|A National Company
|By 1968, Odebrecht had developed expertise in specialized
technology projects and was building major works in most
Brazilian states. In 1979, the Group started taking its first steps
towards internationalization and investing in petrochemicals
Begun in 1969, as one decade ended, and completed in 1971, at the beginning of another, the Petrobras Building in a way symbolized an extraordinary watershed in the history of the Odebrecht Group. It marked a change in geography by broadening horizons; in technology, by adding knowledge; and in policy, by setting the company on new paths, diversifying its operations and launching it into the future. The new decade began with great expectations of economic growth – from 1970 to 1973, Brazil’s Gross Domestic Product grew by an annual average of 10%. However, by the end of 1973, the Organization of Petroleum Exporting Countries (OPEC) placed an embargo on its members’ oil exports. By 1979, the price per barrel had jumped from USD 2.20 to USD 22.50. Since Brazil did not produce even 20% of the oil it consumed, it was one of the nations that suffered the most. It had implemented a program to reduce fuel consumption, which nevertheless rose from 800,000 barrels per day in 1975 to 1.1 million in 1979. That year, the nation’s oil import bill reached USD 7 billion, which meant that hard times were ahead in the following decade.
Meanwhile, the period of development had driven up the manufacture of durable consumer goods, production, civil construction, commerce – spearheaded by large supermarkets and shopping malls – and roadways. With over 500 projects to its credit, Construtora Norberto Odebrecht was well off financially and had already become one of the largest construction companies in the Northeast. It was building projects in that region and other parts of Brazil, including Route BR-324 between Salvador and Feira de Santana, blast furnace number 4 for Usiminas in Minas Gerais, the Tapacurá water treatment facility in Pernambuco, Salvador’s 3,350-m ocean outfall (2,350 meters underwater), and the Othon Palace in Bahia’s state capital – a five-star hotel with 301 rooms, all with an ocean view.
Brazil needed specialized technology works: metros, nuclear power plants, airports and long-span bridges
However, Brazil needed more than massive construction works. It also needed new expertise. The country had imported the technology to build large hydroelectric plants in the 1950s. By the 1970s, Brazilian engineering had absorbed and improved on this knowledge to such an extent that it was exporting that technology. But the 1970s presented a different challenge. Brazil planned to build specialized technology works involving fields that were new to its engineers: light-rail systems, nuclear power plants, large airports, and long-span bridges. Now, construction companies needed a different kind of know-how – the capacity to manage large projects, mastery of equipment and cutting-edge technologies and the ability to meet strategic deadlines.
These new challenges were well suited to the track record of Odebrecht’s teams, who have always focused on applying and developing pioneering methods. Bolstered by its experience in the Northeast, Construtora Norberto Odebrecht decided that the time had come to compete in the specialized-technology construction market in the Central South, where a cycle of major projects was emerging. As a result, the contractor tendered the winning bid for a contract to build the Rio de Janeiro State University campus, carried out between 1970 and 1976, including twenty 12-story buildings, ramps, catwalks, a theater, and an open-air bandshell with seating for 3,500 people. Between 1971 and 1976, the company’s teams surmounted a multifaceted challenge to build Rio de Janeiro International Airport. Construtora Norberto Odebrecht had to manage a huge number of small and large contractors and subcontractors – over 180 at once. Furthermore, the project involved a large number of federal, state and municipal agencies, as well as the local community. Contractors had to have more expertise than physical assets, and a greater capacity to mobilize people committed to using their creativity and innovation.
The number of large and challenging projects multiplied. Ground had barely been broken for the city of Rio’s airport when a call for tenders was issued for a much bolder undertaking – construction of Brazil’s first nuclear power plant in Angra dos Reis, Rio de Janeiro State. This project required a technology that no Brazilian contractor had fully mastered. And it was needed to overcome the country’s energy deficit, which was strangling the process of industrialization and putting the country in an uncomfortable position – 49th in the world in overall per-capita energy consumption.
The call for tenders for construction of the Almirante Álvaro Alberto Nuclear Power Plant was announced in the early 1970s. The tender documents contained extraordinarily rigorous requirements. The winner would be a company that could both manage the project and provide services while having the following characteristics: sufficient flexibility to adapt to different circumstances, and a proven track record in industrial construction projects; a diversified portfolio of services that went beyond in pouring large amounts of concrete and doing big earthmoving projects; and professional enough to absorb foreign technologies and integrate itself with a number of consulting and design firms, equipment suppliers and installation companies. Above all, the company had to accept and understand this kind of construction management contract and be willing to pursue the aim of developing nuclear power in Brazil.
Odebrecht met all these requirements, and won the contract after a fierce competition with giants in the sector. It had teamed up with the J. A. Jones Construction Company, a US firm with a track record in nuclear power plant construction, and tendered the most commercially adequate bid, as well as providing technical guarantees.
