Felipe Lopes, General Manager, Sotreq, Brazil
Felipe Lopes, Managing Director (Maritime section) of Sotreq, Brazil‘s largest Caterpillar dealer, describes how their service excellence has gained business recognition and applaud in Brazil. He details Sotreq’s expansion strategy and how this fits in with the requirements of Brazil‘s burgeoning offshore industry.
Sotreq made the delivery of the first batch of main generating sets for six semi-submersible rigs to be built by Keppel Offshore and Marine in August. What stage is this project currently at, what have been the principle challenges in delivering this project, and what does this project represents for Sotreq?
The project is a break through; it represents at least four years of work for Sotreq ensuring our supply chain complies with local content requirements. These local content requirements are intended to strengthen the local supply chain and for this reason, Sotreq had to create products locally. However, historically, Caterpillar, our long-standing partner, has previously only manufactured such products in the United States.
For this reason, we had to connect Petrobras, the shipyards making parts and equipment and parts suppliers with Caterpillar so that our partner would have full confidence in this venture. This was a huge investment and, despite their presence in Brazil for 60 years, Caterpillar have still principally manufactured equipment in the United States—they had to be convinced that changing this business model was a further opportunity. Not long ago, they opened a factory in Brazil to build small generator sets, and we used this as a precedent to argue that large engines such as the 3500 units, Sotreq’s cash cow in the offshore market, should also be produced here. A single generation unit can weigh as much as 150 tones; it is not designed for easy movement, and should be installed close to where it was produced.
There is a great expansion of the offshore industry here in Brazil, and demand is high for products as diverse as diesel electric units to large mechanical cranes. Earlier this year, with Sotreq having won a project for several EEP drillships, and a second for Keppel FELS, Caterpillar upgraded the small plant producing generator set to produce larger, heavier equipment here as well.
What is the degree of customization involved in Sotreq’s work; to what extent are your products standardized, or customized to the needs of your clients?
There are no petroleum industry projects alike. Whilst many elements including the base generator unit, for example, are standard units and can be used project to project, each client will require a customized service, and to achieve this, one must have access to a responsive and efficient supply network.
Caterpillar and Sotreq are used to being highly adaptable; it is typical of the oil and gas market. For example, the alternators on the Keppel Fels project are WEG products and the EEP contract uses GE elements to ensure the overall Sotreq client service addresses exactly the user’s needs.
In July 2012, Sotreq signed a deal which formalized the use of Vulkan parts in Sotreq’s marine market product range. What benefits did both parties bring to this partnership (such as whether it was to increase local content requirements)?
Vulkan has a factory in Brazil, which is of benefit for local content purposes; however, the key aim of pursuing this agreement was to increase our scope of supply. Customers do not want to buy singular parts or pieces of equipment; they want the entire solution. Sotreq has always been, and remains principally a Caterpillar dealer, however, for some contracts, it is important to have the ability to add some extra capacities to the finished offering; and this is where Vulkan is of great use to Sotreq. The companies together both bring strengths to oil, gas and marine projects.
Sotreq received a gold certification from Germanischer Lloyd (GL). What was the context for Sotreq receiving this accolade?
This award is a certification related to the maritime sector, and oil and gas industries marine elements. One of the biggest challenges for Caterpillar is that it does not interact with customers directly; it has to rely on suppliers globally to provide clients with customer services and post-sales interaction. This distribution chain is unique, and presents challenges in that standardization must be maintained across a diverse range of companies responsible for selling Caterpillar products. Particularly, with regard to oil and gas, the client may require repair facilities at any point, possibly far from the point of purchase. Customer services must remain at a high level wherever that equipment needs servicing, from the North Sea to the Gulf of Mexico to Brazil.
Three years ago Caterpillar launched a program, the Marine Service Assessment (MSA), which was aimed at improving the quality of product support in the marine sector. Every dealership was audited under this program. Sotreq was certified in May last year as part of this program and the award for Germanischer Lloyd has followed on from this success.
Sotreq acquired rival Marcosa, a dealer for Caterpillar branded construction equipment in February. How has this acquisition affected Sotreq?
Marcosa was another traditional Caterpillar dealer in Brazil, based primarily in the North East of Brazil, and Sotreq had been looking to expand its presence in that region. When the opportunity to acquire Marcosa arose, this was a logical route by which Sotreq could develop. Our company has had previous successes with regard to acquisition; for example, Leon was acquired by Sotreq about ten years ago to the satisfaction of both parties.
For Sotreq, the opportunities arising for onshore oil and gas projects in Marcosa’s home territory, the North East, meant that acquiring Marcosa was highly appealing. Our company is very satisfied with this acquisition.
What are Sotreq’s technical capabilities and resources that the company can deploy at the moment?
Out of 300 staff, around 120 are technicians, with half specializing in oil and gas, and the other half focusing on the marine sector. Sotreq has training processes and ensures that all its technicians are up-to-date with maintenance and repair policies issued by Caterpillar. Training is however, a major challenge because staff on training courses are not able to work in the field. It is difficult to cope with high levels of demand, yet still prioritize training over projects; our services are highly sought after.
Training is critical however, and Sotreq at the start of the year brought in processes to make sure that our engineers will undertake regular training courses. A schedule now is in place to ensure that engineers have time away from field operations to undertake training. This emphasis on skill development is in part due to the shortage of skilled labor in Brazil. Looking back for a moment, three or four years ago, Sotreq had only about 30 technicians. Attracting the high number of recruits to attain our current staffing levels was challenging. Sotreq had to make sure that its staff were qualified and had the skills to repair Caterpillar’s diverse range of equipment.
Brazil lacks the availability of technically qualified labor—this is a situation that I see improving with time however, and Sotreq has certainly been proactive in making sure it does what it can to alleviate the shortage for the company internally, by pursing an ambitious training program.
Beyond our human resources, Sotreq seeks to make sure its technical capabilities are bolstered by well-thought out production and maintenance processes. The company’s ambition is to become a world reference in product support for marine and petroleum markets.
To succeed, along with well-equipped and technically competent staff, a company must aim to supply parts of sufficient quality and quantity to its customers, although this is to state the obvious. The key factor in the success of any business like Sotreq is how they achieve that aim. As mentioned previously, regular staff training and ensuring we are at the top of Caterpillar’s MSA scheme are two means by which Sotreq ensures it reaches this clear objective.
How important is association with the Caterpillar brand name for Sotreq; what advantage does this give you over your competitors, and what characteristics does Sotreq have itself which place it ahead of its rivals?
Caterpillar is everything to Sotreq; the partnership has been working for 70 years, and as of this moment, 90 percent of Sotreq’s sales are Caterpillar equipment. Through our operations in Brazil, we have been able to increase the penetration of Caterpillar products across the market, which has been possible because Sotreq has an in-depth understanding of the market. Product support is critical and is the prime focus of Sotreq and the company created a dedicated structure for product support separate and apart from its other business segments—it has been pleasing to note that specialization has improved the business’ efficiency massively. The motivation to establish this focus was that product support is a 24/7 business, and happy customers are loyal ones.
Sotreq’s identity is strongly Brazilian and this is a strength of our business here. Our sales staff are knowledgeable and experienced and have the additional advantage over competitors supplying the market from overseas in that they are highly familiar with local circumstances and local businesses. It is far easier to be reliable if one is based close to clients.
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