Thank you so much for joining us all the way from Chile.
I love the backdrop with Latin America perfectly in view there.
Excellent.
I haven't given your background yet to everyone who's watching,
and it's always handy for me, actually, if you recap on it.
So I thought we'd just start off with a little bit of context
about how you got into circular economy back in Chile.
Sure.
I'm a mechanical engineer
from the Universidad Tecnica Santa Maria in Chile,
with a Masters degree in Mechanical Engineering from the
University of Madison Wisconsin in the US,
with several entrepreneurship and innovation courses in different
universities around the world.
I'm an interpreter.
I'm part of this big family of interpreters called Endeavor, and
I'm part of the Directors Board, also in Chile.
I'm the CEO and Co-Founder of this family business
that is called Neptuno Pumps, located in the north of Chile,
right in the driest place on Earth in the Altacama desert.
(Interviewer) And what does Neptuno Pumps do?
We design and manufacture centrifugal pumps
for industrial applications for really heavy-duty applications,
a lot of abrasive and corrosive fluid transportation in different industries.
(Interviewer) So, pumps is quite an extractive industry.
Where is the link between working in that and circular economy?
Well, the world market of pumps is around $21 billion dollars per year
and it's really important technology and equipment for civilization as we know it.
I mean everything is related to water,
all the industries, and all our cities and societies.
They are so important that sometimes they become invisible.
The turnaround sometimes is so big
that this linear model was really used
to buy new pumps and throw away the old ones.
So we saw a business opportunity in this huge market
in order to create the first circular economy business model
with industrial pumps.
Great, so actually,
as we go through this discussion more broadly
about circular economy in Latin America today,
some of this is also informed by your experience in the family business,
working with pumps and remanufacturing the pumps.
(Petar) Absolutely.
Okay, great. There's one other hat that you wear
that we were discussing before this.
You've moved slightly from
just direct entrepreneurship
to also working with inspiring an ecosystem
of other entrepreneurs, which I believe is called
the Center for Innovation of Circular Economy, is that right?
That's right, yeah.
This trip started seven years ago with Neptuno Pumps.
We started promoting the circular economy
in Chile and in Latin America, but shortly we saw
that our network was growing so big and so fast around the world,
that we needed to push the circular economy further.
That's why four years ago, we founded
the first Center of Innovation and Circular Economy
in Chile and in Latin America.
And we're really happy to be present right now, not only in Chile,
but also in Peru, Colombia, Mexico, and Ecuador.
Great, to give me an idea, the Center for Innovation,
who is that working with?
Right now we're working with governments, policymakers, interpreters,
and organizations around Latin America.
Alright, well I'm sure we'll return to that later cause it sounds
like a lovely ecosystem that's involved with that.
But the title of today's discussion was around how circular economy and the
fourth Industrial Revolution can help drive prosperity in Latin America.
There's some big words in there and for context,
I wanted to hear your thoughts on what the Fourth Industrial Revolution means,
what does prosperity in Latin America mean,
what does circular economy in Latin America mean?
Give us your thoughts on what these big heavy words actually mean.
Before describing the Fourth Industrial Revolution, we need to know that
we had three previous Industrial Revolutions.
The First one was with steam or vapor-powered,
Second, automatization,
Third, the Internet, and right now
what we call the connection of atoms with bits.
The connection of the physical world with the digital world
is what we call the Fourth Industrial Revolution.
There are some important things to say when we discuss
the Fourth Industrial Revolution in Latin America,
because our region, particularly,
didn't have a really big role in the first three Industrial Revolutions.
That's why we think that through the circular economy,
Latin America can leapfrog to a Fourth Industrial Revolution.
Because all the technologies that the Industry 4.0 has created,
allow the creation of new circular business models,
and the circular economy promotes the creation of these new technologies.
That's interesting, I wasn't aware so much of the idea that Latin America
hadn't participated as much in the other industrial revolutions that have happened.
What are you thinking about when you say those previous revolutions
haven't had the full takeup in Latin America? Why do you say that?
In fact we had a role, in terms of providing the world, and specifically
the more developed countries, with our natural resources.
For example, the place that I'm in right now in the Atacama Desert
had a huge role with salt pepper and allowed the industrialization
of Agriculture around the world.
The same for copper, the same for other important materials,
but we didn't play a role in terms of developing new technologies
or in the creation of great industries in our region.
So, those are the opportunities we see right now
with the democratization of the Fourth Industrial Revolution.
When we see the lowering of the prices of technology, we can see that right now,
we can really industrialize the countries of Latin America,
and at the same time, create a circular economy business model.
Okay great, so I'm getting a sense that for you, what's exciting about
the Fourth Industrial Revolution is almost a localization of it
in Latin America.
Then actually, you have a sense that it can lead to local innovation
that actually Latin America can capture and potentially export the example
to other places.
Is that right - is that a fair summary?
Yeah, that's right, and I think we can create technologies
around the world-class industries we have in Latin America
that are all related to the linear economy
or through the production or exploitation of natural resources.
I think that's the particularity of the circular economy
and the first Industrial Revolution in Latin America -
that we can take advantage of these industries in order to start
the transition towards a circular economy.
Okay, interesting.
The other one I wanted to unpack a little bit was prosperity,
because I think it is something that we would all want to drive towards,
but it can mean many things to many different people and it can sometimes
feel a bit too aspirational and perhaps not grounded.
So, if you were going to root prosperity
in something you can see as an outcome,
what would prosperity look like in Latin America?
