An industry adapting to survival mode


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The Brazilian naval industry, gathered at Marintec South America this week, is looking for ways to adapt and reinvent itself during times of crisis.

The 13th edition of Marintec South America took place from September 19-21, 2016, and almost 40 Norwegian companies were present or represented by agents at the event. NBCC members like Vard, Palfinger Marine, Kongsberg Maritime, M&O Partners, Ulstein, DNV GL, MacGregor and MRM Logistics were among the exhibitors, and M&O Partners hosted a seminar on market entry strategies during the three day trade fair.

The maritime industry is currently looking for alternatives to dodge the crisis caused by the low oil price, the current situation in Brazilian politics and partially also by the Lava Jato investigations, that have implicated major national construction companies active in several sectors.

Stakeholders are looking for ways to adapt, to reinvent themselves and to innovate, and according to event manager Renan Joel, Marintec South America would like to contribute to the recovery of the industry by presenting solutions, technologies and strategies.

Mr. Daniel Cunha of Vard Promar.

Mr. Daniel Cunha of Vard Promar.

Ship repair
Vard Promar, a shipyard in Suape in Pernambuco, has chosen ship repair and maintenance as a way of adapting. A wise choice according to both Antaq and Firjan who believe that maintenance is among the best alternatives to overcome current challenges and guarantee future growth.

Vard Promar is actually one of the newest shipyards of the sector and the company used Marintec to promote the new maintenance and ship repair services.

«Shipbuilding will remain our main focus, but we are also taking the opportunity here to promote this new service that we are offering, and hope to meet new clients. This is our way of adapting to the crisis that has hit the oil industry. We see that investments are falling, and there is currently a lower demand for new ships. This is why we see maintenance and ship repair as an opportunity, trying to expand our business. Here at Marintec, we also hope to meet business partners and suppliers and maybe learn about new solutions we can use in future projects. We have been accompanying the market and observing the needs of our clients, and we are always looking for new opportunities», says Daniel Cunha, Head of the Vard Promar Financial Department.

Vard Promar currently has three gas tankers and two PLSV-s under construction, and Mr. Cunha describes the shipyard as modern and well-equipped technologically speaking.

Mr. Kjetil Solbrække of Rystad Energy.

Mr. Kjetil Solbrække of Rystad Energy.

«While some are struggling financially, we consider ourselves well positioned. We have the technology and the know-how and the idea is to maintain our team so that we are ready for new opportunities when they arise», Mr. Cunha says.

Market entry strategies
During a seminar organized by M&O Partners on September 20, 2016, Kjetil Solbrække, Senior Vice President South America of Rystad Energy, talked about opportunities in the maritime industry in Brazil.

«In about 10 years, Brazil will be the 6th or 7th largest oil producer in the world. Brazil is already the biggest offshore market, and we believe there are huge accumulations of oil that have not even been discovered yet. The potential is huge, and this is why you need to be present in Brazil», he said. Mr. Solbrække defended more diversity in the Brazilian oil industry with more operators.

«Petrobras will use the increased cash flow to handle debt and continue to keep the investment level low. New divestments could create new opportunities. Rystad Energy believes that new players can contribute to creating growth. But you must prepare for more difficult years ahead», he said. According to Rystad estimates, the market will recover in 2019, but will be back on the 2011-2013 level only in 2023.

Erik Hannisdal, NBCC president and managing partner of M&O Partners, talked about market entry strategies and considerations. Judging by the turnout at the seminar, this is a topic of interest to many.

«Brazil is a challenging market to enter, ranked 116 of 189 on a ranking measuring difficulties in doing business. On the Corruption Perception Index, Brazil ranks 76, although I believe corruption is on an all time low in this sector right now. Bureaucracy when starting a business, taxes and trade across borders are areas where Brazil is under-achieving. Summing up, this is the «Brazil Cost», and you need to take this into careful consideration when you build your business strategy. As a consequence of the «Brazil Cost» you need to make a bigger first step to establish in Brazil», he said.

From the left: Mr. Etienne Spehler, Mr. Erik Hannisdal and Mr. Kjetil Solbrække.

From the left: Mr. Etienne Spehler, Mr. Erik Hannisdal and Mr. Kjetil Solbrække.

He also outlined the different entry options, and discussed the pro-s and con-s of opening a subsidiary, forming a joint venture or choosing representation by an agent.

Etienne Spehler, Export Sales Manager of Gerflor shared some of his experiences on entering the Brazilian market. He believes innovation is the name of the game right now.

«The current market situation is definitely a constraint on volumes, but at the same time, people are more receptive to innovation, new ideas and better solutions. The market is listening», Mr. Spehler said.

The Marintec South America conference and trade fair expected more than 16.000 visitors at this year´s event. 380 brands and companies from 17 different countries were part of the 11.000 m2 exhibition.

By Runa Hestmann, NBCC journalist