News Detail
NAES Enters Brazil
05/11/2010 - Our direction, as it pertains to the plant operations and maintenance business, starts with a vision -- NAES is a global services company that strives for excellence and market dominance in the power generation and infrastructure markets, and a strategic pillar -- NAES will be recognized as the market leader of independent O&M services based on a consistent track record of superior performance and customer satisfaction.
Within that strategic pillar, we have a set of key strategies - one of which is geographic expansion. From the title of this article, you have now discerned that “geographic expansion†certainly means Brazil. Why Brazil? Of course, you might also ask what is new about this geographic expansion strategy since NAES has been operating outside of the U.S. for years.
First a bit of history. NAES first entertained the idea of working in countries outside of the U.S. in 1993. At that time, U.S.-based developers and others as well, were initiating efforts to win work outside of the U.S. as they perceived international opportunities to be more lucrative than those found at home. It was natural for NAES to “follow our customers†as they ventured forth to other countries. That strategy proved successful as we ended up with projects in a number of countries in Latin America and the Caribbean. Frankly, at one point we had as many contracts in those markets as we did in the U.S. and those projects were significant contributors to building our enviable track record and financial performance.
If we fast forward to a year ago, we had operating projects in Canada, Mexico, and Colombia. Although we had successfully completed a significant contract with one of the best utilities in all of Brazil, had started a second contract with the same utility, and thought that we might secure a contract for a plant in development, we had not formally entered the Brazilian market as a separate business entity, nor were we seeking work on a day-to-day, consistent, on-going basis. However, we did see Brazil as a target of opportunity.
Having identified Brazil as a specific target of opportunity, we presented our rationale to the Board of Directors and received approval to formally establish a business there. What we saw then, and still do, is a country clearly on the upswing. Others do as well: The November 14th issue of The Economist magazine has an article about Brazil titled “Getting it together at lastâ€. In short form, what you would learn is that Brazil is among the planet’s wealthiest countries in terms of natural resources (land mass, tropical rain forest, water, hydrocarbons, minerals, and fertile soil); a growing middle class; a stable macro-economic environment; a strong set of private and government-owned banks; a set of world-class privatized companies that make airplanes, produce agricultural products, steel, chemicals, oil and gas; and an economy that is likely to grow at 5% in spite of the difficult worldwide economic conditions. We should not lose sight that Brazil has some issues and challenges such as a large informal economy, a high crime rate, and labor challenges. However, the country is much better placed today to overcome its issues and challenges than any other time in the past. The world has taken notice -- Brazil is going to host a couple of very large "parties" as it will be hosting the 2014 World Cup and the 2016 Summer Olympics.
Within the power sector, Brazil is dominated by hydropower, much the same as our home here in the Pacific Northwest. Generation is also produced via thermal projects (combustion turbines, and coal), and renewable energy (biomass, small hydro and wind). Our target market then, is the thermal and renewable segments of the business. Moving forward, we are also going to look at operating ethanol production facilities. Because we also know Brazil as the fifth most populous country and the tenth largest electricity market in the world, we believe that we are entering a country that can sustain a number of projects moving forward.
Today, we have formed our business, NAES SERVIÇOS DE OPERAÇÃO E MANUTENÇÃO ELÉTRICA LTDA., a Brazilian company with head offices in the State of Rio de Janeiro, at Luiz Carlos Prestes Avenue, No180, 3rd floor, Barra da Tijuca; we have hired a Commercial Director to provide market intelligence, perform business development, and provide support for our activities; have executed the O&M agreement (and initiated pre-commercial services) for a 28 MW wind station that is in construction in the northern part of the State of Rio de Janeiro; and are actively building our national network and proposing on new and diverse work.
It is a pleasure to be part of a company that has a vision and a strategic direction, and exciting to be proactively taking appropriate steps to work to that strategic direction so that we attain our vision.
