with Renato Cabral, President, Astromaritima Navegacao
Astromaritima was established three decades ago in Brazil initially contract 19 vessels for the local market and growing with the industry over the years. Today, what is the state of Astromaritima and what are some of the defining milestones recently?
Currently, it’s a very exciting moment for Astromaritima and we have big plans for the future. This year in particular is very important for us due to several events on the horizon. Firstly, we have to renew 10 of 14 contracts with Petrobras in a difficult period of high competition. Nevertheless, this is a big opportunity for us to obtain better rates on our contracts and improve the financial condition of the company.
Another key point this year was the decision to invest in newbuilds which resulted in a deal in March with EISA shipyard for the construction of one OSRV as well as a pre-agreement to build two more PSV 3000s. This is important to us because for a number of years we have not built any new vessels.
In addition to these opportunities, this is also my first year in the company and as such we are changing some of our internal policies and processes in an effort to improve the efficiency of the company. It’s a period of modernization for us.
The group recently created the Astro International branch. What does this say about your success here in Brazil and how does this add to the company?
This was a business that was very successful in 2009 where we operated between two to three vessels at any given time while by the end of 2010 we expect to run more than 20 vessels. While this is a big increase it’s also a big responsibility because we have to continue to deliver the quality and services our clients expect from Astromaritima.
We’re investing a lot of time and money in order to develop the process and the personel that will sustain this growth and maintain the quality of the offering. It’s a challenge but we’re very happy with the success.
Petrobras is a key customer for Astromaritima which is no surprise given the market. As a domestic company with a long relationship with the national champion, what would you identify as the key factors for partnership with them?
You have to understand the needs of any client as well as their way of thinking and general approach to business. We have been working with Petrobras since the beginning and as a Brazilian company I feel there is an understanding between us when we communicate and negotiate that is one of the key elements behind our successful relationship.
Astromaritima has also worked for many international companies that have entered the market, why do you think they’ve turned to you?
When international companies come to Brazil, whether they’re operators or other supply service providers they require local partnerships. This isn’t an easy country so it can be a challenge to work here, even for us.
Legislation is very creative in Brazil and in many cases it isn’t clear which means you need a partner who is used to this situation and has an understanding of the business culture. You cannot succeed if you do not know where you are. Therefore it’s important for entrants to have a partner who is trustworthy, successful and savvy.
We frequently receive proposals and invitations for business so we have to be very selective as well before entering a partnership. There are some smaller companies and outside groups looking to do new business here in Brazil that can prove very risky for a company such as ours. As a result we need to be confident that a potential partner has the expertise and history to prove their capacities. I feel they do the same for us.
The potential currently in the Brazilian market is attractive for a number of participants, including your competitors. At the moment, you have the advantage of being a company that knows the local landscape better than most but as time goes on these entrants will also develop this asset. Looking forward, how will Astromaritima differentiate itself from international competitors with experience in other markets?
This is a natural trend in the market and we know that everyone is looking to enter Brazil to improve their business. Its clear competition is growing so our strategy is to differentiate our business based on the efficiency of our offering. When things become more competitive, the details make the difference and Astromaritima knows the details.
We’re also planning some partnerships and new business within this strategy. Some of these new opportunities are with potential competitors because we want to join forces rather than fighting against one another.
We spoke recently with Petrobras E&P Pre-salt Director Jose Formigli who noted the sheer logistics of producing so far offshore will drive the demand for support vessels, particularly for newbuilds. DNV confirmed this sentiment and pegged the number to be over 250 vessels in the coming years backed by a push from the government to build these locally. What was your motivation to commission your newbuilds locally this year despite having built in the US in the past?
Local content is a very important factor and in particular, the legislative protection that comes for vessels built in Brazil. The government is interested in developing the industry including shipyards, supply vessel groups and oil companies so they’ve been making a big push in this regard. Moreover, the economic situation of Brazil has improved a lot over the years making it more appealing financially to construct here.
