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Interview

Sergio Parada, President, Andritz Hydro Inepar, Brazil

Sergio Parada, President of Andritz Hydro Inepar, looking back on the company’s key areas of success since he joined in 2006, speaks about the company’s priorities in the next five years, and where he sees Brazil’s hydro potential in the coming years.

In 2006 you joined as president of Andritz Hydro and had a lot on your agenda to restructure the company. How have you been embracing this mission?

My role within Andritz Hydro began in 2006, and at that time Andritz Hydro was already the owner of Va Tech, another important player in the hydro sector. Two years after this, the company decided to acquire GE’s hydro operations and entered the joint venture with Inepar with a large factory based in Araraquara, in Sao Paulo State. Through these acquisitions my responsibilities changed, giving me a double title as president of both Andritz Hydro do Brasil, former Va Tech and since 2011 also from Andritz Hydro Inepar, former GE Hydro Inepar.

In terms of product mix and how these acquisitions changed our activities, in 2012 we transferred some of our product categories from Andritz Hydro do Brasil to Andritz Hydro Inepar. Today Andritz Hydro do Brasil only focuses on three main product lines: automation and protection, speed governors, and excitations. Andritz Hydro Inepar produces the rest of the products and equipment utilized in hydropower plants, such as turbines and generators. Therefore, Andritz Hydro Inepar and IESA produce 90 percent of the components in a hydro power plant, and Andritz Hydro do Brasil the rest.

Our role in managing these two companies is to develop a first class team, which takes time. It involves setting clear goals, vision, and values, while at the same time leading and setting the example. Most importantly, building team spirit that involves everyone in the process of leading the company to success. As a global company, our vision is to have the best products and technology at a competitive price and locally we want to deliver our products on time and respect the clients’ wishes.

What have been some of the challenges in bringing a first class team to the table?

If we can make people proud of the company they work for, our results will clearly surpass our expectations. In the last years we have been quite successful working with Santo Antonio, Jirau and Belo Monte—some of the largest hydropower plants in the world—and this shows how our work, since 2006, has been contributing to our goals. Hence, our success at this year’s auction for Sinop, a 400 MW hydro power plant, testifies to our improvements over the last eight years and establishes us as one of the leading electromechanical equipment suppliers in Brazil. Sinop’s main contractor, construction company Triunfo, worked with us in the past on another hydropower plant named Garibaldi for which we delivered equipment, enabling commercial operation 16 months anticipated. They have confidence in our ability to deliver on time and this recognition is also a sign of our improvements in Brazil. Finally, three weeks prior to the Sinop auction, we organized workshop in our hydraulic laboratory located in Araraquara and invited technical managers and clients to learn about Andritz’s designs for new hydro equipment. This workshop was well received; our customers gave us excellent feedback and this reinforced our image amongst important customers such as Eletronorte and Chesf.

With the very low prices offered by wind companies, small hydropower plants are losing attractiveness. Do you see a risk in incentivizing wind power in a country that is dependent on base load energies and requires 6 GW of new energy every year?

Small hydropower plants are valuable assets to our country and the last auction showed that they remain a competitive source. Andritz Hydro sees potential in this source and although wind and biomass are highly competitive, I have no doubt that small hydro will remain an interest in the future. Andritz Hydro is also manufacturing turbo generators in India and selling them there to compete in the biomass market. Consequently, our company has a chance to play on both sides and become even more competitive at auctions competing for small hydro and biomass. These projects are also a great chance to develop our employees’ skills and expertise, as every power plant is unique and demands different types of qualities in design for instance.

Given the additional energy Brazil needs every year, it is clear that we cannot rely solely on wind or solar energy, as these sources are intermittent and depend on weather conditions. However, one of the best options to provide the necessary power stability to our grid and where these energies could play a role, are pump storage power plants. This method enables energy to be stored in the form of potential energy, shifting water to reservoirs to create the necessary power depending on energy demand. This specific hydroelectric power generation method is used in other countries and has proven to be efficient when combined with wind turbines and solar power. This approach could be highly useful to our energy matrix considering the potential and unique conditions for wind and solar power. My perspective is that in 10 years a real market for pump storage power plants will exist.

Andritz’ largest competitors are Voith and Alstom. How would you define the company’s competitive edge and ability to become the number one player in the hydro sector?

Today we do our best to be technically superior to these companies and specifically in Brazil we to offer very competitive equipment solutions. Hence, in Brazil we are spending a lot on R&D aiming to be ahead of our competitors, bringing new solutions and new perspectives to our clients. Our customers look at the performance, prices and delivery time of our solutions. This is basically where we define Andritz Hydro’s value and competitive edge.

When few large players compete for market share, the pressure is constant and for us it is not an option to be the leader just by lowering prices. In the end, our objective is to be recognized as a reliable and competitive supplier, and be fairly compensated.

What is the importance of the GE Hydro manufacturing plant acquired in Sao Paulo, for Andritz Hydro both locally and internationally?

In the last four years, the demand for our equipment was so high that we had to outsource some capacity. This was mainly in response to Santo Antonio and Jirau, which required a large amount of equipment. With the stabilization of the market and having these large projects receive their equipment, we are looking for new opportunities outside of Brazil.

In February 2013 we won a project in El Salvador, Cinco de Noviembre, in partnership with Queiroz Galvao, one of the leading worldwide EPC companies in various industries. They, as other Brazilian civil construction companies, which have a high level of expertise in hydro dams, have seen the Brazilian market shrinking, forcing them to look at foreign markets to increase their portfolio of activities and revenues. These international ventures include projects in Africa, Latin America and Asia. Since BNDES, Brazil’s development bank, is supporting these projects, they have confidence in securing these projects with Brazilian suppliers. Of course, we are looking at large EPC partners like OAS, Queroz Galvao, Andrade Gutierrez, Oderbrecht or Camargo Correa to follow in their footsteps and increase our international presence and revenues. In the end, Brazil represents around 60 percent of the Latin American market, which leaves potential in other neighboring countries. I truly believe in the potential of countries like Peru, Colombia and Panama, among others.

What are your priorities in taking the company to the next level in the next five years?

In five years, the Brazilian hydro division of Andritz will be one of the most profitable companies in the Andritz Hydro group. Locally, clients shall refer to us as the most reliable company and most preferable partner for hydro products. We will maintain a strong presence in Brazil, bidding for hydro projects mostly; and of course, internationally our products shall flood all important Latin American markets with hydro potential.

The management style will remain the same and our employees will become even more involved with the values and mission of our company. Since Brazil is a highly complex country to work in, local participation is crucial to the success of our company and personal initiatives are always welcome. With bright perspectives ahead of us, and a motivated team, Andritz Hydro Inepar will prevail for a long time in Brazil and soon across Latin America.

To read more interviews and articles on Brazil, and to download the latest free report on the country, click here. 

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