Before the contract was signed, Furnas Centrais Elétricas S.A., the subsidiary of the state-owned power company Eletrobrás that was contracting out the project, sent its technicians to audit Construtora Norberto Odebrecht and inspect and evaluate all of its industrial projects. Afterwards, they sat down with the contractor’s teams to discuss their scheduling and planning methods.
Further consolidating its presence in the southern market, Construtora Norberto Odebrecht was contracted in 1973 to build the Colombo Salles Bridge, which links the island of Florianópolis to the mainland in the state of Santa Catarina. This happy coincidence took the company back to its origins, when Emílio Odebrecht, a native of that state, built the Arcos Bridge across the Itajaí-Açu River in Indaial in 1925. Nearly 50 years later, using its extensive experience in prestressed concrete foundations, the contractor proposed using a variant of this method to build the Colombo Salles Bridge, which would make the project simpler and cheaper to build than the cantilever method and dispensed with the central roundabout.
Construtora Norberto Odebrecht also moved into other parts of the country. In the North, the Amazonas Theater, an architectural jewel that recalled the splendor and decadence of the rubber boom, opened in 1896, was crumbling with every passing day and year. The theater’s dome, the limestone-paved sidewalk, and the plafond of the great hall were in a “disastrous state,” according to a 1970 report from the National Historic and Artistic Heritage Directorate (dphan). The enormous list detailing its deterioration included leaky roofs and loose wiring on the walls, crumbling structures and leaky pipes. Construtora Norberto Odebrecht had a plan that would preserve the original characteristics of the building and its art works while replacing everything that was unusable and making the theater comfortable and safe.
And that is exactly what it did, keeping faithfully to the philosophy of restoring historic buildings with modern technical resources. As critic and art historian Clarival do Prado Valladares wrote in his book Restoration and Recuperation of the Amazonas Theater, published by Construtora Norberto Odebrecht to commemorate the theater’s reopening in January 1975: “Since its restoration, the Amazonas Theater is no longer an idle object of luxury and romantic memories. It has become a modern instrument of culture and civilization.”
The Odebrecht brand was making its mark throughout the country, but the contractor never left the Northeast. In fact, it did the opposite. That is where the company began providing services to a new Client in the petrochemical sector, when it began building the Copene thermal power plant in 1973 for Companhia Petroquímica do Nordeste. Located in the town of Camaçari, in the Bahia bay region, Copene was to become the local industrial district’s main feedstock supplier.
In 1967, Petrobras created a subsidiary called Petrobras Química S.A. (Petroquisa) as a holding company for tripartite arrangements between state-owned and private Brazilian companies and multinationals. The aim was to overcome the increasing lack of oil byproducts. Petroquímica União was created the following year and began operations in 1972. It was Brazil’s first ethylene plant.
Odebrecht’s Norbe I Platform contributed to the Brazilian effort to find a rapid solution to the energy problem
The creation of the Camaçari Petrochemical Complex in Bahia was a major milestone in the state’s quest for industrialization. The long process of deciding, planning and implementing the industrial district took place over the course of three state governors’ administrations: beginning with Luiz Viana Filho (1967-1971); developing under Antonio Carlos Magalhães (1971-1975); and seeing its completion and start-up under Roberto Santos (1975-1979). It also involved the efforts of local business leaders who demanded new industrial investments in Bahia, spearheaded by Empreendimentos da Bahia S.A. and the Celso da Rocha Miranda Group. Founded in the early 60s, Empreendimentos da Bahia S.A. was formed by Norberto Odebrecht, Fernando de Góes, the head of the Banco da Bahia; Fernando Correa Ribeiro, who headed the group that bears his name; and Miguel Calmon, from the Econômico Group. They had already built the Aratu Industrial Center, which soon became one of the most advanced manufacturing complexes in Brazil. In 1971, they joined forces once again to win the fierce competition with São Paulo companies to create another Brazilian industrial district. That is how the Camaçari Petrochemical Complex was born. Odebrecht built facilities covering 29,000 square meters of the complex as a joint venture with Ishikawajima and Marubeni.
Projections for 1974 and 1975 pointed to the construction of new railways, expressways, sanitation projects and steel mills, among other facilities. Odebrecht built a 1,546-meter rail bridge across the Bertioga Canal in São Paulo; the Iguatemi Shopping Center in Bahia, then one of the largest in the country, and later another mall complex in Rio de Janeiro called Rio Sul, which has a 160-meter-high, 40-story office tower. The contractor also built the first integrated neighborhood in Brazil, the Caminho das Árvores sub-division; Bahia’s first planned community, Vilas do Atlântico, and Portoseco Pirajá, a 730,000 square-meter multipurpose project for commercial use, all in the Salvador Metropolitan Region.
