Strategic industries seek partnership with vocational schools

Companies, schools are joining forces across country

07/04/2022

Ana Inoue — Foto: Carol Carquejeiro/Valor

Ana Inoue — Foto: Carol Carquejeiro/Valor

The partnership between the public and private sector, which specialists see as key for the expansion of vocational education, is starting to accelerate and deepen in Brazil in strategic fields like information technology and renewable energy. Experiments conducted in Araripina (Pernambuco) and in the state of São Paulo show programs that bring together companies and public schools in projects for training more in line with reality, curricula that can be replicated across the country, or programs that establish seamless transition between vocational and higher education.

Technology, creative economy and sustainability, including innovation in the power generation mix, are among the priority fields for which it is necessary to train young people with the ability to create and think, said Ana Inoue, head of Itaú Educação e Trabalho, the education and work initiative led by the Brazilian bank’s foundation.

She sees vocational education as a way to generate labor capable of meeting demands. Policies and programs involving public schools, which account for 88% of high school enrollments, are key, Ms. Inoue said. Partnerships with the productive sector, she said, can provide not only greater opportunity for professional practice and supply of updated and state-of-the-art equipment for teaching, but also constant dialogue with public bodies to create curricular articulation that involves training more in line with the reality of each school and region.

With a population estimated by the Brazilian Institute of Geography and Statistics (IBGE) at 85,000 people, Araripina, in the northwestern region of Pernambuco, joined in 2020 the map of cities with more partnerships between the public and private sectors for the development of vocational education.

Carla Chiamareli, knowledge management manager at Itaú Educação e Trabalho, said that the program developed at Pedro Muniz Falcão, a full secondary school in Araripina, considered the strong regional inclination to wind and solar power, in a project that started with a dialogue between representatives of the state government. The Votorantim Institute, currently linked to the Auren group, continued with the entry of Schneider Electric, and now draws other companies in several forms of partnership.

The program, Ms. Chiamareli said, involved the joint construction of a curriculum in the field with the concern of generating vocational training for the entire renewable power production chain. The implementation of the curriculum also considers employability not only in generation companies, but also in user companies, paving the way for entrepreneurship as well, with the formation of professionals qualified to work in the supply of goods and services.

The project stood out for having a curriculum put together from the demands of the productive sector, which meant a change in relation to a model of vocational education often disassociated from the labor market, said Ricardo Marques Jacó, the school’s principal. Currently there are four classes of about 45 students each – two in the first year and two in the second year – in the renewable energy vocational course, which also includes high school. The school, he says, took advantage of the framework developed to also offer an evening vocational course for those who have already completed high school. Currently, there are three classes with about 30 students each.

Born in Araripina, Mr. Jacó expects that the new courses will contribute to change the profile of the labor force that works in the productive chain generated by wind and solar power, increasing the generation of jobs for the local population. Today, most of the professionals come from other regions, he said.

According to Rômulo Marçal, corporate director at Auren, there is a great opportunity in the sector in the region of Araripina, where the company runs a wind farm. He said that public information sources indicate that within a radius of 200 kilometers from the Pernambuco city there are about 1,800 renewable power projects – mainly solar and wind.

Mr. Jacó recalled that there are job opportunities not only among generation companies and manufacturers of power equipment, but also in user companies in several industries. The use of renewable power has been expanding in the region, he said, and many companies – among them those in the city’s plaster industry and food industry – have been investing in their own plants, which will also demand more professionals in the field.

The training resulting from the vocational course is expected to generate better pay for the population. In 2020, the average monthly wage in the municipality was 1.6 minimum wages, which put it in 93rd place among the 185 cities of Pernambuco and in the 4,400th position among 5,570 municipalities in the country, according to IBGE. The proportion of employed people in relation to the total population was 9.4%, also two years ago.

Mr. Marçal highlights Auren’s contribution for the creation of a curriculum for the renewable power course. Fifteen volunteers from the company took part with the concern to create a course that connects to digital technology and that can also develop the necessary skills for the corporate world.

The objective of adopting the curriculum is to develop general skills, such as the ability to solve problems, initiative, creativity, logical reasoning, flexibility and adaptability, said Mr. Chiamareli, with Itaú Educação e Trabalho. Another concern was to create a comprehensive renewable power curriculum that, besides wind and solar energy, also reaches other sources, such as hydro and biomass. “The idea is to give scale to the curriculum so that it can be put in place in all states.” At least six states have already shown interest, she said.

