Far from tourist clichés on music, football or carnival, Brazil is above all a country of strong economic and industrial power and Brazilian industry is a global powerhouse.
The companies that prop Brazil up as a global industrial superpower are large MNC´s like Embraer, Petrobras or Odebrecht, to name only the top three. They have allowed Brazilian industry to grow exponentially in the post-war years, but have also became infamous for the rather shady political and financial affairs in which some have recently became involved. They are nonetheless the architecture of industrial Brazil of the twenty-first century.
Brazilian Industry: a key player in world economics
The industrialization of Brazil began in the mid-nineteenth century and for a long time was confined to the harvesting and export of natural resources, namely coffee, sugar cane and wood. While the so-called “Western” countries had earlier on opted for the path of heavy industrialization and development, the former Portuguese colony and largest country on the South American continent, seems a hundred years later frozen in an obsolete economy. It was only during the Second World War that the first iron and steel products were produced, in a plant in the state of Rio de Janeiro. The wick of Brazilian industry had just been lit.
The end of the war leads to a fierce appetite for development that pushed Brazil to do everything possible to catch up with other more industrialized countries. During thirty years, all sectors of a competitive economy grew at high speed, petrochemicals, iron and steel, aeronautics etc. Thanks to financial contributions from the United States, Europe and Japan in the seventies, the country was flirting with a growth rate of 7.5%!
The press, television and the media soon became influential in the country, generating impressive revenues, alongside the companies mentioned above. Now firmly anchored in the 21st century, Brazil has managed to become 9 th in the world in terms of economic power, ahead of Canada and South Korea. The foundation of Brazilian industry even more solid, since unlike many so-called “rich” nations, it has immense natural reserves, some of which are still unexploited: Brazil currently ranks as the world’s leading oil producer in Kuwait, and its possession of 18% of the world’s drinking water resources makes it a key player for the years to come.
Embraer, Petrobras and Odebrecht, leaders of Brazilian Industry
In 2015, Credit Suisse granted Brazil third place on a not so glamorous podium: “the most unequal countries in the world.” Added to this are the political and financial scandals that have had a major impact on some of the biggest companies and some of the most prominent politicians in the country. In the end, we will have a very tarnished image of Brazilian industry, and the role it has to play in the country’s economic and political development. This is hardly unexpected. Embraer, Petrobras and Odebrecht are the key actors.
Dealing with aeronautics, oil and construction, these three gigantic consortia have not only pushed the country upwards, but also directed it towards the path of world competition, with remarkable successes.
Embraer: A Brazilian technological jewel
Embraer ( Empresa Brasileira de Aeronáutica ), celebrating its 50th anniversary this year, has positioned itself well, with the construction of medium-capacity civil aircraft. Its production targets the business community and wealthy rural owners who have to travel long distances across the country. The company also operates outside the confines of Brazilian national industry selling its jets all over the world, including in Europe, China and the United States.
In the seventies and eighties, Embraer formed alliances and collaborations, for the better, but also sometimes for the worst. In 1981, the construction of a military ground attack aircraft for Italy (the AMX), pulled them briefly outside the area of civilian aircraft. In 1988, Embraer and Lockheed Martin researched a bi-national Argentino-Brazilian military aircraft project. The economic crisis then raging in South America did not allow for the production of the plane and the collaboration between the two South American giants remained there.
Embraer suffered several economic problems that led to bankruptcy, nationalization, followed by privatization, and finally takeover by Boeing in 2018. The company is currently one of the major players in world aeronautics and fiercely fights for global leadership with Canadian Bombardier.
Petrobras and Odebrecht scandal
Petróleo Brasileiro SA, commonly known as Petrobras, is a research, exploration and oil trading company, who have in recent years expanded to gas. In short, it is the most profitable company in Brazil! It is one of the world’s leading companies in the sector, producing $88.8 billion of revenue in 2017. It is also the leading company in the world for deep-water drilling, with record-breaking depth records. Founded in 1953, it is a state-owned company whose new CEO Roberto Castello Branco was appointed by President Jair Bolsonaro in 2019. Petrobras was at the heart of one of the most monstrous scandals in Brazil in recent years.
Did “Lavajato” reveal the true story of Brazilian industry?
Triggered in 2014, Operation Lava Jato, better known as the “Petrobras affair” had unimaginable repercussions, even by the most daring of screenwriters! A president impeached, ministers and deputies charged, businessmen, a judge of the supreme court and soldiers incriminated in the scandal, and, last but not least , a former president of the republic sent to prison for nine years. All for an estimated $3.5 billion worth of bribes made mainly by Petrobras and the building company Odebrecht (with the help of other private companies). These bribes were made to the largest political parties in the country, right and left!
Brazil had never revealed such an organized machine of corruption. Mistrust of politicians and executives has become even stronger in the country where only a small minority benefits from the wealth created by these big companies. The scandal did not only affect Brazil, but many of its neighbors, such as Peru, Argentina, and even Venezuela, virtuous Chavists, whose leaders were accused of also having benefited from the largesse of these great corporations.
No one can deny the incredible success of Brazil’s leading companies like Petrobras, Embraer and Odebrecht, and others who are pushing the country forward. It is clear however that a major clean up was necessary, and that the process of moralization in all parts of Brazilian society will be a long process. The ranking established by Credit Suisse in 2015 is unfortunately still relevant today.