Cashing In on Security Worries


By Simon Romero

New York Times
July 24, 1999

One morning in March, two gunmen unleashed a point-blank barrage at the driver of a sedan carrying the three school-age children of Jorge Paulo Lemann, one of Brazil's wealthiest men. The car's glass did not shatter. The car was armored, so just one of the 20 bullets fired in the kidnapping attempt punctured the driver's window, grazing his right arm. He sped to safety, weaving through the quiet, tree-lined streets of the exclusive Jardim Europa neighborhood. Mr. Lemann, a former banker who is now an investor in Latin America's largest brewery, declined to comment on the incident. Like many other wealthy individuals in Brazil, where publicity is linked to the fear of kidnapping, he shuns the media.

But the company that armored his car, the O'Gara-Hess & Eisenhardt Armoring Company, which is based in Fairfield, Ohio, and has various operations around the world, is basking in the media coverage. O'Gara's sales of armoring for cars at its Sao Paulo office tripled after the incident, to 90 vehicles a month from 30. And business is also booming at the 20 or so other car-armoring companies here. ''We prosper when times are bad,'' said Adilson Parrella, president of O'Gara's Brazilian subsidiary.

While Brazil's elite remains relatively well off in a stagnant economy, large swaths of society are struggling. And perhaps no trend better illustrates the strain placed on Brazilian society by a skewed income gap than the recent surge in car armoring. This is especially true in urban centers like Sao Paulo, where unemployment is at a record high. With the gross domestic product expected to fall by 1 percent this year, car sales as a whole are declining. According to the National Association of Car Manufacturers, sales fell nearly 20 percent in June from June 1998. The main reason for the slump is the high interest rates the Government is using to control inflation and attract foreign capital. Those same rates, hovering above 20 percent, have helped provide a shield against the recession for wealthy Brazilians who invest in the Government's high-yielding bonds. Combined with impressive returns on the Brazilian stock market, most investors here have done reasonably well since the currency, the real, was devalued in January.

Representatives from car-armoring companies say the market for such vehicles is expected to rise to $70 million this year, a 60 percent increase from 1998. O'Gara, a unit of the Kroll O'Gara Company, is the market leader, vying for customers with domestic competitors like Inbrafiltro Industria e Comercio. ''More than half the cars parked outside the finest restaurants of this city are armored,'' said Marcelo Silva, the sales manager at Inbrafiltro's armoring division. Inbrafiltro, which uses Brazilian-made bullet-resistant glass, charges about 40,000 reais, or $22,200, to armor an automobile, while O'Gara, which uses mainly imported material, charges $35,000 for an average job. All this is on top of the normal price of the car, which tends to run high in Brazil because of tariffs on imported autos. Additional items like anti-explosive gas tanks, nonpuncturing car batteries, sirens, walkie-talkie systems and armoring resistant to gunfire from automatic weapons like AK-47's can more than double the price.

In a reflection of the cars favored by prosperous Paulistanos, as this city's residents are called, BMW's, Mercedes and Jeep Cherokees are the most-sought-after models for armoring. The Volvo Car Corporation, of Sweden, a unit of the Ford Motor Company, is looking to join this group through an agreement formed this month with O'Gara. Under the accord, Volvo's Brazilian subsidiary agreed to work exclusively with O'Gara to armor new cars for an average added cost of $38,000. The advantage of the deal for the consumer in search of an armoring job will be a brand new Volvo with O'Gara armoring, sold with a guarantee.

''We're providing added value to the existing image of Volvo as a very safe automobile,'' said Luis Carlos Name Pimenta, head of Volvo's operations for Mercosur, the South American trade bloc consisting of Brazil, Argentina, Paraguay and Uruguay. The two companies said they expected sales of $400,000 a month from the agreement. The Volvos will be armored on their arrival in Brazil from factories in Sweden, Belgium and Holland. While some Brazilians are rushing to buy such vehicles, others are trying to decipher their allure.

