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The challenge of developing talent to meet the offshore and shipbuilding demands in Brazil
Abstract
This case focuses on the challenges regarding capacity building required to meet the huge increase of manpower demand by the offshore and shipbuilding sectors in Brazil and Rio Grande do Sul state. This arises from four key factors: end of monopoly of exploration and production of oil and gas in 1997, expanding the Brazilian offshore market; the Local Content policy adopted since 1999; national programs to stimulate the maritime industry such as the Fleet Modernization and Expansion Program created in 2004 to renew the fleet of Transpetro, a Petrobras subsidiary; and the expansion of Petrobras investments, partly due to the discovery of giant oil reserves in the Pre-salt layer in Brazil, in 2006.
Since 2010, annual investments from Petrobras have reached US 120 million were invested to train nearly 100.000 people in 185 trades at several levels. In the state, training has been provided mainly by SENAI-RS, the state branch of the National Service of Industrial Apprenticeship, linked to the Federation of the Industries of Rio Grande do Sul.
The large-scale actions undertaken for training have not been efficacious enough to meet the needs. Studies and discussions have raised factors that impact on shipyards’ productivity and competitiveness.
We consider alternatives to develop talents to accelerate the learning curve, anchored in the following axes: SENAI methodology for professional training; pre-selection of people according to specific abilities; the concept of a "Living Lab" training environment; familiarizing workers with productiveness indicators; efficient management paradigm; workers training aligned with the project repeatability principle.
The local industry must be internationally competitive when the local content policy ends and labour productivity plays a crucial role in this aspect.
... If offered in a bidding round, even areas outside the Presalt could have attracted investments from several oil companies already installed in the country or from new players, contributing to sustain the level of the investment in the sector, benefiting the Government and the supply chain. In a capital-intensive industry, such as in the production of big equipment and structures for the oil industry (shipyards and EPC companies), regularity in production is vital for developing and maintaining competitiveness (MEDEIROS et al, 2015). Thus, this long period without bidding rounds contributed to generate more inefficiencies in the supply chain and even hold its investments, with consequences that will materialize and be noticed with time, including lower future oil production. ...
... Besides this LC and R&D clauses many actions have been taking by the government, reinforcing the objective to develop the O&G supply chain in Brazil and related to (MEDEIROS, 2016): i) stimulus to form and develop clusters in five geographical areas; ii) internationalization of suppliers; iii) qualification of labour force in technical and tertiary level; iv) funding investments (CAPEX, OPEX) and R&D; Despite of not being able to fully evaluate the results of the policies and actions implemented by the Government, due to insufficient of data and studies/documents found, it could be identified the following positive facts in the O&G industry and its supply chain (MEDEIROS, 2016) problems in the industrial policies related to planning, execution, measuring the results and transparency, when stablishing targets, indicators and time horizon of the actions, e.g., for the internationalization of suppliers and for the development of shipbuilding industry, as it lacked objectiveness, feasibility, measurability and the results are not being made public in a systematic way; ii) the hundreds of millions of funds lifted with the application of fines, that the operators pay when not reaching the minimum or agreed LC goes to the federal government, without a defined destination, instead of staying in the sector to support the solution of problems in the supply chain 11 ; iii) too much detailed items that LC should be measured, and apparently not fully considering the real potential that the equipment or services have to be competitive one day; iv) the continuity to access some of the benefits of the policies do not be linked to the need to improve performance, as in general, but specially funding for the shipyards, and having as a reference international metrics (lack of stimulus to be competitive); v) lack of focus on the application of the R&D funds on technological results oriented to the market; vi) lack of adequate monitoring of the performance of the supply chain, evaluating the productiveness of the companies, in a way that facilitate identify more precisely which actions should be taken or reinforced, as in general, and per segments (MEDEIROS et 2015;MEDEIROS, 2016). Some of the main challenges that the suppliers of the oil industry are facing in Brazil, are similar to those that Norway had at the beginning of its oil industry, such as delays in the deliveries and cost overruns. ...
