“If you want to be successful in South America, you've got to be flexible.”
What does it mean to manage KSB in a region of the world where political upheaval, inflation and power cuts are part of daily life – and one that also holds enormous opportunities? In this interview, Jens Deltrap, KSB’s Regional Executive Officer responsible for South and Central America, talks about why things work differently in Brazil to the rest of the continent and why flexibility is the key to success in South America.
Stream of Stories: You started in your role as Regional Executive Officer responsible for South and Central America ten years ago. What were your first impressions when you arrived there?
Jens Deltrap: The region wasn’t entirely new to me as I had already travelled through South America for two months as a student. I have always been fascinated by the incredibly dynamic nature and chaos of this region.
There are many challenges here – poverty, crime, corruption, an unstable government and inflation. But on the flip side there are also many opportunities. For example, if you want to build a house, you can get plots of land here for a good price and there aren’t many building regulations. The economy also offers similar opportunities. As a European company, you are often the first on the market with an innovation and stand out from the competition. It is the Wild West of our time – the last land of endless opportunities.
I also liked the way of life here. The people are incredibly sociable and it is easy to make contacts. I could be at a “churrasco” every weekend, which is a get-together with family and friends for a barbecue, either at home or on the beach. You quickly feel at home here – at least I do.
How is the management of a company in South America different from that of a European company?
There are many business opportunities, but also constant crises and challenges. You can’t make long-term plans here, you have to ride the wave – and react very quickly if it breaks differently to how you were expecting. I really enjoy this fast-paced and flexible way of working. Last year, for example, there was only electricity for four hours a day in Ecuador because the hydroelectric power plants had to be shut down during the dry season. Imagine having to run a company with a service workshop and employees both in the office and in the field and you only have four hours of electricity a day!
Working in Europe is rather boring in comparison: you go into the office every day knowing what’s going to happen. If a crisis ever occurs, everyone is stressed out and overwhelmed. Here, people wake up to a new crisis every day – be it a new government, a revolution or a currency devaluation. To cope with all these challenges, they need to be creative, flexible and resilient. I think the people in this region are incredibly innovative, highly creative and extremely fast. Flexibility, speed and ingenuity – that is what characterises the people of South America.
Roots in Holland, heart in South America: Jens Deltrap
Jens Deltrap is originally from the Netherlands. He has been KSB’s Regional Executive Officer responsible for South and Central America and President of KSB Brazil for the last ten years and lives and works in São Paulo. The 60-year-old brings international experience with him: Before coming to Brazil, he worked in Italy for three years and also in the USA for three years. In South America, he is particularly fascinated by the dynamic nature of the region – both economic and cultural. The people, the attitude to life and the challenges of everyday life have shaped who he is today. He is due to retire next year, but he is not planning a conventional retirement. Instead, he will split his time between Europe and South America.
Can you give us a brief overview of your market?
We have three branches, which together account for around 80 to 85 percent of our sales revenue in South America: Brazil, Chile and Argentina. Half of the volume comes from Brazil alone. These three locations are already very well developed and very, very deeply integrated into the market. The more recently established branches are Peru, Colombia, Ecuador, Panama and Bolivia. These locations are of course smaller and are more focused on individual market segments. You don’t start with everything all at once.
The market in South America is dominated by basic goods industries. There are three main sectors: mining, oil and gas, and agriculture, i.e. meat, soybeans and grain. KSB is very well positioned with its portfolio for all three. Brazil stands out among the countries because it is so large in terms of area and also has a strong economy. Brazil differs from the other countries in that its value creation goes beyond the production of raw materials. It has a huge manufacturing industry. This is also due to the fact that it is a very closed country that pursues a highly protectionist trade policy. Almost everything is produced locally, hardly anything is imported from abroad.
This also means that our competitors here are very different from those in the rest of the world. There are local companies here that have been on the market for a long time, have their own production facilities here and are very good at playing the region’s flexible game. KSB is one of the few international companies that has been able to play this game better than many others – and this is reflected in our results.
“Flexibility, speed and ingenuity – that is what characterises the people of South America.”
Jens Deltrap
KSB has developed very well in South America in recent years. What is the reason for this?
That’s right, we have almost tripled our profits over the last ten years. We are currently at 17 percent per year in this region. Several measures have led to this result. First of all, we completely restructured our production. As there are many import restrictions here, it is incredibly important to produce as much as possible locally. That’s why we source 70 to 80 percent of our products from the region.
We distributed our product lines more efficiently between our production locations, introduced lean manufacturing and optimised and professionalised production. We also invested heavily in new machines. If you look at the plants here in Brazil, they are on the same level as Europe, which makes it possible to double the production volume with the same number of people.
This enabled us to enter the market even more aggressively. We focused heavily on sales and were flexible with our prices so as not to lose any orders. This does not mean that we lowered prices, but that we increased prices less. For example, if there was inflation of 15 percent, we only increased prices by eight percent. Our sales exploded as a result.
Are there any important trends in the region that we need to keep an eye on?
Trends are for people who plan in the very long term. This is difficult for us in South America because of the dynamics here. But there is one global trend that has helped us in South America a lot in recent years: the chaos in international trade relations. As South America exports basic products such as oil, gas, food, metals and ore, it often profits when there is war, sanctions or trade restrictions in the world. The countries in South America position themselves neutrally and do business with everyone, whether it’s the USA, the EU or China. If trade relations break down somewhere in the world, the South Americans can step in and take over. For example, the war in Ukraine increased the demand for grain from Brazil and Argentina. Soy and steel are currently booming in Brazil because the Americans and Chinese are no longer supplying them. As an important supplier to the basic goods industries, KSB has also benefited from this trend.
You will be retiring soon. Have you got any tips for your successor?
I would say "Stay flexible". Flexibility is incredibly important. And find the right path within the structures of a large, successful and global company, which automatically entails a certain degree of inflexibility. If you don’t find this, you lose flexibility and will be overtaken by local competitors from all sides.
Do you already have plans for your retirement?
My wife and I want to spend part of the year in Europe and the rest of it in South America. I would really miss this dynamic energy and this constant chaos if I were to retire in the conventional way in Europe. And I still want to see and do a lot of things. But if you are asking me about specific plans, I can only say: “We’ll just have to see.” I’m too influenced by South America to be able to tell you any long-term plans. We may still be here in five years’ time. We may end up living in Belize. Or in Italy. But it won’t be very conventional. That would be far too boring!
KSB has set itself ambitious targets to achieve by 2030. Stefan Reutter, Head of Group Strategy, explains in an interview how the Group intends to achieve these.