''It is emblematic of the end of a society,'' said Ignacio de Loyola Brandao, a writer whose 1982 novel, ''And Still the Earth,'' is a science fiction account of Sao Paulo gone awry in the future. ''Soon the haves will circulate throughout the city in personal tanks,'' Mr. Brandao said in an interview. ''And the misery, the banditry, the conditions that make this possible will coexist with this perversity.''

Sao Paulo was not always a city of such extremes. In 1960, before some 46 million Brazilians left rural areas for cities in a three-decade migration that was one of the largest of the 20th century, Sao Paulo was a relatively calm city of 3.7 million. And income disparities across Brazilian society were not as sharp. Then, the city's population was served by an extensive network of trolleys and buses, along with 164,000 private automobiles, according to the Fernand Braudel Institute of World Economics, a research center here. Today, there are roughly 17 million people in Sao Paulo and 5.1 million cars.

The city underwent a metamorphosis to make way for all of the cars. The trolleys were junked and their tracks were torn out, cobblestone streets were widened into vast thoroughfares and tunnels were built under the city center. Even more than in most cities, pedestrians were relegated to second-class status. With a new, car-dominated Sao Paulo chiseled out of the old, another important trend was changing urban life: rising crime. Afraid of muggings and other street crime, many well-off Paulistanos have retreated in the last 20 years into gated communities with names like Alphaville or Mountain Village.

According to Tulio Kahn, a United Nations researcher here who has studied the rise of urban violence, the same fear that is fueling the increase in armored-car sales and the cordoning off of residential areas has also contributed to the rapid growth of private security services. In the state of Sao Paulo, which includes the city proper and surrounding regions with a combined population of 35 million, there are about 400,000 private security guards, compared with 120,000 police officers. A third of the citizens of Sao Paulo pay security guards to watch over their homes, according to United Nations figures.

Much of the recent concern over crime has been centered around the automobile, though. There were 23,562 car robberies in the first quarter of 1999, a 54 percent increase from the period a year earlier. ''Car theft has grown more than any other type of crime,'' Mr. Kahn said. But does the threat of having your car stolen justify the expense of having it armored? The answer may have more to do with the perception of fear and with the disposable income of Brazil's wealthy than with the probability of life-threatening crime while one is driving. Drivers for years have been vulnerable to muggings at intersections, and many habitually speed through red lights at night or when traffic is light. In Rio de Janeiro, in fact, officials recently told drivers they would not be fined for running red lights at night. But carjackings or the type of holdups involving automobiles that end in gunfire are far less common than car thefts, analysts said.

''The rush for armored cars is more about displaying status than protecting oneself,'' said Jose Vicente da Silva Filho, a former colonel in the military police who is now a researcher at the Fernand Braudel Institute.

According to Mr. da Silva, Sao Paulo had 5,157 homicides last year. Yet only about 200 of those murders were related to robberies. And in a display of how violence plagues poor neighborhoods much more than rich ones, the more prosperous districts were relatively free of murders. For instance, in the police district encompassing the prosperous neighborhoods known as Jardins, there were no homicides in 1998. In nearby Jardim Angela, police registered 195 murders last year, or an average of 16.3 a month. Yet few armored-car owners from Jardins have ever ventured close to Jardim Angela. ''If someone insists on driving a BMW around Sao Paulo, I'd advise them to put 1,000 reais ($555) in their glove compartment instead of spending 40,000 to armor their car,'' Mr. da Silva said. ''Give the 1,000 reais to the bandit. It's cheaper.''

For most people here, like Ana Carolina Bueno Abe, a 24-year-old pharmaceuticals saleswoman, less might do. Early one morning in April, shortly after the Lemann kidnapping attempt, two adolescent girls approached Ms. Abe's car as she waited at a red light. One girl stretched her arm through the window and held a piece of broken glass to her throat, demanding the money from her purse. ''I only had 2 reais in cash,'' -- about $1.10, Ms. Abe said. ''I gave it to her and she walked away.''

More Information on Inequality

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.