Brazil is an expert at getting into trouble, but an even bigger expert at getting out of it again.
How do you describe a people’s temperament? And is it possible to describe something or someone as “typically Brazilian?” Perhaps it is.
At any rate the Brazilians themselves have a couple of good illustrations. One is an expression which they use whenever they get into an awkward situation or face a difficult problem. The key thing is to “dar um jeitinho” – be deft, flexible and find a way out. Without making a big deal about it.
The other example is taken from the animal kingdom. According to the laws of physics, the bumble bee should not be able to fly – but it does anyway. It just doesn’t know it can’t fly, and it wants so very much to do so. Typically Brazilian, says the Brazilian financier who told the story.
Harald Martinsen, who heads Hydro Brasil Ltda., puts it in another way: “Brazil is an expert at getting into trouble, but an even bigger expert at getting out of it again.”
The Brazilian solution
And Brazil certainly has its share of problems. In addition to the fundamental problems of poverty and crime, the country has periodically – and right up until the 1990s – struggled with rampant inflation. In 2001 there was a danger that a major economic downturn would result from the energy crisis which followed two or three years of little rain.
But once again Brazil hauled itself out of its difficulties. With a few adjustments, the economic plan – Plano Real – from 1994 has worked, despite a temporary setback following the financial crisis at the end of the 1990s. Not even the crisis in Argentina, which is Brazil’s second-largest trading partner, looks like having a dramatic impact on the Brazilian economy.
“It has now been eight years since Brazil suffered from hyper-inflation. I do not think it will happen again, but we are conscious that the risk is still there,” says Martinsen. He points out that the Brazilian economy has grown, despite the problems facing the country.
Compared with the Argentine economy, there are major differences. Argentina has a huge balance of payments deficit and the Argentine currency is tied to the US dollar. Today, Brazil has a balance of payments surplus and management of the economy is strong. It is not without reason that Brazil is often referred to as Latin America’s economic locomotive.
The country accounts for 40 per cent of the continent’s GDP and its economy is the eighth-largest in the world.
Right for Norsk Hydro
“Brazil is a country which fits well into Norsk Hydro’s business portfolio. Take aluminium, for example. The country has major deposits of bauxite, the basis for aluminium production. The domestic market for aluminium is already considerable and has an even bigger potential,” says Martinsen, who has special responsibility for following up the major expansion program at Alunorte’s alumina plant. After the capacity increase, Norsk Hydro will increase its shareholding in Alunorte from 25 to 34 per cent.
“Today, Alunorte and Alpart in Jamaica supply around 40 per cent of Norsk Hydro’s alumina requirement. As Norsk Hydro gradually increases its total metal production – for example, through the acquisition of VAW – the shortfall in alumina supplied by our own facilities will increase. If we are to maintain a 40 per cent coverage level we will have to increase our production of alumina,” says Martinsen, adding that it may be necessary to increase Alunorte’s production capacity even further.
Brazil is no less promising when it comes to agriculture. Each year Brazil uses 16 million metric tons of fertilizer, making it the world’s fourth-largest consumer with the second-largest growth rate in fertilizer consumption.
“Any company with ambitions of being an international player in the fertilizer market must have a presence in Brazil. And if you are going to be a success here you need to acquire a stake in a domestic producer as well as having access to imported products,” says Martinsen.
The market is currently split almost fifty-fifty between imported and domestically produced fertilizer. The problem for importers is that their costs are in US dollars, while their revenues are in the local currency.
Two main tasks
As head of Norsk Hydro’s business in Brazil, Martinsen has two tasks. In addition to looking after the company’s interests, he is also responsible for the aluminium business. It is a pattern which Norsk Hydro has also introduced at its Moscow office, and it works very well, says Martinsen, who emphasizes the importance of exploiting the synergies between the different businesses. The company has made considerable savings by coordinating its financial services, banking and insurance services and purchasing. A company which signs a deal to buy 150 cars from a supplier can expect to get a good price.
“We will exploit the advantages of belonging to a group, whether we are mixing fertilizer or manufacturing aluminium profiles,” he says.
Cultural translator
Norsk Hydro’s office in Botafogo in Rio is furnished in a modern Scandinavian style, with light wood furniture. The office chairs – which could be Brazilian or Scandinavian – are upholstered in blue leather. The conference room’s wall-to-wall window frames the beautiful tropical landscape like the picture on a postcard. The office assistant does the rounds several times during the course of the morning offering exceedingly strong “cafezinhos” or glasses of water.
“The office reflects how I think we should adapt to other cultures,” says
Martinsen, who describes himself as a cultural translator. “It is a matter of finding the point of intersection – a good balance – between the local environment and the heritage we bring with us.
“We cannot run our businesses outside Norway completely according to Norwegian principles, but it would be equally wrong to go to the other extreme and become completely ‘Brazilified.’ That is one of the reasons I do not think that people stationed abroad should spend too many years in the same job.”
But as Martinsen points out, an expatriate manager is totally dependent on having a team of capable local employees. In Brazil, the number of expats is negligible. “Today we have 1,100 employees, and only four of them are here on a foreign assignment,” he says.