Interview with Glauco José Côrte, President of FIESC (Industry Federation of Santa Catarina)

What are the big advantages that Santa Catarina’s industry has to offer and what are the greatest investment opportunities in your sector for international companies that wish to invest in Santa Catarina?

I think Santa Catarina has a highly diversified industrial structure. It is also de-concentrated, and has a strong industrial tradition, stemming from our German and Italian origins. We have these roots, and we also have a great talent for exporting. That sets us apart, and it makes it so that Santa Catarina’s industry still has a considerable weight in the comprising of the country’s GDP – quite above the Brazilian average, if we consider the transformation industry, construction and public utility services. Almost a third of Santa Catarina’s GDP contribution is comprised by industrial production. So the local businessmen and entrepreneurs are professionals that are always technologically up-to-date. Due to our significant participation in international markets, our businessmen have always been in frequent contact with the international reality, so they get to know and adopt the latest technologies for their companies.

There is also a tradition of reinvesting the profits of their businesses in their expansion and modernizing. So, we have quite well prepared, competent and determined industrial businessmen, who invest in their own businesses and we also have a set of workers with an above-average level of skills and training, both in terms of knowledge and of mindset towards work. There were never any social problems in Santa Catarina, because the State is so decentralized, but also due to the fact that our workers are very disciplined and committed to their company. I think this is also a factor that sets us apart. So we have bold and innovative entrepreneurs, and workers who respond to those characteristics.

You are giving us quite a positive image of Santa Catarina. What are the biggest challenges that FIESC has to deal with?

Our biggest challenge, and the one that conducts our management plan, is the improvement of Santa Catarina’s competitiveness. This problem is not exclusive to Santa Catarina; the country itself has lost competitiveness in the last few years. The truth is that the production costs in Brazil have gotten quite high lately, and we have been unable, especially in recent years, of accompanying the most developed countries in terms of investment in innovation. Nevertheless, there has been an increasing awareness that we cannot compete in terms of prices – because no country can compete with the Asian in terms of prices; so we have to compete in innovation, in design, in production flexibility and this is something that has been gaining some momentum recently.

Nowadays, our businessmen are aware that we need to invest much more than we have so far in innovation and technology in order to improve our productivity. In fact, we have actually seen a decrease in productivity in recent years. The country has failed to maintain a sustainable growth rate.

So what is our role at FIESC? If this is true for the industrial sector, we must commit ourselves to contribute, to help the industry improve its competitiveness. How will we do this? Just a week ago, we have launched in FIESC something that we are calling the “Industry for Education” movement. We organized an event, which was graced with the presence of the Governor, as well as that of several industry leaders, like Mr. Schneider, for instance. From 2012 to 2014 we will be investing R$330.000.000, at an average of R$100.000.000 per year, over those three years. This money will mostly be going into the qualification of the Santa Catarina workers. We will build technology and innovation centers that will cater to the needs of the industrial sector, in terms of technology, but above all, in terms of preparing workers for a new stage of this much more competitive economic environment. Something that has become very clear to us is the fact that the low growth rates in developed countries have made the competition in emerging economies fiercer. China is losing ground in the Unites States and in Europe and is starting to move in on Brazil. And we have to compete against China in the internal market and also in the foreign one. So we really need to make vigorous investments in the qualification of our workforce, as well as in innovation and technology.

In this regard, do you have any protocols or connections with international companies or entities that can help you to have such technology and knowledge available for this project?

Yes, of course, we have cooperation agreement with several entities, like China Trade Center, Chamber of Industry and Commerce of Neubrandenburg (Germany), National Institute for Exterior Commerce (Italy), Exterior Center of Vêneto Chambers of Commerce (Italy), Taiwan External Trade Development Council – TAITRA, Turkish Confederation of Businessmen and Industrialists – TUSKON, Dubai Chamber of Commerce and Industry (United Arab Emirates) and ArabBrazilian Chamber of Commerce. We have also partnerships with technology and research institutes, like the Fraunhofer institute in Germany and MIT, from USA.

Before this interview, we spoke with Mr. Carlos Schneider from Certi, who was also very enthusiastic regarding technology and innovation.

Yes, because Santa Catarina, and also Florianópolis, are becoming quite a notorious center for technology. Take, for instance the Sapiens Park. We will be at the Sapiens Park as well, at the Institute for Technology for Embedded Networks, which is an institute for innovation. We will also be present at an event here in the continent about innovation in the field of lasers. This is possible thanks to a program created by the National Industry Confederation, which is helping us, as well as other federations in the several states, in the modernization and transformation of what used to be mere research laboratories in full-fledged technology institutes. This is why we see this high level of investment, which, in our case, will actually require funding. We will be investing R$200.000.000 from our own resources, and approximately R$130.000.000 from the Brazilian Development Bank.

What other interactions does FIESC have on an international level?

Well, we have a lot of protocols and cooperation agreements with several countries; European and others. We always have a very strong program in terms of international missions. For instance, next Tuesday, we are taking 70 Brazilian businessmen to China. We have travelled to China quite often in the last 15 years. We go there, and to other countries, precisely because we want Santa Catarina’s entrepreneurs to see what is going on out there; opportunities for exports and imports, for exchange, for joint ventures, and of course, to attract investment for Santa Catarina.

