TBY talks to Pedro Esteva, President of IMCA, on the inception of the company, the development of the mining and agriculture industries, and investing in technology.
THE BUSINESS YEAR IMCA represents some of the world’s leading machinery brands in the Dominican Republic. How did it achieve this position?
PEDRO ESTEVA IMCA was founded in 1945, and the founders of the company wanted to help grow the country after the end of World War II. They opened IMCA with the idea of representing machinery that would help create infrastructure for the country, such as roads, aqueducts, and buildings, as well as grow the agriculture sector in order to feed Dominicans. Over the years, we have mainly provided services to the mining and construction industries. Caterpillar and John Deere also develop products that serve the agriculture market. As Caterpillar builds smaller machinery, we also work with local contractors to build apartments and houses in the Dominican Republic.
How do you see the development of the mining industry in the country, and how significant is it to your business?
In the last three years, mining has meant about 30% of our business. Around 30% of my employees are also directly linked to the mining sector in the Dominican Republic. Technology wise, miners are very strict with time utilization. We need to have well-trained technicians, which is why IMCA is the founder of a private initiative for technical education in the Dominican Republic. We have improved the overall level of the technicians, driven by the needs of the mining sector in the country. Most mining is carried out by Canadian companies in the Dominican Republic, and these companies also have operations in several countries around the world using international standards. In response, we have to align our level of services to worldwide standards. For the last three to four years, we have also incorporated IT into the products we provide.
How much has the company invested in these technical education programs?
So far we have invested $2.5 million, and over the last five years alone we have allocated $1.2 million to train teachers and open chemistry, physics, and IT labs. IMCA has also provided technical material to help instructors teach these concepts in a contextual way. That is why we hired a company called Center for Occupational Research (CORD) from Waco, Texas. In the same technical school, we are providing this training to all students regardless of their specializations. This particular vocational school has seven specializations, but we only hire for the internal combustion specialization. For the internal combustion specialization, we made a $1.3 million investment by building a service shop inside the school. Now, when students come to work at IMCA, they have already practiced in a shop that is equal to the one we have here, with the same tools. On top of this $2.5 million investment, Caterpillar from the US donated 10 18-liter engines, a motograder, a backhoe loader, and an excavator. Before we hired graduates from this vocational school, it would take us 18 months to have them be able to perform world-class standard jobs in our company, but now it only takes us only three months.
What are the latest technological solutions that IMCA has brought to the country?
This is technology that is available worldwide, meaning satellite and GPS connectivity. Basically, you can perform prospecting on the place that you will mine. That prospecting is built into the equipment computer and into the hydraulics of the equipment. Rather than using a geologist to help the operator of the machinery, the machinery itself will display whatever needs to be excavated in red on a panel inside the tractor. When it turns green, the job is done. It is a more efficient process. That technology also helps notify the machinery administration when the machine is reaching maintenance time. Also, if there is an alarm on the machine for low fuel, low lubricant, or high temperature, it will also be sent to the laptop of the administrator. It will help in performing preventative maintenance on a piece of machinery, rather than repairing it after failure.
Is the projected demand for other construction activities also growing?
We have fantastic prospects for infrastructure. This is a country of 10 million people, and most of the infrastructure needs to be improved and adapted to the projected growth of the Dominican Republic. People think it is going to keep growing above 5% over the next decade. We also have Haiti right next to us, and we provide services and goods for at least 4 million Haitians. We send dairy products, agriculture products, plastic goods, and more. This is an economy that not only produces for the Dominican people, but also for at least 4 million Haitians and for another 5 million tourists that stay in the Dominican Republic for at least two weeks every year.
Since last year, IMCA also sells machinery for the harvest of sugar cane. What are the prospects for this business line?
CAMECO used to be a US-based company, and John Deere did not make any products for the sugar cane industry. It went out and purchased CAMECO, but the company is no longer called CAMECO, it is called John Deere Sugar Products. In the past, we were only selling wheel tractors to the sugar industry, but not harvesters or loaders. It is not a very big market compared to the total contribution of the rest of the markets that we serve. There are plenty of workers that still do some of the labor that is required in this industry by hand in the Dominican Republic. This is the reason why the mechanization sugar industry is not as it should be.
What are IMCA’s advantages for expansion in the region?
We have a regional label on the company, as it provides services to both the Dominican Republic and Jamaica. Whatever we do is a standard in both countries. IMCA does not have a separate set of rules for each country. When we talk to Caterpillar, John Deere, Michelin, and Exxon-Mobil, we are clearly telling them that we want to have more territory in the region. That is the reason why we have the regional label. If we are going to be in Cuba, Puerto Rico, or Haiti, we will provide the same level of service that we provide today. Because of laws in the US, we cannot act as a dealer for certain products in Cuba. However, when it is clear that it is good to go, then we will pursue that market too.
Why can the Dominican Republic be considered a natural market for the Michelin and BF Goodrich brands?
In the Dominican Republic we have what we call natural markets, which means mining, construction, industry, commerce, and agriculture. It was a very good alignment to represent Michelin and BF Goodrich, because in the natural market they basically buy everything that we sell because of our credibility and the quality of the products. Michelin is number one and BF Goodrich is a company that is 100% owned by Michelin. The retail market is where we are really working on deepening our penetration of the market. In 2012 alone we have opened eight Michelin service centers. We run four of them, and the other four are concessions to independent companies. The automotive market has always been strong, but we also import double the amount of used vehicles. It is a growing market, and automotive dealers are very strong in the Dominican Republic. As soon as the buying power of the average Dominican grows, and the taxes are lowered, we are going to see more cars being sold. Since we have been representing Michelin over the last two years and BF Goodrich for the last year, we have a great deal of room to grow our market share.
This interview will be published in 'The Business Year: Dominican Republic 2013'. To pre-subscribe please e-mail us at firstname.lastname@example.org
© The Business Year - September 2012