For us, the economics made the difference. Today if you go to the US or other locations in the world to build vessels it’s a much more equal playing field. The Brazilian flag also has to be considered due to the complications and costs that can arise from bringing international vessels into the market. We’ve done this before and we know it isn’t easy to do especially with new tax frameworks established. This isn’t to rule out the international option but on this evaluation it made more sense to do the build here in Brazil.
Many international service suppliers have noted the complications with importing vessels and equipment. As a local company with vessels already here in the market, what is the biggest challenge facing you today?
There are so many challenges today you could write a book on it. One of the main challenges is definitely legislation.
Is this stifling the growth of local industry?
Certainly and it’s an important point that needs to be changed for the market and Petrobras plays an important role in solving this situation as a link between government and market. Some improvements have been made but there is still a lot to be done, particularly in regard to taxation.
Looking at the activity in the market and the potential on the horizon, do you have the capacity moving forward to handle the demand?
The demand is really big and every figure we have seen so far from Petrobras indicating the number of vessels required has yet to even consider the pre-salt development. There was another announcement just the other day from the ANP of a new discovery almost the size of Tupi that also isn’t included in the plans.
Currently, we see there is a space for everybody in the market. Petrobras wants to double its production from now through 2020 which is obviously a big move. There is also the rest of the industry such as up-and-coming players such as OGX and IOCs including Statoil, Anadarko and Shell to name a few.
Astromaritima isn’t looking win every contract either because we prefer not to grow exponentially every year but rather take a more stable and solid approach. There are always risks in the market and while it looks very nice at the moment we want to be sure we’re paying attention to where we step.
We’ve spoken with several offshore suppliers including Trico Marine who noted one of the most difficult things coming from outside is finding the local talent to staff their vessels. As an established domestic player how are you keeping these employees from running off to your competitors?
Over the past decade, Astromaritima has been like a school for the Brazilian maritime industry: if you look at any foreign operator of vessels in Brazil you will find someone who started at Astromaritima. Of course, we would prefer if this was not the case but it’s a fact. Today, we’re implementing several strategies to reverse this including retention plans and development schemes.
What is the key factor that keeps people within the company?
We believe a good working environment is important in any business and it’s something we offer. I also feel that the employees have to see the goals and ambition of the company which is something we have today. In the past five to seven years Astromaritima has been rather stagnant in the market without a clear plan for the future and content with our position.
Today, we have a very strong position with clear orientation in an excellent market so I believe our employees recognize this.
Looking forward, what can we expect to see out of Astromaritima in five years?
In five years time we will be in a very good position in a market that will be just as strong if not stronger than it is today. As the industry consolidates, we will be at the end of our vessel renewal program that looks to replace the older pieces of our fleet so we will have an attractive offering. As it stands, the market has created an opportunity for us to invest heavily in the future.
In an environment that is relatively low risk, what keeps the company motivated so that it will not get too comfortable again?
Today, we have a mixed team including both experienced employees who know how the industry works and youthful professionals with the energy and motivation to ensure the company grows. This combination makes for very good chemistry in the company and pushes us to look beyond where we are now. The opportunities are large but so are the ambitions of the employees.
Do you have a dream project for Astromaritima or is running the company enough a project?
It’s a personal issue for me because I’ve been close to the company nearly since I was born. For me, it’s very special to be involved in the group and it’s also a big responsibility for my family who has been involved since the beginning. My motivation comes from the fact that this is a personal dream coming true at a time when the country itself has a lot of potential. Brazil has seen some ups and downs in the past so it’s great to stand where we are now.
What do you think you personally bring to the operations here?
When I joined the company my plan was to bring more professionalism to the administration of Astromaritima and replace the old culture of process management that has been in need of modernization. I’m not complaining in anyway because it worked for a longtime but the changes to the system brings the company to a new level.
How would you like the company to be seen in the future?
I would like to see Astromaritima recognized as a very efficient company. We already have experience internationally in places like Colombia, Argentina and Mexico but we want to continue to grow abroad, particularly with Petrobras and to be part of their plans for the internationalization of Brazilian industry.
Astromaritima has worked with the industry for 30 years and we want to continue to do so for at least another 30 years!