American CH2M studies acquisitions to grow in the Brazilian market
Valor Econômico
The engineering firm CH2M Hill, one of the largest in the United States, is considering making acquisitions in Brazil as part of a greater strategy to make the country responsible for at least 10% of its general earnings. Today, its income in Brazil, of only US$ 22 million, is nearly nothing compared to the global dimensions of the company, which earned US$ 6.3 billion in 2010. "I am not satisfied with that", told Valor the President of CH2M Hill, Lee McIntire. He integrated the group of businessmen who accompanied the American President, Barack Obama, on the trip to the country, little more than two weeks ago. Last year, he also was the host of a meeting of the United States-Brazil CEO Forum in Denver, Colorado, where his company is headquartered.
In Brazil since 1996, CH2M Hill has sought to grow mainly organically, that is, through the expansion of its own operations. Recently, the company entered into a partnership with the Método Engenharia to operate in the oil and gas sector. For this year, the projection of the company is an 80% increase in the earnings of the Brazilian operation. But it will still be necessary to multiply it times 16 for the Brazilian earnings to represent 10% of global income. "Sometimes, when you are trying to enter a new market, you cannot grow quickly organically", says McIntire, explaining the logic of moving on to acquisitions in Brazil. "Sometimes you need to speed up the growth through acquisitions. It is a matter of having capacity to perform every time larger projects".
Many consider the Brazilian construction sector closed for external competition. In an interview to Valor before Obama's trip to Brazil, the former Under Secretary for Latin America in the George W. Bush Government, Roger Noriega, said that American contractors see the country as forbidden land. "When I talk to the largest American building companies, many are afraid to put great efforts in Brazil because they did not have a hospitable environment in the past". McIntire, however, doesn't think so. "When we dispute Government contracts, we enter into partnerships with Brazilian companies, and that works for us". For him, the two countries would gain from the convergence of the regulations that could enhance the trade and services in both directions.
The data of the Central Bank also deny the thesis the market is closed. In 2010, Brazil had earnings of US$ 5.739 billion in engineering services rendered abroad, but it had an expenditure of US$ 3.856 billion in contracted services rendered by foreign companies. For the Executive, one of the main challenges today is the lack of skilled labor in the country. "Most of the engineers we hire are Brazilians, but once in a while we need to bring employees from outside the country to perform specialized technical works", said McIntire. "It is expensive because there is no income tax treaty [between Brazil and United States] and it is cumbersome because of the requirements for obtaining visas". The treaty to prevent double taxation and the reduction of the work visa requirements are two of the priorities of the agenda of claims of the CEO Forum.