Industrial Contracting in Southeast Brazil

Interview with Salvador Turco, President of Uniao Engenharia

As a self-made businessman, can you tell us a bit about your story?

I´m originally from Sao Paulo, my name is Salvador Turco, I come from a very humble family but I was born in this wonderful country with a tropical climate, called Brazil. I came to Espírito Santo, which means God´s Conforter, where many nationalities of the world are incorporated. Espírito Santo was discovered on the day of the Pentecost, where in the Jewish tradition many languages are spoken, so because of this we have the characteristic of being a State involved in imports and exports. And here I had the opportunity to learn trade and put together this company, Uniao Engenharia (Union Engineering) which today has been in business for 34 years.

We work in the engineering field, working from the beginning of a project, the process, in the area of petroleum, oil, mining, iron and steel and cellulose. Our State has been growing above the Brazilian GBP for 15 years with a growth rate of 7-8% on average. Brazil is an emerging country with enormous opportunities, but also with a degree of difficulty mainly in technology and specialised labour. So I believe that bringing foreign capital, from first world countries together with the opportunities of an emerging country like Brazil and a state like Espírito Santo which has a growth rate above the national average and the willpower of Uniao Engenharia we can add a proposal of bringing competitiveness to profitability in addition to capital with increased quality of life.

What does your company specifically specialise in and who are you looking for?

Uniao Engenharia is a company that specialises in various sectors: petroleum and gas, because we are Brazil´s second producer, in Espírito Santo with the capabilities to produce oil and gas so we have been investing in this area for 15 years, our main client is Petrobras and it´s also a partner that gives the opportunity for equal conditions nationally; in the mining area we have Vale from Rio Doce, one of the largest companies on an international scale and here we´re the largest producer in Espírito Santo with 55% of pellet which is the mineral added to make steel. And Uniao Engenharia is a supplier to Vale, Rio Doce, we have Samarco and we have the iron and steel industry, where Arcelormittal is a company operating on a national level which is also has facilities in Espírito Santo and Uniao Engenharia is a qualified supplier to them. So we work in these 3 areas as our basic cornerstones of sustainability, our staff, our family here, our suppliers, looking after our clients here, which are those I´ve just mentioned to you.

What are the major challenges that the company has at the moment?

Today we have contracts in Brazil, Sao Paulo, Rio de Janeiro, Bahia, Ceará, Minas Gerais servicing these 3 sectors: gas – energy, which is gas with petroleum – we have the mining side and the area of the iron and steel industry. Today, in the two plants Uniao Engenharia has in Espírito Santo, we have around 800 employees and in terms of works it varies from 2000 to 4000 employees in accordance with the contracts we have for projects in our portfolio.

So what are the greatest challenges facing the company?

The greatest challenges are maintaining a standard of motivation amongst our staff and as well as developing processes and technology because of the major challenge called time. In a global economy time has to be a highly important factor in order to service your contracts and developing technology has a high cost mainly in terms of time. So we look for partnerships to come together to develop and purchase this technology to give us better know-how and with this better service the contracts that we have in our portfolio are the challenges we are looking to overcome.

What type of partnerships are you looking for?

Today we have in the area of technology the most interest in oil and gas for deep water pre-salt, which has its process and also has a qualified supplier so that through a joint-venture or through affiliates we can service these contracts both in our portfolio and those that the market in Espírito Santo has in terms of opportunities.

How do you go about making partnerships with these international companies?

In the past, Brazil had its doors opened in such a way where large international companies came from outside and sold their technology, their end products – engineering supplies and materials – directly to the end client who was the Brazilian investor. Brazil then started developing a socio-economic policy which needed new laws to ensure the development of an emerging country such as Brazil to use the resources it has, such as the existing mineral riches, in order to add value so that nowadays the large international suppliers are obliged to enter into Brazil, whose doors are still wide open, by making partnerships with local companies. And this is where we fit in. Beforehand, we were a third-party company, now we can sit down at the negotiating table and be a company that can provide local resources directly to the large project developers who are also at the table and the Brazilian government´s action plans. So this has opened up the windows and instead of being a third-party company we are directly involved in these projects.

What are the pre-requisites for choosing a partner?

