The Bric countries are investing in the region and also offering opportunities for expansion for established North East firms. COREENA FORD looks at how one Tyneside company is ensuring that its Brazilian subsidiary is benefitting from expertise built up over its 42-year history.
The economist Jim O’Neill has a handy way of coining snappy acronyms and nicknames that tell us much about the world around us.
As well as coming up the phrase “Manpool” to explain how previous rival regional cities like Manchester and Liverpool needed to work together, Mr O’Neill is the former Goldman Sachs man responsible for the term BRIC, an acronym that lumps together the emerging economic powerhouses of Brazil, Russia, India and China.
Those countries may be thousands of miles away from the North East, but all have play a part in the regional economy.
From Indian-owned Shasun Pharma Solutions and Tata Steel to the Chinese takeover of Tyneside’s SMD and former Russian tycoon Alexander Temerko setting up the OGN group on the Tyne, the BRIC countries are firmly entrenched in some of our major employers.
Brazil too offers opportunities, with a number of North East companies in the offshore industry looking to South America for new markets.
One of those companies is the Team Valley-based Express Engineering, which set up a joint venture in Sao Paulo back in 2010.
The Gateshead-headquartered firm, established some 42 years ago, brokered a £2m 50/50 venture with the firm Brastec to create Petrotec, and within 12 months the first components – subsea connectors used in pipelines for the transport of gas and oil from undersea wells to the surface rig or ship – rolled off the production line.
It didn’t take long for Petrotec to gain customer approvals for most of the big name subsea equipment providers located in the region.
And three years after initially gaining a foothold in the Brazilian oil and gas market, Express bought out its South American partner, taking full control of the business.
The Brazilian operation compliments Express’ plants in Gateshead and Stokesley, making up a workforce of almost 500 that supplies precision engineering services to the aerospace, defence, sub sea oil and gas exploration and production, power generation and medical equipment sectors.
Now the company has welcomed Glaucio Cordeiro, a technology transfer engineer from Petrotec, to Gateshead for four months, to ensure that some of the expertise developed on Tyneside over the last four decades is shared with the Brazilian firm.
Mr Cordeiro, who had worked for a number of major companies in the oil and gas market – including some of Express’ clients – has been tasked with ensuring that the production methods and quality of products manufactured by Petrotec exactly replicates those made on the Team Valley.
Now a wholly owned Express Engineering operation, the firm operates from a 5,500sqm, purpose built factory which employs 100 people – and it has become established as a well recognised and respected supplier of subsea products.
By duplicating the technology and equipment used in the UK, Express has created the capability to provide in-country manufacture of critical sub-sea products for customers who are seeking to increase their ‘local content’ – an initiative being driven by the Brazilian government.
Company chief executive Nigel Davison said: “This initiative makes us much more competitive in Latin America but also back at home in the UK where our development drive is based.
“There is a very active market in Brazil but the government there is putting pressure on subsea operations to source products locally.
“We have responded to that by opening a manufacturing facility of our own in Sao Paulo.
“The operation uses exactly the same machines and software that we have in the UK. It wasn’t the cheapest solution by far, but it allowed us to have full transferability and capability between our UK technology and our Brazilian facility.
“Of course the vast majority of overall production remains in the UK but this addresses one specific market and keeps us competitive within it.
“We are now working to build up the capability and the capacity of this business and the key to achieving that is technology transfer.
“The reduced risk and ability to test new projects and processes before going into production in Brazil offers huge benefits for us and adds value for our customers.”
As well as spending time here to absorb processes, to prepare for duplicating those quality standards back home, Mr Cordeiro has also been struck by the differing management styles between Brazil and Gateshead.
Mr Cordeiro said: “The main thing which strikes me here is the trust people have in their supervisors and managers. When they are given instructions about how to do something, they just do it.
“In Brazil everyone seems to think they know a better way of doing things and that’s not generally the case!
“Of course it’s important to find ways to improve but we have a special team dedicated to that and so day-to-day processes need to deliver products which are right first time, every time.
“It has been a tremendous experience working alongside the people here in Gateshead and although I will miss them when I go back in a few weeks time, I am also very much looking forward to helping my colleagues in Sao Paulo match the quality standards set here.”
Mr Cordeiro’s time on Tyneside has also had the added benefit of winning a new friend for Tyneside.
Having visited Austria, Germany, Holland and Italy and worked in the USA, he reckons the UK – and particularly the North East – is the best place he has ever been based.
“This is a special place,” he said. “We were told that English people were very reserved but that’s not true here. We have made so many friends so quickly.
“I went to watch ‘the Toon’ and on the way I got talking to a supporter. In five minutes I knew his life story and he was inviting us to go and meet his family. I have never experienced anything like that before.”