Alexander Hamilton and Friedrich List stand out among the leading promoters of policies and actions focusing on industrial development, with their work in the 18th and 19th centuries, respectively, to accelerate the process of catching up for the United States and Germany. Since then, many other countries have implemented policies to develop its local industry. The country analysed here is Norway, which has been regarded worldwide as one of the best examples of success in implementing policies to develop the O&G industry. More than developing local oil companies, significant tax revenues to the Government, a giant petroleum fund and avoiding the Dutch disease/oil curse, Norway also managed to build up a broad and competitive O&G supply chain, with around 2.500 suppliers. Norway became a benchmark and a technological leader in several segments such as: subsea, drilling, seismic, offshore services and equipment. Another reason why this case is so emblematic is due to the short time in which Norway managed to build this whole industrial competence. It only started to produce oil at the beginning of the 70´s and the main or stronger policies instruments had to end when Norway joined the European Economic Area (EEA) in 1994. Not surprisingly, Norway became a reference for developed and developing countries in the attempt to manage oil resources and build a competitive local O&G industry, such as: Canada, Australia, South Africa, Uganda, Angola, Ghana, Nigeria, Tanzania and Brazil. However, Norway still had a learning curve, with the industrial development of the oil industry. Some of the challenges that Norway had to overcome were: problems in the production of offshore equipment/structures, leading to delays and cost overruns; shortage of workforce; unproductive investments of the oil companies in the local industry and in the economy as in general; the bankruptcy of important local companies in different levels of the supply chain; and the fact that oil companies withdraw their application of rounds, because of excess of requirement and control of the authorities over the production of O&G. Some countries implementing policies to develop the O&G supply chain nowadays, such as Brazil and Mexico, are also facing similar difficulties as Norway had in the past. In this vein, the aim of this article is to withdraw some lessons from the Norwegian policies to develop the O&G industry, especially its supply chain. The main lesson that we believe that are still to be learned, from the Norwegian oil experience, is that it is possible to build a broad and competitive O&G supply chain, but it won´t be so easy to have again the internal and external favourable scenario, that was key to this success case. Therefore, we believe that the countries´ ambition with the policies to develop the O&G supply chain should be aligned with its potential to succeed, and for that a right perception of the international and internal environment status and changes is of high importance.
The aim of this thesis is to analyse different forms of Industrial Policy (IP) in Norway and Brazil to develop the Oil and Gas (O&G) supply chain, identifying the lessons and contributions from the Norwegian experience. The evolutionist view of IP forms the theoretical basis of the analysis, which is structured in three parts. The first two essays are in English and the third in Portuguese. The first essay presents a theoretical review of IP, defining the concept and placing the theories within a historical perspective, in addition to discussing other relevant issues, such as: its relation to macroeconomic policies; its stability and predictability; policy coordination; horizontal and vertical policies; types of instruments; measurement of results; linking benefits to progress in competitiveness/targets; and, finally, its duration. The article also discusses the main approaches taken towards IP today (orthodox and evolutionary). Thus, we see how IP was historically implemented in industrial development processes and find that there is still room to continue implementing it, despite
the creation of the World Trade Organization (WTO) and its consequences. The second essay analyses the successful development of the O&G supply chain in Norway, promoting
structural changes in the economy. Norway stood out in the development of the O&G sector for having succeeded, in just over 20 years of policy implementation (1972-1994), in: enhancing its socio-economic development; avoiding de-industrialization due to the Dutch disease; developing local oil companies (state and private); developing a broad and internationally competitive O&G supply chain, including the formation of clusters related to the O&G sector, and, moreover setting a benchmark in innovation in the O&G sector. The
essay also illustrates the main actions implemented in Norway to develop the O&G sector.
Although the development of the Norwegian O&G industry was marked by internal and external favourable factors, some relevant challenges had to be overcome, including cost overruns, delays in deliveries and important local companies went bankrupt. The third essay finds that the O&G supply chain in Brazil has evolved, the industrial policies have been improved, but while its development also shows some problems similar to those that Norway had to overcome in the past, it also has other peculiarities. On analysing the industrial policies implemented in both countries to develop this sector, it emerges that to some extent, Norway
is already being used as reference for Brazil, but there are still lessons and contributions to be learned from this successful case. However, due to socio-economic, political and cultural differences, compounded by today’s more adverse global and domestic environment, the challenge Brazil has to face in developing a broad and competitive O&G supply chain is tougher than it was for Norway.