In order for vocational education to be expanded with the capacity to meet existing demands, Ana Inoue points out, it is necessary to transform the way vocational education is seen. It is necessary, she added, to leave behind the “last century” vision. “Vocational education was created as something for the poor and underprivileged, and was less comprehensive, less emancipatory, and more restricted.” It was education aimed at those who would not have the opportunity to go to university, Ms. Inoue said. Vocational training does not have to be “definitive in the young person’s life.” Instead, it must pave the way for “a new development process that needs to take place.”

In this sense, she said, it is necessary to create public policies and programs in a way that encourage vocational education students to move forward with that in higher education, and even adding value to the student’s previous training.

The Multiplatform Development Technologist course currently offered by 12 Technology Colleges (Fatecs) in São Paulo seeks to achieve this. Brasscom, an association that brings together 86 business groups in the fields of digital technologies and Information and Communication Technology, also took part in the formulation of curriculum of this course, which is the result of a partnership between Itaú Educação e Trabalho and Centro Paula Souza (CPS) – an autonomous body that coordinates São Paulo’s public vocational schools and Fatecs.

Cacau Lopes, implementation and development manager at Itaú Educação e Trabalho, points out that the work with Brasscom also involved the review of career paths for vocational education. Working with an association has allowed the curricula to reflect the various companies that operate in the technology sector with different focuses and languages, and often competing with each other.

*By Marta Watanabe — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Economy exceeds expectations, contraction may be delayed

Monetary policy slows GDP from July, but new fiscal stimuli kick in

07/04/2022

After positive surprises with activity in the first half of the year, the Brazilian economy enters the second half of 2022 under low visibility. Since the data from the beginning of the year started coming in better than expected, analysts expected that starting in July activity would start to feel the monetary tightening in a more relevant way, slowing down. This view holds, but with the strong recovery in the labor market and the forecast of further fiscal stimuli by the government, projections of GDP contraction at the margin have been pushed from the third quarter to the fourth quarter or even to 2023.

The turn of 2021 to 2022 was marked by a general drop in projections for GDP this year, notes Santander, recalling that the median reported in the Focus survey reached 0.25% on January 20. The perception was that real interest rates had entered the restrictive field, imposing tepid activity in the first half, still sustained by the recovery of services and records in agriculture, but contractions from then on.

Since then, figures for the agricultural sector have been revised downwards, but in services, even though the omicron variant wave has postponed consolidation, expectations have even been exceeded. The sector’s contribution to GDP in the first half of the year is strong, especially in those segments most dependent on the normalization of mobility.

But even assets-related areas, such as industry and retail sales, brought positive surprises, economists note. For Santander, the continued increase in household consumption has reflected spending of savings accumulated during the worst moments of the health crisis, the expansion of the real total wage bill – in the wake of the recovery in the labor market, and the increase in government transfers – and the support for credit concession.

Santander projects 0.2% growth for the second-quarter GDP, after a 1% rise in the first quarter, but the bank’s monitor indicates that this number is higher, around 0.5%, “which implies upside risks to our annual projection,” say economists Lucas Maynard and Gabriel Couto. Santander, which was already on a more optimistic side by estimating a 0.7% growth for the GDP in 2022, now expects 1.2%.

Débora Nogueira, the chief economist at Tenax Capital, recently adjusted her projection for the GDP in the second quarter to 0.7% from 0.4%, because she says she continues “to see strong data at the end”. For her, the numbers from the labor market in April, when the quarterly unemployment rate dropped to 10.5% (it is now at 9.8%), were “a great watershed”. In addition, she mentions the resilience of credit, especially to individuals, and the fiscal stimuli of the period.

“The question was how the shock, positive for Brazil, of the terms of trade [ratio between prices of exports and imports] was going to impact the economy, how this wealth would spread. It is being by the fiscal way,” she says. The authorization to withdraw money from Workers’ Severance Fund (FGTS) accounts alone, for example, added 0.3 percentage points to its projection for the year’s GDP, now at 2.2%.

The increase in disposable income in the second quarter also made BRCG Consultoria raise its GDP forecast for the period and the year, which went to 1.1%. But the second semester “is complicated,” says Livio Ribeiro, partner at BRCG.

The consumption of goods and services should decelerate in the second half of the year, while the total wage bill should “drift sideways,” says Santander. “If, on the one hand, employment performed better than we expected, on the other hand, inflationary surprises eroded real income even more than our scenario initially considered,” Messrs. Maynard and Couto point out. What can give support to the economy, they say, are less cyclical sectors linked to commodities and longer cycle sectors, which take longer to feel the rise in interest rates, such as construction.