What are FIESC’s main necessities at the moment?

We provide services for the health and safety of the worker, take care of the preparation of young people coming into the work market with professional and technical qualifications and we also take care of workers already employed in a company. What we need today - and we are striving to achieve this – is to fill the empty seats in our classrooms. What happens is that the country is going through a period of nearly full employment - the unemployment rate is around 5%. There is a contingent that is not currently looking for a job. So we are looking for support from the industrial sector in order to encourage, stimulate and facilitate their workers’ access to our classrooms. We have always been in dialogue with the industries and we define the needs that need to be addressed together with them. At this moment, our courses are ready and what we need now is students.

We have an ambitious goal; in the next three years, we will be offering nearly 800.000 openings and that is the number of students that we would like to see going through our schools, in short, medium and long term courses, in that period. We have all kinds of courses, from basic education all the way to higher education - we offer courses in technology universities. Our focus is to deliver technical and professional education, so that our youths, and also those already employed, can be fully qualified to work in an environment of increasingly sophisticated equipment, which require higher skills and training. This is our objective and our commitment.

What are your plans, your vision, your philosophy for the future of FIESC? Ideally, what would you like to achieve?

I feel very strongly that FIESC needs to work in a closer collaboration with the industry. Even though we exist to serve the industry, we are not always sufficiently close to be able to understand exactly what its needs are. Furthermore, the most important work that we do here is to be ahead of the industry’s demands. If we let ourselves fall behind instead of placing ourselves where the industry is going, then the industry does not need us; if we are beside it, we can only be of some help; we have to be one step ahead in order to offer the industry the solutions that the industry would take some more time to come up with itself. That’s the reason for our obsession with education and qualification and the reason why we scour foreign countries for the latest trends, to study all the new things being made, etc. We do not want to only follow trends, we want to start them, and in Brazil we have all the conditions to be in the lead. And for this, we need qualified professionals and entrepreneurs; so much so that our education network comprehends all levels, from basic education to executive training. Yesterday we concluded, here in Florianópolis, in collaboration with Duke University, a course on Open Innovation. More than 40 executives and company CEOs discussed the matter of innovation with teachers from the Duke University for three days. They debated on how to approach these issues, and the systems around innovation.

Your capital comes from the industry, doesn’t it? You are a private enterprise, but do you also have some profit from these courses?

We are, in fact, a private enterprise financed by contributions from its members. The greater part of our courses for the industry sector is free of charge. There are some specific courses, particularly those that require equipment or outsourcing of teachers or consulting services, in which the industry bears some of the expense. But the vast majority is free.

How do you think the State of Santa Catarina is perceived in the foreign countries you have visited?

Well, those who have already done some transactions, some business in Santa Catarina have a good impression of our products and also of our businessmen. But we must make an effort to make Santa Catarina even more famous. We are a very small state, we account for only 1% of Brazil’s territory; so it is very common for visitors and investors to go right past Santa Catarina on their way to Rio Grande do Sul, or for them to go no further than São Paulo. So we have to do a major effort – the missions we carry out abroad also have this advantage, of making Santa Catarina better known.

I am convinced that we are entering a “virtuous cycle” in Santa Catarina, and here’s why: The great urban centers like Minas, São Paulo, Rio de Janeiro, are getting a bit crowded; we have better quality of life here. The seasons are perfectly distinguished from one another; we have beaches, we have mountains, we have universities all throughout the state – we have a higher education system in Santa Catarina that could probably serve as a model for all of Brazil. You will find a university center in every region you visit here, which prevents young people from having to move away to the cities to study. And we also have a rather approachable government. It is much easier to speak with the Governor of Santa Catarina than with the Governor of Minas Gerais or São Paulo. Here, if I dial the Governor’s number, he will pick up. It is a bureaucratic government, like all governments, but it is more open to dialogue.

I am convinced that, in the next ten years, we will go through a period of new investments in technology and, in the upcoming years, Santa Catarina tends to be a state that will attract many investments.

When we conducted interviews in other States, for instance Espírito Santo, São Paulo, etc., we always heard the same from them – they all say they have all the best conditions and so forth. So there is a competition…

Yes, there is a strong competition, but there might be very few States where you will find the conditions that we have here today.

Just so you don’t say I did not speak of our difficulties – We do have one here, which is our physical infrastructure. And that is crucial for our development in the next few years. For instance, from here to Chapecó, in the west part of Santa Catarina, it’s 800 kilometers. We need small aircrafts, and we need to invest a great deal in the improvement of our roadways; our logistics costs are quite high. So this is what we need to improve, our physical infrastructure, our roads, the access to maritime ports… Very few states, if any, have a maritime port complex like ours – we have five ports in operation. This is a real asset for the state, but, unfortunately, the access to these ports is sub-par, and there are no railways. These are all issues that, at least, are now part of the investment program. We need to see a great political mobilization pushing for this to happen. So this is one of the barriers that we need to breakthrough. We are doing it, but it is happening to slow. These results must be achieved faster.