The aim of this thesis is to analyse different forms of Industrial Policy (IP) in Norway and
Brazil to develop the Oil and Gas (O&G) supply chain, identifying the lessons and
contributions from the Norwegian experience. The evolutionist view of IP forms the
theoretical basis of the analysis, which is structured in three parts. The first two essays are in
English and the third in Portuguese. The first essay presents a theoretical review of IP,
defining the concept and placing the theories within a historical perspective, in addition to
discussing other relevant issues, such as: its relation to macroeconomic policies; its stability
and predictability; policy coordination; horizontal and vertical policies; types of instruments;
measurement of results; linking benefits to progress in competitiveness/targets; and, finally,
its duration. The article also discusses the main approaches taken towards IP today (orthodox
and evolutionary). Thus, we see how IP was historically implemented in industrial
development processes and find that there is still room to continue implementing it, despite
the creation of the World Trade Organization (WTO) and its consequences. The second essay
analyses the successful development of the O&G supply chain in Norway, promoting
structural changes in the economy. Norway stood out in the development of the O&G sector
for having succeeded, in just over 20 years of policy implementation (1972-1994), in:
enhancing its socio-economic development; avoiding de-industrialization due to the Dutch
disease; developing local oil companies (state and private); developing a broad and
internationally competitive O&G supply chain, including the formation of clusters related to
the O&G sector, and, moreover setting a benchmark in innovation in the O&G sector. The
essay also illustrates the main actions implemented in Norway to develop the O&G sector.
Although the development of the Norwegian O&G industry was marked by internal and
external favourable factors, some relevant challenges had to be overcome, including cost
overruns, delays in deliveries and important local companies went bankrupt. The third essay
finds that the O&G supply chain in Brazil has evolved, the industrial policies have been
improved, but while its development also shows some problems similar to those that Norway
had to overcome in the past, it also has other peculiarities. On analysing the industrial policies
implemented in both countries to develop this sector, it emerges that to some extent, Norway
is already being used as reference for Brazil, but there are still lessons and contributions to be
learned from this successful case. However, due to socio-economic, political and cultural
differences, compounded by today’s more adverse global and domestic environment, the
challenge Brazil has to face in developing a broad and competitive O&G supply chain is
tougher than it was for Norway.
As this article is being written, eight-een months have passed since the Base Realignment and Closure Commission (BRAC) voted to close Charleston Naval Shipyard. Its action came just as Charleston was beginning to show impressive results from a major, multi-year change effort aimed at significantly improving overall perform-ance. The BRAC's decision to close the shipyard at Charleston was not based on its performance compared to other Navy shipyards, but rather was a part of the Navy's larger strategy to close most of its activities in the Charleston, South Carolina area as it tried to adjust to a shrinking fleet and support requirement. This article attempts to document the changes made to move the shipyard toward higher performance. It also tries to capture some of the practical lessons learned during the effort and to provide those about to begin the journey toward higher performance in their organizations with the thought process, change model, and roadmap used at Charleston. Charleston's Background: the "Pick Two" Paradigm and the Functional Hierarchy Charleston Naval Shipyard has con-tributed a century of service to the nation's defense through the repair, refitting, and modernization of Navy ships. During that period, the yard built a tradition of pride in the quality of its workmanship. Further, because Charleston has also been deeply Arlington, Virginia. He has served in the Navy for over 28 years, including sea duty on two nuclear submarines, instructing at the Officers' Submarine School, serving as Engineering Duty Officer, in increasingly responsible management positions in three naval shipyards, and he was Assistant Chief of Staff for Materiel for the U.S. Atlantic Fleet's Submarine Force. He received a B.S. degree from the U.S. Naval Academy, an M.S. Degree in Nuclear Engineering from Pennsylvania State University, and attended Harvard University's Senior Executive Program. *JOHN PICKERING is President of the Commonwealth Center for High-Performance Organizations, Inc., a management and organizational change consulting firm located in Charlottesville, Virginia, working with executive teams in both the public and private sectors to improve organizational performance. He served as the Deputy Director and a Senior Faculty Member of the Federal Executive Institute in Charlottesville, Virginia, was an executive with the U.S. Department of Housing and Urban Development, and taught at Lamar University, Florida State University, and Memphis State University. He received a Ph.D. in public policy and administration from the Florida State University. *GERRY BROKAW is a Managing Associate in Coopers & Lybrand's Federal Government Practice and Organizational Change Management Group. He has more than twenty years experience working in the private and public sectors focusing on high-performance management and work team development, corporate long-range and strategic planning, operational systems improvement, organizational change management, and Total Quality Management. His clients have included General Motors, General Electric, Mobil Oil, Georgia Pacific, IRS, and the Navy. He received a B.S. degree in psychology and chemistry from the University of Pittsburgh.
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