Odebrecht enters a new phase in the USA

About to sign yet another important contract with the county of Miami, for the construction of a business, commercial and hotel complex next to the International Airport of the county, Brazilian company Odebrecht is making giant strides into American territory. Apart from this project, which has been valued at between US$ 600 million and US$ 700 million, this contractor is also ready to take part in the tender for the construction of the first High Speed Train (in Portuguese, Trem de alta velocidade, or TAV) in the United States, which is a project worth US$ 2.5 billion in the first stage alone, and is now getting ready to set foot in Texas, through tenders for the construction of one American football stadium and one baseball stadium.

We are in a new phase, focused on larger contracts and also on the search for opportunities in other States, says the President of Odebrecht in the United States, Gilberto Neves.

Having clocked up exactly 20 years of presence on the American market, Odebrecht has obtained the right to negotiate the new project of Miami International Airport and may sign the contract this week. According to Mr. Neves, five groups have shown interest, but only two groups continued running for the right to negotiate with the county. In the end, the Brazilian contractor was the winner. Some terms of the agreement are being discussed and the “senators” shall have to approve them, says the executive, which participated in the start of operations in the United States. One of the points that have already been altered is that regarding a diagnostics center, which ended up giving way to a business center.

Following a model based on a Private-Public Partnership (PPP), this development should have Odebrecht as an investor and also an operator during a certain period. The project finance shall be designed by the company, who shall seek out banks and other possible partners. The proposal anticipates the construction of yet another hotel – the existing hotel shall be refurbished – a shopping mall and also some office towers, similar to those at the airports at Orlando and Dallas. We shall be looking for the investors. The airport shall only supply the land, which is currently unused, explains Neves. After 35 or 40 years of concession, the assets shall revert back to the airport.

The project presented by Odebrecht took into account, according to the executive, the airport’s need to generate income not associated with air travel business, and thus make it possible to reduce the costs of the airlines operating out of the International Airport. Nowadays, due to the high investments made in the expansion work and also the issue of some US$ 6 billion in International Airport bonds to finance such projects, these areas end up paying high operation taxes. By generating additional cash, these costs can be reduced. Odebrecht was responsible for the expansion work on the North terminal, which is still in progress, and also the South Terminal of the airport, in contracts which come to a total value of US$ 1.94 billion.

In the contest for the construction of the TAV, which tender to bid shall be published in October, Odebrecht shall be a partner of Spanish company Dragados. The contractor got to sign a similar contract back in the 1990s, but the TAV project ended up cancelled. The first phase of the development shall connect Tampa to Orlando. In the second phase, with a budget as yet not established, the track shall be extended to Miami. The winner of the first lot shall have the right to build the second section of track and the contract also includes the operation of the TAV.

Apart from the focus on large projects, the American operation of Odebrecht also wants to open up new markets. Eyeing the potential of Texas, they are analyzing two bidding processes for construction of sports stadiums, valued at US$ 60 million. For business in that State, the company has already appointed a Contract Manager. We shall seek larger contracts. We shall not enter a work project to lose money, says Mr. Neves.

This selectivity reflects the maturity of the operations of the contractor in the United States. Some 20 years ago, when the company came to the United States, its focus was that of attracting specialized labor and establishing this labor in the company’s workforce. After this phase, the focus turned to tenders of the lower-price variety, with contracts between R$ 15 million and R$ 50 million. The leap came with the US$ 840 million for the expansion of the South Terminal of Miami Airport, together with American company Parsons. This is the third phase: to do business together with an American partner. In Texas, we shall look into partnerships with local companies, says the president.

With a turnover of US$ 300 million per annum, the American operation is responsible for about 5% of the total global business of the contractor. Even though the participation is fairly small, the operation is of strategic importance to the contractor. The American market is highly competitive and we are not a big company like we are in Brazil. This means that we turn out extremely qualified professionals, who leave ready to take over any operation in another country, he says.

The first Brazilian contractor to win a public contract in the United States, Odebrecht has so far been responsible for 57 different work projects in the country, for a total of US$ 3 billion. One cannot underestimate the American economy (in the light of the crisis). There is still a lot of work to be done, he reckons.

Metro and Train tracks

Apart from being responsible for the modernization and expansion of the area of Miami International Airport (MIA), which receives 95% of the passengers coming to the area, Odebrecht won the tenders for the design and construction of the MIA Mover, a light rail vehicle which shall connect the airport to the Miami Intermodal Centre (MIC) and also the metro branch track that shall connect this last development to the already existing track. Together, these projects are worth some US$ 700 million and shall be ready between September 2011 and April 2012.

According to Luiz Simon, the director of Odebrecht responsible for the contract for the MIA Mover, the transport capacity of the train, which uses tires and is fed with energy through the electricity network, must be close to that of the trains of the Airport Link (the new metro track), so that there are no bottlenecks in services to the passengers that enter or leave the airport. Thus, the light train shall have a capacity to transport 3.3 thousand people per hour and could reach 6.6 thousand people per hour further down the line. The coaches are already been produced by Mitsubishi in Japan, a company that shall be responsible for the operation of the vehicle.

According to Mr. Simon, Odebrecht has been given the project, including the choice of train system, and also the construction of the whole structure, equivalent to US$ 260 million of the total value of the contract. There shall be some 2 km of track in a raised concrete structure, between 15 and 20 meters, and also a substation of energy. The project shall mean a reduction of 30% in the traffic of buses as used by the car rental companies to take clients from the airport to the MIC, with a saving of US$ 650 thousand per month.

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