Well for us, it fits with the triple benefits of the circular economy:
Creation of high quality jobs, sustainable economic growth,
and fighting against climate change.
We need to remember that Latin America and most of our countries
are always in the top ten list of the most threatened places for climate change.
The other thing, as I said before, because we weren't part of the
first three Industrial Revolutions, we need to create high quality jobs.
I think that through the first Industrial Revolution
and the circular economy, we can create those.
In fact, there's a super interesting report from the
International Organization of Labor
that has a special chapter on circular economy in Latin America.
It says that it can create up to six million new high-quality jobs.
Do you have any examples of them? A challenge that sometimes comes our way,
if it's about the fourth Industrial Revolution,
that's about jobs being automated,
and this notion that there will be high quality jobs
perhaps disappears, or there will only be very few,
because it's for the very high skilled, but it's not going to provide
a lot of job opportunities.
Do you have examples that can counter that?
Sure, but first let me say that
the transformation towards a fourth Industrial Revolution -
it's so big, because you need to transfer
the energy matrix, the communication matrix,
and the transportation matrix.
So when people are afraid of the potential destruction of jobs
in the Industry 4.0, I think there's no need to worry about that,
because we have some examples, one is in the mining industry.
The automatization of all the mineral transportation
in the mining industry, I know the case for example,
in one mine site that it provides 2,000 jobs.
Right now they think that through automatization,
all these 2,000 jobs will be destroyed.
But in fact, 3,000 will be created, in terms of not only operations,
but also in the need of support, and creation of new technologies.
That's one really small example that we won't destroy jobs here,
but we will need more
and we will need to make new workers more skilled in these new jobs.
Ok great, so there's definitely something around the fourth Industrial Revolution
enabling new ways of working in terms of, for example,
automation a different way in which machinery can work.
Other examples that I've seen is how it can help capture data
so that you can track materials more easily,
and then that opens up alternative business model opportunities
for example, through sharing or through offering things as a service.
Yeah, for example in our business,
the pump or the fluid transportation business,
our customers don't want to own the pumps,
because they you don't know what to do when the life cycle ends.
So right now we're moving towards is product as service,
so I won't sell the pump, I want to sell the cubic meters per second
to our customers.
(Interviewer) Okay
That will need more skillful workers and technicians.
Zooming out again a little bit from this, what are the triggers?
I know you've mentioned the opportunity that the fourth Industrial Revolution
poses for Latin America.
You've also mentioned that the pressures of climate change
is a reason why perhaps people are looking at a new model.
Are there other things that are particular about Latin America,
which has currently got an economy that is driven a lot by
natural resource extraction?
And are there other triggers therefore about shifting it to a circular economy
that are local to the region?
Yeah, for example, in our region
we generate 160 million tons of solid waste per year.
That's 1.1 kilograms per day and the sad thing is that only
three percent of all this waste is recycled or reused.
So we have a huge opportunity in the creation of this waste -
we know that in the circular economy, waste is our resources.
When we compare these numbers to Europe, for example,
the generation of waste is not that different in Latin America
than in Europe, but when you compare the recycling rate,
here it's three percent
and the most advanced countries in Latin America are up to 10 percent.
Europe is 40%, 50%, 60%, so the huge opportunity we have there
in order to create or generate economic growth,
in order to create new jobs that can create wealth from this waste
and the opportunity to generate new business
or new circular business models is huge in our region.
You were mentioning that, for example in your own family business
around the pumps, the model is around remanufacturing and repairing.
Is that an industry that's still very much alive in Latin America?
Or would that need a bit of rekindling?
I think the definition for the last 100 years in Latin America
is repairing and remanufacturing.
I think it's part of our DNA and that's why the circular economy
makes so much sense in our region.
Right now, I think a lot of family-owned businesses are really comfortable
with the concept of the circular economy, because it's so natural for us.
It's like a rebirth of these business models
that for the last 50 or 60 years
were considered like bad quality ones or the businesses that
nobody wanted to be involved with.
But right now, all these entrepreneurs and these family-owned businesses
see a huge opportunity of creating a new story through what we've been doing
for the last 100 years.
What we've seen in Latin America and particularly in Chile
is that this movement absolutely started with the entrepreneurs.
I mean entrapreneurs were the driver of this process. Absolutely.
I've seen the same thing in Mexico with great entrepreneurs,
also in Colombia and Peru.
After this, all the governments start supporting and pushing.
In the case of Chile, it was great.
We have a corporation that supports entrepreneurs that establish
the circular economy as the backbone of the development strategy in Chile.
The same thing we're seeing in Mexico, as a country, but also in Mexico City,
which is a country in itself, I mean it's 22 million people.
Chile is 17 million people, so I am really happy
to see that also happening in Mexico.
Colombia also has a strategy for the circular economy.
So, the first step was entrepreneurs, the super powerful ecosystem
of entrepreneurs we have in Latin America,
and then government and organizations.
What does this mean for local community development?
Can local communities be included in this or are they at risk of being excluded
from this circular economy fourth Industrial Revolution transformation?
I think the circular economy is the only way to include communities.
Right now and through the deindustrialization we had
in Latin America and in Chile, communities were excluded
from economic development, because all the high quality jobs
and all the high-tech products were designed, manufactured,
and repaired overseas.
So the jobs that people had in places like my region were not high-quality jobs.
Through a circular economy, we can bring back local industries
through a circular economy business model
that can create these jobs incorporating new technologies.