Santander estimated that the upward shock in commodity prices due to the war in Ukraine pushed the risk of contraction of the Brazilian economy from the third to the fourth quarter. The bank’s respective projections are for a stable GDP and then a 0.4% contraction, versus the previous estimate of two 0.3% declines.

Tenax does not expect GDP contraction in any quarter of the second half, but highs of 0.3%. “Before, we had the fourth quarter negative. Now, we think that, with the fiscal environment and the carryover on the labor market, it will no longer be so,” says Ms. Nogueira.

Marcelo Toledo — Foto: Ana Paula Paiva/Valor

Marcelo Toledo — Foto: Ana Paula Paiva/Valor

Even if the GDP slows down in the second semester and the creation of job openings follows this movement, the unemployment rate will probably continue to fall in the period, says Marcelo Toledo, chief economist at Bradesco Asset Management (Bram).

In addition, according to him, the fiscal impulses under discussion at the moment – such as tax cuts and an increase in the cash-transfer program Auxílio Brasil – naturally lead to an upward revision of activity in the second half of the year.

“You have to wait for the outcome, but the drop in [sales tax] ICMS represents an increase in disposable income,” he exemplifies. Bram had projections of quarterly GDP closer to stability in the second half of the year; now, a slight growth is possible, according to Ms. Toledo. “We still see an upward bias in this projection of 1.9% for 2022,” he says.

On the other hand, in the second semester, the “post-pandemic” reopening effects on the activity may be practically exhausted, at the same time that the world, which had a positive contribution to Brazil’s growth in the first semester, may operate in neutrality, Mr. Toledo points out.

By Anaïs Fernandes — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Simec to inject $300m in steel mill in São Paulo

As of 2024, Mexican group will produce more 500,000 tonnes of steel/year in Pindamonhangaba unit

07/01/2022

Jaime Moncada Ramos — Foto: Claudio Belli/Valor

Jaime Moncada Ramos — Foto: Claudio Belli/Valor

The Mexican group Simec, the third-largest long steel producer in Brazil, unveiled Thursday an investment of $300 million to increase twofold its steel mill located in Pindamonhangaba, 140 kilometers far from São Paulo.

The company has just received the preliminary permit from São Paulo state’s environmental body Cetesb, which allows it to start the construction works.

The expansion is expected to be ready by mid-2024, with construction and assembly works starting in the second half of the year, said Jaime Moncada Ramos, the company’s chief executive in Brazil. The investment consists of a new electric steel mill and a new rolling mill, with state-of-the-art German technology. The equipment will be shipped from China in July.

With the duplication, the installed capacity of the steel mill in Pindamonhangaba will increase to 1 million tonnes of crude steel (billets) per year. Currently, the capacity is 500,000 tonnes a year. The Mexican group began producing steel in Brazil at the end of 2015 after investing the same amount ($300 million) in a greenfield project in the country.

The Pindamonhangaba unit will expand the supply to the market of straight and rolled rebar – a product used for civil construction and real estate projects – and wire rods, for several industrial applications, such as wires and nails.

According to Mr. Moncada, much of the infrastructure for expansion already exists at the site, next to the current production line, facilitating the installation of the new plant. The location, near Presidente Dutra highway, in the São Paulo-Rio de Janeiro region, is a logistical advantage for the acquisition of iron and steel scrap and for the distribution of products to the market.

In Brazil, Guadalajara-based Simec already serves the markets of the Southeast, South, Central-West and part of the Northeast regions, through steel mills located in São Paulo, Minas Gerais and Espírito Santo.

According to the executive, 1,200 jobs will be generated during the construction work, and 450 employees will be hired to operate the new line in Pindamonhangaba. The generation of jobs and additional taxes is part of the São Paulo state government’s program to encourage new investments in the state.

Three years after starting production in Brazil, Simec became the third-largest manufacturer of long steel (rebar, wire rod, bars and profiles) in the Brazilian market. It is behind the leader ArcelorMittal and Gerdau. It also competes with AVB (Aço Verde), Sinobras and CSN’s long steel business.

This leap, in May 2018, was the result of the acquisition of two steel units of ArcelorMittal (one in Cariacica and another in Itaúna, Minas Gerais) by imposition of CADE, the country’s antitrust body, due to the purchase of Votorantim Siderurgia’s assets in Brazil.

As a result, Simec increased its production capacity of crude steel to 1.1 million tonnes a year at that time, and of rolled products to 1.05 million tonnes.

The project in the city of Cariacica is expected to reach 800,000 tonnes of crude steel, with the expansion of the furnace capacity. New rolling lines for bars, profiles and others are also planned. The investment in the unit is estimated at $80 million to $100 million.