Although the heavy construction sector was still suffering from limited public investments due to successive increases in the price of imported oil since 1973, the nation’s dependence on foreign fuel led the Brazilian government to invest heavily in prospecting and exploration in its own territory, and even authorized international firms to explore for oil at their own risk. In 1975 and 1976, Odebrecht began drilling exploratory wells in the Vaza-Barris field, in Sergipe, and Garoupa and Pargo, in the Campos Basin, offshore Rio de Janeiro, where the discovery of oil had been announced in 1974.
There, aboard oceanography vessels with sophisticated equipment, the company obtained valuable technical knowledge of the field of offshore construction using reinforced concrete, and gained the expertise required to build these projects wherever and whenever necessary. An immense market was emerging. Having satisfied Petrobras, its main Client in that area, with small shallow-water platforms, Odebrecht kept pace with the oil giant’s interest in discovering and demarcating deep-water fields, particularly in the Campos Basin. At the time, Odebrecht was also aware that the future of the oil industry would depend on advances in the technology used to extract oil from the continental shelf, and therefore it decided to gain the expertise required to work in that area.
At the same time, the company was facing considerable challenges. While taking its first steps in the process of diversification that would intensify in the 1980s, Odebrecht was also managing long-term contracts that went on for years – sometimes a decade. The vast growth of urban construction projects, both public and private, had exceeded the most sanguine expectations, creating a shortage of materials, skilled workers and equipment.
The company immediately began pursuing several objectives: establishing a presence in other countries, expanding into other branches of engineering and construction, and diversifying in the manufacturing and mining sectors. All of them would be realized in the none-too-distant future. First, however, the company needed to bring the second generation of entrepreneurs into the picture – people who had joined Odebrecht in the second half of the 1960s and were hungry for fresh challenges.
In 1973, Emílio Odebrecht, Norberto’s son, moved from Bahia to Rio and began managing projects there. Born in 1945, he had joined the company as a trainee engineer in 1967. He worked on the construction of a pumping platform for Petrobras before taking on a number of other responsibilities. Emílio was already imbued with the Group’s basic ethic tenets – he had been raised with those values at home. He symbolized the rise of a new generation of entrepreneurs who were getting ready to replace the first generation led by his father, Norberto, in the following years. The next generation of entrepreneurs came on the scene along with him, including Gilberto Sá, Luiz Villar, Pedro Novis, Renato Baiardi and Sergio Foguel. Together with Alípio Lima, Asdrúbal Brandão Filho, Luiz Almeida, Renato Martins and Victor Gradin, they would have a decisive impact on the organization’s future.
While in Rio, Emílio soon realized that company been obliged to hire a large number of new members in a very short period of time. Although they were valuable additions to the organization, they had not learned to apply Odebrecht’s entrepreneurial philosophy. Therefore, the company had to bolster the process of on-the-job education, a legacy developed by his grandfather and namesake, and improved over the decades by his father. To this day, on-the-job education is one of Odebrecht’s fundamental principles and the basis of the entire process of delegating responsibility that characterizes the relationship between leaders and their team members throughout the Group.
Knowing that adhering to its philosophy was the basis for growth enabled Construtora Norberto Odebrecht in 1978 to win contracts for complex civil construction projects such as the Pedra do Cavalo hydroelectric plant in Cachoeira, Bahia, the Açominas steel manufacturing complex in Ouro Branco, Minas Gerais, the Riachão Potengi water supply system in Ceará, and the Third Bridge in Vitória, Espírito Santo. But the most decisive events for Odebrecht’s future would be those that launched its two main strategies in the 1980s and 1990s: diversification and internationalization.
On January 2, 1979, the Group created Odebrecht Perfurações Ltda. (OPL) to drill offshore and onshore oil wells, install pipelines and provide supplementary services to the oil and gas sector. Having won Petrobras’s first tender for drilling on the continental shelf, OPL acquired a platform made in Singapore that arrived in Brazil after a three-month voyage. Christened Norbe I, it operated off the coast of Sergipe, making Odebrecht the first private-sector Brazilian company to provide services of that nature. This pioneering move also contributed to the nation’s efforts to find a faster solution to its energy problems.
When Companhia Petroquímica Camaçari (CPC) began operations in September 1979, it was partly owned by Odebrecht, which had acquired a 33% stake in the petrochemical company. By December of that year, CPC had produced over 25,000 tonnes (metric tons) of PVC, meeting 100% of domestic demand and exporting 30,000 to 40,000 tonnes of its total capacity of 150,000 tonnes per year.
In that same decisive year, 1979, Construtora Norberto Odebrecht began building the Charcani V hydroelectric plant in Peru, and diverting the Maule River for the Colbún-Machicura hydroelectric plant construction project in Chile, as a result of over two years of investments in the international market. These projects signaled the beginning of the Group’s interaction with other countries, cultures and technologies, which would bolster the development of its teams and produce financial and economic results for Brazil and its client countries. They also marked the beginning of the organization’s participation in Brazil’s policy of establishing closer ties with neighboring countries by transferring human and technological expertise. Above all, they were the first milestones on a new and challenging path for the Group, which would be active in several countries around the world in the following decade.