This past weekend I made another trip out of Sao Paulo to the relaxing town by the name of Araxa, in the State of Minas Gerais, Brazil. It was one of the most memorable experiences I've ever had in life and you'll shortly read why. We made the trip on a last minute notice for a company visit to CBMM, the worlds leading company mining niobium, which is used to strengthen steel. So...there will certainly be some fun stuff in this post because we were hosted for a lavish weekend and even made our way there on a private jet but I learned a lot about business so I'm hoping that my fellow UC LCB readers will enjoy this management case study, too! A link to the pictures (company, hotel, plane, animals, etc.) is at the end!
Well first thing is first...the private plane! Easily one of the coolest things I've done. The whole treatment was awesome. We just pulled up to the hangar and we were greeted with pao de queijo (cheese bread - brazilian famous) and refreshments in this swanky waiting area. Then we just boarded the plane and took off! No TSA, no waiting in line, no tickets, no passports, no turning off electronics, no baggage hassle...you name it, it didn't exist haha. I can see why people get used to private travel! Not to mention the plane itself was a billion times more comfortable than any commercial flight I've ever been on. I'm dreaming...one day haha. Here are some video's of our experience (two more...video, video)! We arrived and were given even more of a surprise...the company was picking up the tab on our entire weekend! We were staying at this huge palace resort that was once the summer home of Portuguese royalty and we would be welcomed with open arms (drinks, food, massages at the spa, and everything else included).
This was all good and fun but I was really mind boggled with the company's approach to management, socio-economic development, and sustainability...so for my business readers...here comes the real fun stuff!
CBMM is the world's leading company producing niobium, an important natural resource that dramatically increases steel's durability and strength. Every steel manufacturer in the world is its customer. It currently has 85% of the world's market share in this sector. We spent the entire day with the company's CEO and General Counsel and I was instantly engrossed in how personable both of them were and how casual they were too (jeans and a polo). The first question was obvious, how can mining be sustainable? Well, my visit convinced me to answer this question differently than I otherwise would have so read on...
Tadeu (CEO) greeted us with one common theme, "sustainable products must be sustainable in every way and that's the way I am running the business." We met him in the company's human development center, a 30 year old facility that didn't look a day old. The center was built to provide a Pre-K through K education center for employees' children and also give those employees training. Tadeu was completely focused on family economics. "I cannot sell a sustainable product in a developed company without a first-class workforce." He knew that he would have to build strategic investment with his workforce so that he could develop the business. What were people in Brazil looking for? Education! In the 1980's more than 50% of Brazil's population had never been to school, wreaking havoc on the nation's economy from a development perspective. CBMM took matters into its own hands by creating the type of socio-economic development it wanted to see in the country and built it's development center and a residential community for its workforce. It also built a database to track the socio-economic status of every one of its 1800 employees working worldwide. The database included information about the family's income, medical history, access to healthcare and education, information on children, family life, and even included pictures of previous homes the worker's owned and the types of homes they live in today. The CEO essentially said his goal was to increase everyone's socio-economic status multi-fold. This was even proved by the residential community that the company built with over 150 homes that were given to its workers. Workers slowly built equity into the homes and now they all own them and have their own community governance structure. The company has 90% of its workforce owning its own home with the goal of getting to 100%.
CMBB is a low-profile business...you won't see them on the front page of the Wall Street Journal (which is probably a good thing) but I tell you what, I was instantly impressed with the leadership style and focus on people. Even more impressive was the CEO's following comment, "this is not charity what we have here...this is good management." CBMM believes that it can gain even more customers if it has the opportunity to show its partners and customers exactly what they're doing on-site to positively impact the lives of its workforce. I couldn't agree more.
Back to education. The company now educates between 300-400 pre-K students each and every year and then subsidizes education for every employee's child through University at 80% of cost. The ROI has been amazing. Turnover rates are at less than 1% and are mostly attributed to retirement. Absenteeism at the worksite is less than 0.5%. The performance of the students is incredible and most of them go on to have extremely successful careers in business, engineering, and medicine...all because they got a good head start and were built on the values and morals of an ethical and equitable company and its management system. The approach ties workers to the company in a way that 9-5 can't and it's having a significant impact in the lives of people around the country.
Capitalism took matters into its own hands for Brazil's economic development and CBMM is leading the way. Before the big beautiful luxury hotel was in town, the company had to build a guest house to host guests (equally as beautiful) and used some of the city's 70% of tax revenues attributed from the company or its workforce to reinstate the hotel some 12 years ago. With minimum wage over 4 times the required minimum, a profit sharing program awarding 6-7 times salary, and a lifetime pension, CBMM has single-handedly developed an entire town from scratch...it is simply incredible.
Some of you might be a little more interested in the niobium...I sure was. It is an alloy used in steel making. It's not a rare resource but it's difficult to find in a good position with good exporting abilities, making this mine especially prosperous. 95% of the product is exported, mostly because Brazil isn't a huge steel making country. Niobium is all about making steel safe and strong. It's used in nearly everything and we even watched some scary movies of cars crashing (those with niobium withstood nearly all crashes when those that didn't caused instant death). It is also proven to have saved millions of people in oil pipeline bursts (or better lack thereof) because it doesn't make the steel break, only bulge. Spending just $9USD on niobium per one car will reduce the car's weight by 100kg and save one litre of fuel and 2.2 tons of CO2 emissions in the vehicle's lifetime which the emissions savings are more than the total amount of carbon dioxide emitted during the production of all the steel in the vehicle anyway. If niobium weren't mined, these things wouldn't happen. That's the pitch for why it is sustainable! With a lifetime supply left and its many other uses (MRI technology, camera lenses), CBMM believes they are making the world a better and safer place to live day in and day out. Only 3% of all the ore they mine is actually niobium but they recycle or process the other 97% in gigantic manmade mineral lakes on the property. Over 90% of the water that is used is recycled and the air quality in the mine is actually 5 times more clean than the air quality in the city. They are ahead of the game having 8 times less emissions than regulations permit and they desire to continue setting the trend. There's double the amount of vegetation on the mine property than there was 50 years ago and the company also started a plant and animal nursery where they breed endangered species.
The message was all about the two most important things that make the world a better place: Education & Ethics. The rest is money and that is just a number on a computer screen, we don't even see it. There was even some questions on workplace safety. The response: "We don't have to stress much about that. We've created such an incredible environment and our employees have education, healthcare, pensions, homes, etc at their fingertips working for us that they are so mentally engaged in their jobs to do well to stay that we rarely ever have a safety breach". Training may be costly but it doesn't really matter if the employee gives more than 30 years of service to the company. Again, I was impressed with the executives' attitudes and they even knew every employee's name in the entire mine....even the cooks who made us a delicious brazilian lunch. I was amazed!
Just when I thought the day was over, we stopped at the company's entrance, where we had to plant our group tree. Every visitor must plant a tree on the grounds and the company puts a plaque next to the tree with your name engraved in it. We were also given company gifts made by local artisans in an effort to help spur that industry as well. Everything was incredibly coordinated and so purposeful.
I hope I was able to give some good details and get some of the future leaders reading this blog some ideas about how to run a great company and how to invest in PEOPLE! It's not hard, it's the little things that count.