The environmental permit for the project is expected to be issued by IEMA, the state environmental body, in August.

*By Ivo Ribeiro — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Analysis: Central Bank’s inflation scenario affected by economic slack

In practice, this reflects stronger GDP expansion and lower-than-expected unemployment rate

07/01/2022

Central Bank’s building in Brasília — Foto: Jorge William/Agência O Globo

Central Bank’s building in Brasília — Foto: Jorge William/Agência O Globo

It was not only supply shocks and other surprises that made the Central Bank revise upwards its inflation projections. There were also the impacts of the lower-than-estimated degree of economic slack and the higher neutral interest rate, according to the Inflation Report released by the monetary authority Thursday.

Since March, the Central Bank increased its inflation projection for 2022 by 2.5 percentage points to 8.8%. A good part of this increase is due to the war in Ukraine, which has caused the prices of oil and other commodities to surge and disrupted production chains due to China’s zero Covid policy.

But the revision in the inflation projections, to some extent, is due to the fact that the Central Bank overestimated the degree of economic slack at the beginning of the year.

In March, the monetary authority had estimated that the so-called output gap, a measure of the economic slack, would be 1.8% at the end of the first quarter. Thursday’s Inflation Report redoes this calculation and finds that, in fact, the slack was 1.1%.

From the point of view of the real sector of the economy, this is good news. In practice, it reflects stronger GDP expansion and a lower-than-expected unemployment rate. The Central Bank has increased its estimate for GDP in 2022 to 1.7% from 1%. But on the other hand, this means that economic slack has not been as strong a driver of lower inflation as expected.

In the second quarter, another surprise: the Central Bank estimated the economic slack at 2%, but according to the most recent estimate in Thursday’s report, it has been revised downwards to 1.3%. A good part of the consequences of this lower-than-expected slack is still expected to reach inflation, which reflects the output gap with a few quarters of delay.

Economic activity was stronger than expected, in part due to the reopening of the economy with vaccination and a lower number of deaths from Covid. But GDP data for earlier this year also reflect last year’s still expansionary monetary policy and fiscal expansion measures.

Another factor that contributed to increasing Central Bank’s inflation projections was the revision of the neutral interest rate. In its June meeting, the Central Bank’s Monetary Policy Committee (Copom) increased its view on the neutral interest rate to 4% from 3.5%.

The market had already revised its estimates to 4% by the end of 2021, due to the high fiscal risk amid tax-cutting measures and spending expansion during the election. But the Central Bank made the move in two stages, raising it to 3.5% from 3% in December, and now to 4%.

A consequence of this is that the economy has seen, before the revision of the neutral rate, a monetary tightening lower than the one estimated by the Central Bank. The monetary tightening represents the difference between the real interest rates forecast by the market and the neutral interest rate.

In Thursday’s Inflation Report, the Copom says that the monetary tightening is lower than previously estimated, in March, until the first half of 2023, precisely because the neutral rate has risen. The tightening is higher in the second half of 2023, because the market now expects a higher Selic policy interest rate for the period.

In practical terms, this higher neutral interest rate leads to a higher inflation projection not only for 2022, but also for next year, which is the relevant horizon for monetary policy. The Central Bank has revised its inflation projection for 2023 by 0.9 percentage points, to 4%.

The Inflation Report says that other factors have also contributed to the rise in projected inflation this year, such as rising inertia and deteriorating inflation expectations. Inertia and expectations, in turn, may have been affected by inflationary surprises and higher price indexes in the short term. But they are also determined by the degree of monetary tightening and the level of economic slack, as well as fiscal uncertainty.

*By Alex Ribeiro — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Fleury buys Hermes Pardini, deepens consolidation in healthcare

Combined company now has annual revenue of R$6.1bn, closer to market leader Dasa

07/01/2022

Medical laboratory chain Fleury has acquired competitor Hermes Pardini, in the wake of a series of other recent deals involving large healthcare groups, which demonstrates that the consolidation in the segment has reached the level of merging competitors.

Earlier this year, the association between Hapvida and NotreDame Intermédica — the largest healthcare operators — was approved, and the business combination between giants Rede D’Or and SulAmérica was announced.

In other words, both the paying sources (healthcare plan operators) and the medical service providers (hospitals and laboratories) will negotiate on a much larger scale.

The combination between Fleury and Hermes Pardini boasts an annual net revenue of R$6.1 billion, a figure close to that of the market leader, Dasa, which closed last year with R$6.5 billion. The EBITDA expected is R$1.6 billion, with the possibility of increasing between R$160 million and R$190 million per year this indicator due to synergies. The combined company will process 245 million exams per year.

