Regional Coalition for Transparency and Participation.
In recent years, Brazil’s economic expansion has been expressed, among other things, in a greater presence of its companies operating in the South American region.
Of the group of Brazilian companies with international operations, the large construction companies such as Odebrecht, Camargo Corrêa and others, present in the construction of hydroelectric plants, highways and airports, stand out for their dynamism and diversification, multimodal terminals and other types of public works contracted either by the governments of the region or by supra-national bodies such as the Union of South American Nations (Unasur).
Whose South American Council for Infrastructure and Planning (Cosiplan) is the body in charge of implementing the Initiative for the Integration of South American Regional Infrastructure (Iirsa).
In recent years, these companies have acquired dimensions and capacities that put them in a position to take advantage of the economic boom experienced by Latin America thanks to the commodities boom, which led almost all governments to expand infrastructures considered key to sustaining this growth route, particularly in the energy and transport sectors.
Brazilian companies, which had already grown significantly in their country of origin under the aegis of the State itself (their main contractor for decades) were able to strengthen their position in other countries in the area from their solid position within Brazil itself.
Indeed, Brazil has a powerful civil construction sector that in 2013 represented 5.4% of the country’s Gross Domestic Product (GDP) (growing at rates even higher than the economy as a whole), creating approximately 3.26 million jobs that same year. In addition to the construction companies, the productive chain is made up of the construction materials industry and trade, a service area and a production area for machines and equipment, which together are one of the most dynamic poles of the national economy.
Within the production chain, civil construction itself accounts for 64.7% of sectoral GDP, and therefore largely dominates all sub-sectors articulated around construction activities.
Although the data indicate the existence of more than 223,000 construction establishments, the truth is that the scenario is dominated by a small group of companies: only 328 companies out of the total have between 500 and 1,000 employees, and only 188 companies have more than 1,000 workers.
Thus, we can say that this is an extremely concentrated and centralized sector in terms of control over capital and labor force. Proof of this is that the ranking of the largest fifty companies in the sector, prepared by the Brazilian Chamber of Construction Industry (CBIC), indicates that this group of companies has a total of 410,653 employees and a gross annual income of 65,760,407 reais.
It should be noted that the vast majority of the jobs created by the sector are temporary, and even that is where the name of the construction companies in Brazil comes
But if we look in more detail, the top five companies in the ranking are the ones that concentrate the most power, as we see in the following table (Table 1). These companies are precisely those whose performance we are analyzing in this document.
As we can see, the data indicate that they dominate the sector, since they concentrate little more than 40% of the total gross yields on a universe of more than 223,000 enterprises registered nationally in said productive chain. They also account for two thirds of the total number of sector employees. We do not have data on the number of temporary workers that these companies hire, but the trend must be similar.
As far as civil construction is concerned, these companies are involved in an impressive range of works: roads, bridges, tunnels, ports and airports, railways, metros, nuclear power plants, off-shore platforms, petrochemical installations, hydroelectric plants, thermoelectric plants, transmission lines, residential and commercial condominiums, shopping malls, factories, stadiums, hotels.
Practically nothing remains outside the area of action of real giants, whose technical and market knowledge makes it possible for them to maintain their privileged position, added to their historical relations with political power, which began decades ago and which are the basis of their success and growth over time.
But these companies are not only active in Brazil or only in the area of civil construction; recent data from the Dom Cabral Foundation indicate that they have a significant international presence.
Thus, in the ranking of the fifty-two most internationalized Brazilian companies, the construction company Norberto Odebrecht ranks number one, with a transnationality index of 0.549; in second place is the company InterCement (of the Camargo Corrêa Group), with a transnationality index of 0.547. OAS appears in the position, with an index of 0.305, and Andrade Gutiérrez in the box, thanks to a transnationality index of 0.284. Queiroz & Galvão is the only company that is not listed as an internationalized company.
To put it simply, Odebrecht and InterCement are no longer, stricto sensu, “Brazilian” companies, but true transnationals, since their activities outside of Brazil already exceed the activities within the Brazilian territory.
The others are companies that have an important degree of internationalization, but still have their main focus in the Brazilian market. As can be seen from the analyses included in this volume, the concept of company does not seem to be the most appropriate to refer to entities whose portfolio is highly diversified and whose performance expands by several countries, and even continents.
The concept of a business group seems more appropriate, as does the notion of trans-Latins. These are groups that have entered very diverse sectors, creating both economies of range and scale, significantly reducing business risks.
The different conglomerates in each group, although they have their own accounts, make up a greater whole that acts according to a rationality of maximizing profit with risk reduction, through diversification and significant geographical staggering.
For example, Odebrecht develops its activities in various branches, such as chemical products, petrochemicals, environmental engineering, real estate, agribusiness, transportation, defense, technology, insurance brokers, finance and investments. Its gross annual (global) returns
The Group works in twenty-three countries on four continents, according to data released by the company on its official website. It is worth remembering that the company’s internationalization dates back to the 1970s, when it began its trajectory in the hydroelectric sector, with the construction of dams in Peru and Chile.