PhillyDeals: 3 Brazilian firms set up shop in region

The Sunoco complex in Marcus Hook included a polypropylene facility that Brazilian chemical firm Braskem bought as part of its "internationalization" strategy. Braskem says it will give the product more priority than Sunoco did.
The Sunoco complex in Marcus Hook included a polypropylene facility that Brazilian chemical firm Braskem bought as part of its "internationalization" strategy. Braskem says it will give the product more priority than Sunoco did. (APRIL SAUL / Staff Photographer)
Posted: October 28, 2011

Brazil, the biggest nation in Latin America, is advancing as a world economic power, and is investing in the United States amid the slump here.

Burger King and Budweiser, to name two iconic American brands, are now owned and operated by a Brazilian-led international group.

Here are three Brazilian companies that are using the Philadelphia area as a base for growth in the United States and beyond.

Plastics

Chemical giant Braskem S.A. spent nearly $700 million in the last 12 months buying polypropylene plants (they make basic material for cups, auto parts, tape, diapers) in Marcus Hook and other U.S. and European cities from Dow Chemical Co. and Philadelphia-based Sunoco Inc.

"We have consolidated the Brazilian chemical industry and now we are completing our internationalization," Luiz de Mendonça, chief executive officer of Braskem America, told me last week.

How can the Brazilians expect to make those plant profitable when their well-funded U.S. corporate owners couldn't?

"They divested those businesses because they were never that successful in those businesses," Mendonça told me. "At Dow, at Sunoco, these businesses were at the tail, scraping for money, with ideas that would not be heard. But for us, polypropylene is a core business. That makes a lot of difference.

"For example, I was in Marcus Hook the other day. We have a very talented process engineer. She was presenting me a project, a $300,000 investment, with a return of maybe $4 million or $5 million.

"I said, 'It's crazy, you're late.' She said, 'At Sunoco, I had to go through the capital-expenditure committee for permission to do this.' That project had probably been sitting there for two years!"

The Marcus Hook plant runs on byproducts from Delaware River oil refineries, including two Sunoco plants and a ConocoPhillips plant that are slated for sale or closure. Mendonça told me he was "confident we can still get the feedstock" to keep the plastics plant from other Northeast refineries, even if the local refineries shut.

Last winter, the company sent Mendonça to run the business from Sunoco Chemical's old offices on Market Street in Center City.

"We decided to make this the headquarters for all our business outside Brazil: 600 people in the U.S. at five plants and the research and tech center in Pittsburgh, two plants in Germany, and more."

Mendonça brought a team of five from Brazil, but Braskem is also betting its expansion on the ex-Sunoco team: "The former chief operating officer, Bruce Rubin, is now executive vice president of institutional relations. He knows everybody around the industry and is well-respected. A strategic thinker. And we kept the vice president of commercial and supply chain, Mark Nikolich. Just promoted him as general manager for Braskem Europe."

Comparing Philly to Sao Paulo: "It's easier to do business here," Mendonça said. "It's a very livable city. Plus the U.S. is cheap now. I came with a very small suitcase. I can furnish my Philadelphia house more cheaply than in Brazil."

To the burbs

Ci&T, a marketing-software firm started in the Campinas university-tech district north of Brazil's leading city, Sao Paulo, sent Leonardo Mattiazzi north in 2006 to find a U.S. headquarters to service Johnson & Johnson, Pfizer Inc., and other pharma clients.

Mattiazzi visited the Brazil trade offices of New Jersey, Pennsylvania, and other states. "We could have located anywhere," he told me. "We looked at concentrations of business. Philadelphia caught our attention. New York also. But Philadelphia wasn't as expensive to set up shop, and would give us easy access anywhere in the East Coast."

Cruising the several U.S. state offices that compete for Brazilian companies' attention, Mattiazzi found Pennsylvania trade rep David Briel the "most attentive" among his U.S. rivals. Brill pointed Ci&T toward the Keystone Zone tax break district and start-up incubator at the University City Science Center, and that's where Mattiazzi started.

But when it was time to grow, Mattiazzi found cheaper space and lower taxes in King of Prussia.

So now Ci&T's 25 reps, project managers, sales and delivery people work from King of Prussia and a satellite office in Somerset, N.J.

Meat wars

Brazil's expansion-oriented meatpacker and shipper Marfrig Alimentos S.A. has suffered growing pains and lower profits on some of its foreign businesses in the year since it bought Keystone Foods L.L.C., the West Conshohocken-based McDonald's Corp. restaurant supplier founded by Chicken McNuggets developer Herb Lotman, for $1.6 billion in 2010.

Keystone recently agreed to sell its trucking and distribution unit, including its Coatesville plant (that employs 165) and others in the Midwest, to another McDonald's supplier, Illinois-based Reyes Holdings L.L.C.'s Martin-Brower Logistics Co. L.L.C., for $400 million.

I asked how the company is coping with volatile meat prices. "Every company is fighting a battle in the protein industry. But we're still humming," Keystone spokesman Jay Pomeroy told me.


Contact columnist Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or @PhillyJoeD on Twitter.

 

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