In order to choose a partner he must have certain affinities, one of those besides technology and besides the process of expertise, is knowledge of the local worker´s lingo, so in respect to the international investor who wants to set himself up in Brazil or come and sell here in Brazil, he makes a partnership with a local company and he´ll be able to use the resources and he avoids certain liabilities whether it´s in the scope of taxation, labour laws or even the operational ambit because the local company has the knowledge of the language, so I believe this is a great advantage as much for the company that wants to sell here, set themselves up here, as for the local companies like us who need the technology.

But are there other Brazilian companies that are doing what you do, or could we say that here you are unique and you don´t have any competition?

No, throughout the world there is competition and this is beneficial, any competition offers motivation for us to be the best provider whether it´s in relationship building, the end product or in price competiveness, because nowadays the logistics of bringing a product from China or from Europe or from the United States by any means, whether by air, or sea, has a high value so as I see it whoever´s going to do will gain in competiveness, in a language that´s practical, proactive and productive.

Which your company has?

We have this and for sure our competitors do too: so whoever gives better service, whoever has the right attitude doesn´t just win on price but also wins in terms of transparency because truth is king.

What projects do you have coming up in the future?

We are working on a project that the government of Espírito Santo has that has a schedule for 2025, in the area of gas and petroleum we know that the next 10 years is the area of exploration, so you look at the part of recognition of the petroleum deposit, then you have the investment of the large platforms from where the petroleum will be explored and then within this growth over 10 years you have the huge supply of the equipment then after the year 2022 you will have the maintenance of this market. In the field of iron and steel mining Brazil still has very low per capita incomes and consumption levels, so besides the international market the huge iron ore and steel mining companies that are already being serviced but as the market is a bit stagnant we have internal consumption, so with the buying power that Brazilians are starting to develop our work in the market of steel consumption is big so I´m seeing the same business opportunities here too. Now the competition is globalised whether it´s out of Brazilian companies, engineering service providers, goods and services, as well as production, assembly, and other projects there are huge suppliers within in Brazil and throughout the world, so there´s no recipe so that alone you manage to provide the service within your projection, your comfort zone, you have to be motivated, develop, treat the client better and be better educated, this is your obligation, the same as being honest is, so you have to be good in this area.

Talking about development, how is the company developing and how do you track this?

Our development is easy to measure with tools like through our invoicing, to what extent a company is developing economically, financially, it is in a growth period when the numbers on its invoicing show profitability. But our greatest development can be seen as part of our story which started in 1978, we founded the company with 2 partners and 1 employee and today we have an extremely high number of employees with a lot of responsibility, working in many Brazilian states and on an international level.

Is it possible that future development will be on the same scale? Will you have affiliated projects, joint ventures? What is your strategy?

Our objectives and our action plan and our guidelines are based on what we can achieve in the next 48 years, we have a development in the next 5 years equivalent to 30 years with quality of life and with greater revenue and profitability looking for partners in technology or even investors so we don´t take so much time, because nowadays time is of paramount importance, so what we have done is with our own resources with transparency and transpiration we want to continue doing so with transparency and transpiration but in a way that is more pleasurable and in a way that is quicker, with safety but with greater speed, with this even though we have to share the pie with our partners we´ll be able to do this a lot more quickly.

By various means: through the banks, opening capital?

We´re not borrowers, we don´t do this through the bank, we look for investors, shareholders, partners in technology so the company can keep going in a healthy way and growing sustainably. We are a company qualified in ISO 9000, ISO 14000 and ISO 18000, we are a civic company with an international profile.

What message would you like to send to foreign investors?

Our message would be in the form of an invitation: Brazil is a very interesting country in the area of growth and in the area of coexistence with its democracy. So its a country that from North to South speaks the same language, there are no dialects, we have good governance as much from the President as from our Governors, a respected constitution democratically in terms of rights and obligations, we have a lot of things to improve on but this gives us sustainability, reliability and confidence. In terms of economics we are an emerging country with a lot of room for growth and a lot to do internally. Here we we´re lacking roads, lacking schools, lacking industry whilst in Europe all the roads have already been paved, all the universities have already been built, so here you´re looking at a place of opportunity whether in the industrial, commercial or residential sectors. So you´re invited to visit us, come and get to know us, and without a doubt to get involved in business opportunities.