company’s capital (Bras, as in Brazil) and its sector of operations (kem, representing chemicals). Braskem consolidates Copene and a number of Odebrecht and Mariani Group affiliates and subsidiaries, including OPP Química, Trikem, Nitrocarbono, Proppet and Polialden. Altogether, these companies annually produce 1.8 million tonnes of thermoplastic resins, 1.2 million tonnes of chlor-alkalis and 5 million tonnes of feedstocks for downstream petrochemical producers.
These numbers make Braskem a global player in the chemicals sector, a USD 1.3 trillion per year industry whose products are found in nearly every aspect of the everyday life of most of humankind. In Brazil, the sector’s growth potential is estimated at 6.5% per year based on projected population increases, per-capita income and applications and uses of plastic products.
In May 1991, Norberto Odebrecht had stepped down from the post of President and CEO of Odebrecht S.A. Ten years later, in December 2001, it came the turn of Emílio Odebrecht to address the members of the board and the Group’s top executives and announce that Pedro Novis would be replacing him as chief executive of Odebrecht S.A.
Pedro Novis had just graduated from law school when he began his career with the Odebrecht Group as a trainee in 1968. He went on to become a director of CNO and was CEO of CBPO for 16 years. Following the 1997 merger of the Group’s three Engineering & Construction subsidiaries (CNO, CBPO and Tenenge), he had joined the Board of Directors of Odebrecht S.A.
Even as he introduced his successor, Emílio Odebrecht, who has since devoted himself exclusively to chairing the Board of Directors, announced the end of one cycle and the beginning of another. This new cycle was distinguished by a focus on the Engineering & Construction and Chemicals & Petrochemicals businesses. It was also characterized by the advent of new leaders in strategic positions – part of the process of renewal that was taking place throughout the organization – and the implementation of the Group’s new corporate governance system, particularly in regard to forms of communication, decisionmaking and relationships with shareholders and the capital market.
In his speech, Emílio Odebrecht declared, “In 2001, we met challenges to make renewal possible and brought about the succession of an entire generation and the implementation of a new governance system at Odebrecht. We have created the fundamental conditions for continuing to meet the demands of internal and external circumstances while staying on the path of increasingly qualified growth. The challenges of the future lie ahead of us, and we will surmount them, just as we have surmounted numerous challenges in the past.”
The new leaders who took charge of strategic responsibilities in the organization included Marcelo Odebrecht, Entrepreneurial Leader (CEO) of the Engineering & Construction area. Marcelo is Emílio’s son, Norberto Odebrecht’s grandson, and the great-grandson of the pioneering Emílio Odebrecht. A civil engineer, he is carrying on the Odebrecht family’s tradition in the construction industry, begun in the nineteenth century by topographer and surveyor Emil Odebrecht, Marcelo’s great-great-great-grandfather.
To head the Chemicals & Petrochemicals area, the Group looked for an executive with international experience and found José Carlos Grubisich, then Vice President of Rhodia, who accepted Odebrecht’s invitation to take the helm of Braskem and realize the dream of building a large Brazilian company in that sector.
With these new leaders and a new governance system in place, the foundations had been laid for building the Odebrecht of the future summed up in its Vision for 2010. “Above all, we will continue to focus on our Clients,” said Emílio Odebrecht in his December 2001 message. “Our hierarchy begins with them. And, as ever, each and every one of our Entrepreneur-Partners is committed to satisfying their Clients, Shareholders, and all other stakeholders in the communities.”
The Group’s founder, Norberto Odebrecht, often cites the words of Bahia jurist Rui Barbosa: “This world of change rests on a changeless foundation.” He means that the major changes that Odebrecht has experienced during its 60-year entrepreneurial trajectory occur on a foundation that never moves but is always being renewed. At Odebrecht, this foundation consists of the spirit of providing service with a modest, down-to-earth attitude, and the principles, concepts and standards of the Odebrecht Entrepreneurial Technology, which guide the work of the organization’s members.
Planned succession: A permanent commitment to renewal
As Norberto Odebrecht himself explains, “We want to be ready at all times to identify and win over clients wherever they may be, and put an Entrepreneur-Partner at their disposal who is well qualified to apply the Odebrecht Entrepreneurial Technology. We want to establish a permanent presence in every country, while respecting each local culture and actively contributing to the welfare of its people.”
He underscores that to move in that direction, it is essential to have competent leaders and effective, helpful team members – knowledgeable people who are sufficiently mature to transform their intelligence into the services and goods the client wants and needs.
“Our overarching effort is identifying and grooming these leaders so that they can follow the example of our greatest achievers – who have always believed in our strengths with determination and courage – and pass on and disseminate these convictions to the teams they lead,” observes Emílio Odebrecht.
Odebrecht will continue on this path – that of education through work – as it moves ahead on the trajectory of achievement begun in Bahia in 1944. The aim of that trajectory remains the same: creating material wealth that satisfies practical needs, and the moral wealth that bestows dignity on the Individual. Underlying all of this is hard work, based on the discipline that generates mutual trust and respect, while keeping to the path of Survival, Growth and Perpetuity.
It was true in the past, and will be true in the future.