Cooperating with defence industry as an active partner & working with ABIMDE
With the blessing and support from RUAG HQ in Switzerland, Sao Paolo native Maria Vasconcelos managed to achieve a miracle in Brazil that might require some examination.
RUAG is known the world over as a supplier of high-quality, high-value ammunition of various types…among other things. However, Brazil is a potentially profitable market that was off limits to RUAG and other foreign companies in favour of monopolistic home-country companies. Often, such market entry limitations means the customer (i.e. the Brazilian national defence forces) is forced to buy from the monopoly at often unchallenged prices and unquestioned quality for purely political reasons.
While the global defence industry sees similar obstructive purchasing practices around the world, Brazil seems to have achieved Olympic gold with their circuitous requirements. The processes to be allowed to sell to the Brazil MOD are as outdated (R-105 est. 1936) as they are full of intentionally complicated requests, obtuse filing regimens and unimaginable “Catch-22s” that can leave the foreign applicant drowning in a whirlpool of impossibilities preventing them from moving past the first stages of MOD approvals.
That said, intensive regulatory study and pure tenacity are requirements if one is to avoid the tricky and expensive practice of hiring a consultant lobbyist who use often shady political channels to secure necessary approvals and contracts. RUAG´s representative in Brazil, Maria Vasconcelos, had the primary desire to keep RUAG´s application process as clean and pure as possible, following a strictly non-political, technocratic/bureaucratic legal regimen to achieve the ambition to provide the very best ammunition solution to Brazil. Her struggle began eight-years ago and only in September concluded in victory.
It is important here to highlight that the Vasconcelos-RUAG-Brazil endeavour was more than just a desire to sell ammo to Brazil´s MOD, it included significant investment from RUAG to build a plant in Brazil, with significant transfers of its manufacturing culture as well – in the form of personnel training and recruiting, industrial infrastructure and paying Brazil´s complex and often crippling business taxes.
Note: While the UK, the USA and Europe offer tax breaks to multi-national companies to re-locate facilities in their country – leaving the local residence and employees to make up for the tax shortfall on an individual taxation level, Brazil reverses this paradigm – to be fair, it puts the tax burden on those grossing the most income; however, it could be a lighter burden.
Aside from being the sole actor and driver of RUAG´s applicant process, Vasconcelos faced a host of other obstacles: 1) being a woman in a largely male chauvinist public sector; 2) apathy of regulatory and MOD officials; 3) pioneering a professional pathway into actually “uncharted” bureaucracy; 4) a lack of process knowledge because this approach was unprecedented; and, 5) covert political and industrial obfuscations to hinder or stop Vasconcelos´ efforts.
Over time, resistance to having another competitive supplier waned and waxed for support as the wisdom of high-level army commanders and MoD professionals prevailed over the situation. Plus, vocal support from Brazil´s own community of legal gun owners (from sport shooters to police departments) were very supportive of RUAG´s endeavours in Brazil and remain very keen to have RUAG operating there.
After eight years of struggle, introspection, frustrations and determination not to be beaten back, Brazil´s national newspapers started to leak the news this week that RUAG won the right to build its factory in Brazil and to compete for public sector tenders. This is the first time in more than 50-years – half a century – that a company of this kind has been built in Brazil. A personal and corporate triumph due in large part to just one person´s vision, determination and mettle. As CEO of RUAG Brazil, Vasconcelos and her superiors at RUAG headquarters have a sound, graduated business plan for investment and production in Brazil. Already it is clear that this pathway to being fully-operational will be faster and easier than getting the approvals to realise Vasconcelos´ vision for her employers.
“Our struggle to produce in my home country – and I am a proud Brazilian! – is not just about creating more jobs and realising more sales,” Vasconcelos declares. “It is about bringing more foreign companies to Brazil – having shown them it can be done without shady ways that can increase the technology and financial flows into Brazil, making our country and economy stronger.”
Vasconcelos´ business model for RUAG is based on her business acumen and surprisingly vocal love for her country, which includes: cooperating with the defence industry as an active partner; working with ABIMDE – the defence and security trade association; realising an alternative, fairer price structure for the MOD by increasing competition; and, making a healthy net profit despite the heavy tax burden of what is commonly known as “Brazil Cost.”
“Look, we made a good case to the MOD and received much support from the top downward,” explains Vasconcelos. “It was very much their point of view – or, wisdom – in this evolving supply-dynamic. To date I am happy to say that we earned the kind and benevolent support of the Minister and Army Generals. They are the drivers of the needed change in how suppliers must conduct business in Brazil – reducing prices, increasing innovation, allowing competition and improving quality all create good for our country.”
Can anyone argue with this?