(a) Managing large scale industrial complexes in undeveloped regions
The management of a large scale industrial project such as the NFP would certainly raise the question of the first priorities of business. Should those complexes be developed as competitive units in conditions not only of supplying the region with petrochemical products but also of facing
competition in other markets and from other industries outside the area? How can this be achieved without endangering the stated development of the region badly needing more jobs and more even distribution of wealth?
11-21
Diagram No.
2/2
Distribution o f the Tax Incentives originally scheduledfor the NE.
11-22
It is churlish but also frequent for industrial companies going into development areas to forget the original objectives for which they were
created. There surely must be two-fold conditions to obtain those objectives
- a favourable environment as discussed in the previous chapter and a
management purpose to accomplish them. It would be an economic illusion
to create poles where non-appropriate environmental conditions exist: it is also unreal to set up social objectives where the management of the project is not determined to pursue them.
Managerial staff very often identify themselves with "profit" that seems to be a key word to measure management success or failure. If that is the case here, it is a unfavourable behaviour in these large scale projects for underdeveloped regions, at least, in the short run.
(b) Social Objectives in large scale Projects
In fact there is a general and wide acceptance of the social values of business in modern society. Nowadays, nearly all the management literature suggests a list o f social objectives for business. But, in practice, those objectives are v e r y often forgoten. They work better in theory them in practice.
This controversy is very high whenever in underdeveloped regions the
government decides to invest in massive industrialisation. Generally, there
are three streams of opinions:
(i) Those w h o advocate a subordination of the company profitability to attend other objectives for which they were created;
(ii) Others opt for a strict rationalisation of the company leaving the social problems for the government to decide;
(iii) Others wa n t a certain type of compromise and suggest a system of a common fund whereby they and the government can subsidise the costs of labour.
11 - 2 3
This discussion goes deep into the nature of business, where some
managers adopt a line similar to that supported by the management by objective philosophy (Drucker, 1964 , Humble, 1970) . Others simply neglect that, at
least in practice. A different approach to this problem has been put forward by managers of those complexes. The argument is that the basic industries in the pole should be as profitable as possible and they should be managed in strictly rigorous business strategy, very profit-conscious, and well rationalised. It is argued that they should be managed in this fashion, because they are 'propulsive' industries in Perroux sense, needing a high level of efficiency not to pass excessive costs to the peripheral units to be created. So, if the basic industrial complex fails, all other
satellite industries would go with it. These satellites industries,
however, could provide jobs, linkages and the integration with the local community.
Reasonable as it appears to be at first glance, this argument fails in three grounds. Firstly, every single industry has to be immersed in the community and responsive to its needs and not transfer this responsiveness
to other industries or customers. Secondly, they have received incentives
and government help and so, indirectly, public money and thirdly, the arrival of satellites industries is only a possibility and not a reality in Bahia. In fact, the percentage of the pole output that is processed in Bahia does not reach 10% (see 3.93).
(c) The North East Petrochemical Pole (NPP)
The NNP has potentially all the characteristics a growth pole should have (see 2.2). The only straight forward difference is that, instead of a propulsive industry in the Perroux's concept, there is a propulsive complex, i.e. a group of firms closely linked together for the production
i n d u s t r i e s tha t us e d go v er n m e n t i n c e n t i v e s - p r o j e c t 34/1 0 - to com e i nto t he
11-25
of different petrochemicals. The NPP also satisfy Hermanson’s definition
of industrial complex "as an ensemble of technologically interconnected industrial units usually located on a given territory".
From a study based on the firms which set up branches in the state of Bahia using the tax incentives given by the government, there is an input- output table that indicates close linkages between the chemical segments of an industry with other sectors of the economy (table n.2.5). This table indicates only relationships between different kinds of new-coming industries which, on its own, does not mean their integration to the regional economy.
The function of a pole, however, is not only to sell its production to other companies of the same pole, but to create an environment suitable for other satellite companies to appear. Selling products is not only a proper function but vital to the survival of any industry. The concept of pole goes beyond that however. It should sell its products to companies it helps to create. The appearance of a large linkage of industries in the North East, besides being an objective of the Government plans for the region is also fitted to the requirements for a healthy functioning of a growth pole. The extent to which Camacari will be able to do that is, then, a double govern ment task in its role of creating more jobs in the area and also in its
entrepreneurial role as a shareholder of the petrochemical pole. It is
also a business job in its social objectives and in the reasoning behind the creation of the pole, and a consequence of the public incentives given to the installation of that complex.
li) List of Companies to be considered in this work
In Appendix A, there are more details about the firms of the pole as
they appeared in diagram n.2.3. They are presented according to location
and in alphabetical order with additional data on the year of starting operation and jobs. It includes firms in project stage as well. There are
P E T R O B R A S
11-2 6
Diagram Mo. 2/3 - Interconnections among the firms of the pole