Interview with Rune Andersen

Representing: Innovation Norway in Rio de Janeiro Date: March 28^th 2014

Location: Innovation Norway house Rio, Rio Torre do Sul, RJ

Summary of interview

Innovation Norway and the Norwegian cluster program are organized as follows. IN have the ARENA program, with small clusters (many are qualified) and many of these are perhaps strong enough to be given the status NCE. However, this is a matter of budget constraints and only 12 NCEs can receive funding. Next step is becoming a Global Centers of expertise (GCE) of which there are 4 and NCE Subsea is a

candidate.

Why Rio want assistance from Norway is explained because Norway is strategically important for Brazil within oil and gas. CENPES is world leading within deepwater.

Petrobras is a cluster in itself, but need the rest of the industry that is supposed to deliverer products and services to Petrobras. And due to LC requirements, they need to attract the supply chain to Brazil.

When being asked how Innovation Norway is promoting the Norwegian cluster model, he sais that they say YES every time anyone ask to have a presentation etc.

They never tell Brazilians how they should do it; only how we do it in Norway, and what have been successful in Norway. Our main tool is information to the board of directors in to the Norwegian companies, have programs to gather interested and relevant companies. After the process, it is up top the company to find a niche to penetrate the market.

He explains the declined interest from the Norwegian companies to enter the Brazilian market is a result of increased investments and possibilities in the North Sea. Many have therefore put Brazil “on hold”. He believes that there is room for them in the Brazilian market.

The Brazilian institutions are solid, well-constructed, a lot of knowledge is present.

Perhaps too many institutions, but then again Brazil is 200 million and not 5 as in

Norway – so it is difficult to compare. He walks me through the major programs and structure of the governmental organs devoted to research based on a presentation given by Mr. Elias (as referred to several times in the thesis). Previously, nobody spoke with eachother and research were conducted more or less individually in each area, on municipal, state and federal level. PACTI was a program made to collect these loose threads, which he claims they have managed to do, taking into

consideration that they are 200 million people. Collaboration, universities, financing, education and other actors that are focused on the same.

Why should the old industry go into an area they do not know – the oil sector?

Petrobras is trying to mobilize supplychain. The competence lay in universities. All universities have a TTO - technology transfer office that takes care of

commercialization and control the patents. Brazil is competitive in other traditional industries such as aircraft and mining, but has not been adapting to the nascent oil industry because they do not have the same pressure as Norway did. The companies must want to change, no one can force them to change. Incentives and schemes is a tool that can be used more to get these companies to adapt their technology base to be applied in the oil and gas sector. First of all they need the knowledge to do it.

Secondly, the process to be certified by ANP an approved supplier takes a long time and is very thorough.

The reason why Brazil lack a supply chain is due to ownership structure in businesses.

The industry did not focus on oil related production and besides Petrobras – the

“gigantic amimal” – there is no one else. He underlines how big Petrobras is by exemplifying that the recent tender offer was larger than Statoil. Plus, one need to keep in mind that this is a highly investment intensive sector. Petrobras has thousands of projects ongoing, they do not need more research projects. Additionally, it is very resource demanding for Petrobras to take part and operate in all concessions with minimum 30%.

He claims that the 1% rule is used to build institutes, new equipment, labs and improve infrastructure in universities. Instead, should spend money to fill the institutes with people and projects. Time to market from idea to production is very long. They lack a basic understanding that time is money in Brazil.

Upon being asked if there is a gap between university and the industry he says that the universities are not commercial; they do research. The effect of Sintef is too soon to say – they are currently too small. That Sintef is a foundation and not an institute created a problem for ANP as they are only familiar with public research. CNPq have not fully approved Sintef yet because of this.

Rune argues that Brazil does not have a traditional foundation for cluster creation.

Important features such as high trust index, culture for innovation and sharing, and horizontal organizational structures, are not present in the Brazilian cultural

landscape. They are protectionist because of historic reasons. Portugal came to utilize their resources, and empty the country to bring the riches back to Portugal.

He also highlights that only the Brazilians can lift the Brazilian market further.

He describes the market as introvert, and that they have a protectionist behavior because the market is big enough. He jokingly claims that they lack the “Vågå-gene”, to say that globalization is not a crucial factor for Brazil to survive like it is for the people in Vågå.

He illustrates the extent of the Brazilian bureaucracy and say that a business that in Norway would have 80% engineers and 20% economists would consist of 80%

economists and 20% engineers in brazil. Example of the Brazilian cost: The hammer produced in Brazil was 40% more expensive than in Hamburg. But a Norwegian subsidiary holds a comparative advantage as only a part of your business is exposed to brazil, and does not loose the global competitive. Once established in Brazil, they compete by the same rules as the domestic companies.