For years, Hermes Pardini is sought by investors and competitors, but there was resistance from the founding family in giving up control of the business. In 2011, the asset management company Gávea acquired a 30% stake, and in 2017, the Minas Gerais-based group went public. But still, rumors persisted, mainly that it would partner with Alliar, recently acquired by businessman Nelson Tanure. Fleury itself tried to negotiate with Alliar, but after Mr. Tanure’s arrival, the company backed out and went after Pardini.

In the new company, siblings Victor, Regina and Áurea Pardini will each hold 7.3% of the shares. Bradesco will have 20.2%, the founding physicians will hold 13%, and the free float will be 44.9%. The business combination foresees an exchange of 1 share of Pardini for 1.2135 shares of Fleury, plus R$2.15 for the shareholder of the chain headquartered in Minas Gerais. Fleury’s cash disbursement is R$273 million.

According to Roberto Santoro, CEO of Hermes Pardini, the decision to sell was motivated by recent moves by healthcare groups joining other fields. Fleury itself has been acquiring clinics, and Dasa now owns more than 10 hospitals.

“It’s a way to resignify medical diagnosis, which is very important, 70% of medical decisions are based on exams. There is, in my opinion, a deviation of the model with the entrance in other fields,” Mr. Santoro said.

With the acquisition of Pardini, whose brand will be maintained for at least 10 years, Fleury is entering a segment in which it has little activity: the processing of tests for other laboratories, which represents the largest source of revenue for Pardini — which processes 111 million exams for other chains, while in Fleury this number is 1 million per year.

Jeane Tsutsui — Foto: Julio Bittencourt/Valor

Jeane Tsutsui — Foto: Julio Bittencourt/Valor

Jeane Tsutsui, who has been CEO of Fleury for about a year, says that the operation is very complementary.

“We are more active with our units, and Pardini has a great logistics infrastructure; in addition, we are in different places. I don’t see cultural problems, there are a lot of complementarities,” Ms. Tsutsui said.

Also according to her, Fleury continues its strategy of acquiring other health assets such as clinics to complement the patient journey, that is, to be present in various stages of medical care. Today, Fleury owns daycare hospitals, ophthalmology, and orthopedics clinics, among others.

*By Beth Koike — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Suzano to invest R$600m in new plant in Espírito Santo

Future unit will have capacity of 60,000 tonnes per year, increasing installed capacity by 35%

07/01/2022

Suzano, the largest producer of market pulp in the world, intends to invest R$600 million in a new tissue paper plant in Espírito Santo, increasing the installed capacity for this type of paper by 35%, to 230,000 tonnes. Today, it is 170,000 tonnes per year, which already places the owner of the Mimmo and Max Pure brands among the large local manufacturers.

The future plant, which will also convert toilet paper and paper towel, will be located in Aracruz and have a capacity of 60,000 tonnes per year, with an implementation period of two years. The execution of the project still depends on the approval of the board of directors and the signing of contracts with suppliers.

Suzano joined this market in 2018, initially focusing on the North and Northeast regions, where it is the leader with shares of 66% and 28%, respectively. After advancing into the Central-West and Southeast regions, it ended 2021 as the third largest player in this market, with a share of 11.2%.

The company has tissue production plants in Belém (Pará), Mucuri (Bahia) and Imperatriz (Maranhão), and converting units in Maracanaú (Ceará) and Cachoeiro de Itapemirim (Espírito Santo).

Suzano’s plan is to use remaining sales tax ICMS credits in the state to meet the new investment, which still depends on approval by the authorities. At the end of 2019, Suzano unveiled a first tissue project in Espírito Santo, with an investment of R$1 billion, also using ICMS credits accumulated due to its export activity in the state – Suzano has a pulp production unit in the city of Aracruz, which used to belong to Fibria.

In operation since the beginning of last year, the Cachoeiro de Itapemirim unit has the capacity to convert tissue paper into 30,000 tonnes of toilet paper per year, equivalent to 1 million rolls per day.

“Less than a year and a half later, we announced the plan to make another important investment in the state viable,” CEO Walter Schalka said in a note.

During the construction period, 300 jobs are expected to be generated. When operations start, about 200 employees will work at the unit.

According to the company, the potential investment is in line with the strategy “to advance in the links of the chain, always with competitive advantage, and to ensure the supply to the growing Brazilian market for sanitary products.”

*By Stella Fontes — São Paulo

Source: Valor International

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