|in Vol. 13 - March Issue - Year 2012
A Case Study Of International Development
Fernando Diehl Vieira, Commercial Director of CMV
CMV preservation lines - several complete lines including pre-heating, shotblasting, painting and drying were sold to major Brazilian shipyards in the past few years
Julio Diehl Vieira (2nd from right to left), International Business Manager of CMV and Russian staff
CMV plant close to Porto Alegre
At the headquarter of CMV, in Porto Alegre, MFN conducted an interview with Fernando Diehl Vieira and Julio Diehl Vieira, Commercial Director and International Business Manager.
(?) MFN: Can you please introduce CMV to our readers?
(!) F. D. V.: CMV stands for CONSTRUÇÕES MECÂNICAS VIEIRA; the company was founded in 1973 by our father as an airblast equipment manufacturer in the suburbs of Porto Alegre, Rio Grande do Sul State, in the South of Brazil. In 1997 we acquired some assets of Blastibras, which was a major competitor producing wheelblasting machines. CMV is now the leading Brazilian blasting equipment manufacturer offering a wide range of surface treatment technical solutions, blasting machines and preservation painting lines.
(!) J. D. V.: CMV is well established as a key actor in the Brazilian industry, particularly active in the shipyard sector, accompanying its oil-related growth on the Mid-Atlantic coast, and supplying the most advanced shot-peening machines to Embraer, amongst others.
(?) MFN: What are the key drivers of CMV?
(!) F. D. V.: The company was created by our father with a strong work ethic: no compromise on quality, utmost service to our customers who can count on us at all times, continuous technical improvements, and industrial progress. There is no room for complacency in the CMV culture.
Keeping an edge, building and maintaining competitive advantages, being at the forefront of the changes is our mandate. At the same time, we remain a family company, with common sense and, reasonable cost structure, for the benefit of our customers.
Thanks to our leading position in Brazil, CMV is now growing internationally at a fast pace. We have much to offer in blasting technology to the growing industries worldwide and our entry is always very welcomed.
(?) MFN: By international growth, do you mean Latin America?
(!) F. D. V.: By international growth, we mean tackling the global economy wherever growth is. Spanish-speaking South America and Mexico are obviously concerned, but not only these two countries. We target all emerging markets, where CMV equipment are much needed to enhance the industrial capabilities and where we can establish ourselves as a potential leader or co-leader.
(?) MFN: This is a very ambitious vision…
(!) J. D. V.: Well, this is not only a vision, this is an unfolding strategy, which started several years ago and which is now accelerating. Despite the fact we are located in the Southern corner of Brazil, we have taken an active part in the global market since the mid 2000’s:
CMV produces equipment for prominent blasting machines producers sold on a private label basis. This is an indication that we produce world-class machines and can meet the requirements of the most demanding end-users. We have also set up CMV USA in Baltimore, Maryland, participating in the American market. CMV also enjoys genuine international exposure with partnerships in Italy, China and Singapore. These were the first steps of our global expansion.
In 2010, the Board of Directors decided to accelerate this development and settle for good where the growth potential is the more attractive. We first conducted extensive market research that provided us with a short list of target countries and zones: China, South East Asia, India, Russia, the Middle East and Africa.
We then investigated these markets to rank them and allocate our resources wisely. China was indeed the largest market, growing at an incredible speed, but when we gave it a closer look, we found that the level of competition was intense and the complexity of setting up CMV China would be high for a questionable result at this point. Russia was not ranked first, but the secondary investigation provided encouraging perspectives and we therefore decided to start heavily investing in this high-potential country.
(?) MFN: Russia is generally considered a difficult place to carry out business due to its geographic size, the post-communist business culture, and the political issues. How did you manage to tackle these aspects and enter this intriguing country?
(!) J. D. V.: Firstly, what you describe is an outdated stereotype. No question Russia is the largest country in the world and this creates a considerable need for infrastructure where a large part of it requires blasting operations: the railways system is also nicknamed the backbone of the Russian Federation, navigation on the rivers with specialized shipyards, etc.
Secondly, a new generation of entrepreneurs, now in their 30’s and 40’s, has taken over business in Russia and they are catching up with the rest of the world. They are well-educated, in particular in the technical and industrial sciences; they are bold and ambitious, and they make things happen.
The political situation is more stable than in many other countries, the current political debate is a healthy debate, and I regret that many observers see the downside rather than the upside of it.
The country is on a faster growth track thanks to the huge oil extraction and transportation needs of infrastructure, the fast rising automotive industry, large-scale construction and renovations programs all over the country.
(!) F. D. V.: I am pleased to announce that CMV Russia was created in December 2011, as a joint venture between CMV Brazil and Industrial Technology, an Ural based company in Ekaterinburg. Let me point out that the joint venture paper work, including all necessary official agreements and registration was completed in less than three months. I do not know many places in the world where such a speedy process could have taken place. This shows that Russia is becoming a sheer friendly place for FDI and international business.
(?) MFN: Why Ekaterinburg rather than Moscow?
(!) F. D. V.: Would you set up an industrially focused company in Washington DC, Berlin, or Brasilia? The right choice, close to manufacturing facilities and corporate offices where decision makers are based, would rather be the Middle West, the Ruhr Gebiet, or the Sao Paulo State. While Moscow is a political and administrative hub, 40% of the metal-related industries have been located in the Greater Ural region since the Second World War. This made Ekaterinburg the preferred location for CMV Russia, in the very heart of the N°1 industrial region in Russia. This gives us a strong competitive advantage versus the importers or manufacturers of blasting machines located 000’s of miles away in Moscow or in the Far East of the Russian Federation.
(?) MFN: What’s next?
(!) J. D. V.: Well, we are not going to stop there! We are currently exploring several options for CMV to settle industrially and commercially, to catch a significant part of the business in several fast-growing regions of the world.
Let me stress that our business development model is probably unique, with one of the best technologies in our industry matching the very demanding Brazilian standards, a lean fixed cost structure as the result of family business tradition, and a global reach thanks to the connections we have been building up over the past decade.
Furthermore, we only focus on fast growing markets, we skip the countries where the cost to run a business is high, with dense competition and lagging growth, if not recession, in the metal related industries. This is translating in accelerated growth and we are also planting the seeds for long term expansion, like in Africa.
(?) MFN: What advise can you give to the MFN readers?
(!) J. D. V.: The Global economy is definitely a land of opportunities. This requires good marketing and competitive intelligence, and we wish to thank MFN for making these recently available in the field of blasting consumables. This also requires adapting business models to tackle the emerging and fast-growing markets, making available technology with no compromise at competitive conditions. Eventually this will lead to some reshuffling in the structure of our industry and CMV will definitely take advantage of this, joining the first league.
MFN would like to thank Fernando Diehl Vieira and Julio Diehl Vieira for the interview!