Editor: Would you give our readers something about your background and experience? How did you come to Embraco?
Fischer: I graduated from the Law School of Joinville, which is located in my hometown in the State of Santa Catarina in the southern region of Brazil, and went on to receive a Master's degree in the field of corporate law in São Paulo, at the Pontifícia Universidade Católica, in the late 90's. By that time I was already an in-house attorney working for Brasmotor, one of Embraco's controlling shareholders, and consequently carrying out legal services to Embraco and its affiliated companies as well, but based in São Paulo. In 1999 I was invited to become head of Embraco's Corporate Legal Services. This was a very great step forward in my career and a wonderful opportunity. I am most grateful. During the last 17 years of the practice of law, I have had the good fortune to experience and perform activities encompassing, inter alia, mergers and acquisitions, R&D transactions (IPR), international operations in Latin America, Europe, Asia, the Middle East, the United States, Canada and Russia.
Editor: In what kinds of activities is Embraco engaged?
Fischer: Embraco is a multinational and listed joint stock company incorporated in 1971. It has developed into one of the leaders of the refrigeration industry, initially in Brazil and now on a worldwide basis (plants located in Brazil, Italy, Slovakia and China). Its dominant activity is the manufacture and sale of compressors for refrigeration. With approximately 9,000 employees and a production capacity of some 24 million compressors per year, Embraco is very much a part of the global economy. Some 70% of the company's Brazilian production is exported each year. It is also an enterprise with a strong technological emphasis, with laboratories in Brazil, Italy, Slovakia, China and the U.S. Embraco's vision is to be, in all markets, the preferred supplier of cooling solutions.
Editor: Can you tell us something about your position? What is your relationship to the Chief Executive Officer of Embraco, to other members of the senior management team and to the governing board?
Fischer: I report directly to the Chief Financial Officer and provide direct support to the senior management group, which is comprised of the Chief Executive Officer, the Board of Officers, the Board of Directors and the Statutory Audit Committee of Embraco and its controlled companies. My function includes a variety of preventative activities and, whenever necessary, corrective initiatives.
Editor: Do you supervise a legal staff? What about the relations between Corporate Legal Services and the various branch offices of Embraco?
Fischer: Our office includes six attorneys, two administrative assistants and a trainee, all of whom are subject to my supervision. Our work is focused mainly on corporate, environmental, tax, consumer, social security and commercial law issues, together with a variety of intellectual property and e-commerce matters. Litigation is usually outsourced, and employment and labor issues fall under the management of Embraco's Human Resources Department. Each branch office, laboratory and plant of Embraco is entitled to support from Corporate Legal Services, whether located in Brazil or overseas, so we have extensive and ongoing contacts with operations in a variety of jurisdictions, including contacts with the law firms that serve those operations.
Editor: Have you had experience in working with American lawyers and law firms?
Fischer: Yes, and quite extensive experience. The U.S. is the marketplace where Embraco holds its major market share. We work closely with our American counterparts on behalf of Embraco's interests in that arena. I hasten to add, the U.S. legal system sets global standards for preventative and corrective initiatives for our industry and for a great many others, so being in compliance with the requirements of the U.S. statutory regime is the way by which we properly safeguard Embraco's interests on a global basis. We are very attentive to, and grateful for the support of, the American lawyers with whom we work.
Editor: Will you tell us about Brazil as a place to do business for foreign enterprises?
Fischer: In recent decades Brazil has undergone a remarkable transformation from economic isolation to global integration. There was a time when the country was inward-looking and its sole source of inspiration for development, both intellectual and material, was internal. Today things are completely different. Not only is Brazil a leading emerging market for North American enterprises, and for the entire international business community, but Brazilian enterprises are competing successfully in a variety of overseas markets. An awareness of Brazilian capability in the international arena is something that attracts international investment to Brazil because it constitutes a very positive comment on the diligence, ingenuity and capability of the Brazilian workforce. In just the last few months the "Brazilian risk" - as rated by international investment institutions - has dropped to approximately 400 points, a very positive development for the country.
Editor: Can you comment on the legal climate in Brazil? Is it advantageous to business?
Fischer: By containing the chronic inflation that was so destructive of the investment climate in the past, and by engaging in a series of tax, employment and labor, social security and judiciary reforms, the country has become very attractive to international business. Investors, both domestic and foreign, have sufficient confidence in the country, its economy and its legal system, to make major commitments, and the inflow of substantial capital is the result. Foreign investors believe that Brazil is a safe investment destination. Taxes are predictable. Contracts are enforceable. The laws in place are comprehensible, and they are administered by a legal system that is both objective and transparent. All of this serves to boost internal consumption, which, in turn, leads to an increase in foreign investment levels. Brazil recognizes, as do all countries which aspire to be part of the global economy, that the rule of law is crucial to a prosperous economy. In addition to this recognition, Brazil's legal framework moves in tandem with the rapidly changing economic realities that come with participation in the global economy. That framework, grounded by the rule of law, makes for the predictable environment that must be in place to attract investment. In the absence of such an environment, as we in Brazil know well, internal wealth goes underground and external wealth remains external.
Editor: Are there any special incentives that Brazil offers to enterprises locating in the country or in particular areas, such as the Northeast?
Fischer: Yes, in certain circumstances and in certain areas of the economy and country. The incentives are more headed to income tax and VAT relief for a determined period of time, and they are available to both domestic and foreign investors. The specific regions of the country that have been targeted to benefit from these incentives are, of course, those which have experienced an economic downturn or, for a variety of reasons, not participated in the economic development enjoyed by other parts of the country. The type of enterprise is also important, since the incentives are extended to companies which encourage (a) the export of goods from the region, and the corresponding inflow of income; (b) the implementation of research and development in the region; and (c) the generation of jobs, the improvement of job opportunities for the local workforce and the enhancement of the skill level of that workforce. All of this represents a long-term commitment, and what this effort aims to accomplish is a sustainable economy in those regions of the country.
Editor: What about employment? Do the employment laws provide sufficient flexibility for employment arrangements?
Fischer: There is considerable flexibility in the area of employment regulation, notwithstanding the fact that the Labor Courts have traditionally taken a paternalistic approach to the claims of employees. Even the unions recognize that an employer has the right to terminate without cause on the payment of compensation that is determined in advance, and dismissal without compensation is the rule where there is cause for termination. We are really talking about principles here, not money, since the labor costs in Brazil are so much lower than those in the U.S. or Western Europe.
Editor: Has Mercosur been a good thing for Brazil?
Fischer: The Southern Common Market - Mercosur - Agreement was signed in 1991 among Argentina, Brazil, Paraguay and Uruguay for the purpose of establishing an integrated market among the four countries.
The intention was, and is, to encourage the free movement of goods and services throughout the region by eliminating internal custom duties and tariffs and by establishing one external tariff and a common trade policy. In addition, Mercosur seeks to bring about the coordination of policies among the participating countries in such areas as foreign trade, fiscal and monetary matters, foreign exchange, as well as the coordination of positions in international economic and commercial forums. A great deal of progress has been made, but there is still a number of things that remain to be accomplished. There is confidence that in the years to come, the participants in Mercosur will benefit from the integration of their economies and economic policies.