Colombia 2014 | INDUSTRY | INTERVIEW

TBY talks to Rodolfo Ramírez, President and General Manager for Colombia & Ecuador, PPG Industries, on management strategy, competition, and the legal and regulatory framework in Colombia.

Rodolfo Ramírez
Rodolfo Ramírez studied Industrial & Manufacturing Engineering with a minor in business administration at the Universidad Iberoamericana and Oregon State University, and went on to study further at the ITESM Campus Querétaro, ITESM Sonora Norte in Hermosillo, and IPADE Business School in Mexico City. His professional career has included such positions as regional manager for PPG in various parts of Mexico, Automotive Recovery Project Manager in São Paulo, Brazil, and a range of other senior management posts.

What has underpinned your success?

When PPG acquired Colpisa in Medellín, it provided additional production capacity in Colombia, which has helped us grow in the region. Our success is also the result of diversifying the end-use markets we supply. We have a sustained focus on petrochemical and oil and gas industry coatings. However, since 2012, we have also entered other markets, such as transportation, automotive, and refinish, which we distribute to the market through a third party.

How has your product portfolio evolved in recent years in Latin America?

PPG is known in Latin America for its technological advantage. One of the benefits of the Latin American market, and more specifically, Colombia, is that we have the technology available first-hand. We offer our customers the commercial benefit of unique and innovative products. This means that apart from reducing costs, they can also differentiate themselves from their competitors. Our portfolio provides them with the tools needed for growth.

How would you characterize the competition in Colombia?

Ours is a highly competitive market. Architectural applications account for 50% of the coatings segment, not just in the region, with the remainder spread between industrial coatings and associated products for the oil and gas segments. Colombia is becoming a mature market today, as we are witnessing the consolidation of the sector and a reduction in the number of companies. Technology is available through both joint ventures and, as in our case, direct participation. This consolidation will likely continue, whereby in five or 10 years, perhaps five or six large companies will have acquired the small-scale manufacturers and captured the market.

“The legal protection that Colombia affords foreign investors is one of the key reasons why PPG and other foreign entities are investing in this country."

What is the potential for growth in the Colombian market?

PPG in Colombia acts as a regional hub. We see it as an opportunity for the Andean region. Despite recent years of slow growth, we foresee the economy growing at an average of around 5% per year for the next five or six years. With these figures, the government needs to implement the infrastructure expenditure that had been postponed in the past. That will give the industry the opportunity to grow.

What are your targets for expansion in Latin America?

Latin America is a key focus region for the company. We currently have operations in Mexico, Brazil, and Argentina, as well as operations in Colombia. We would like to position ourselves to be among the Top-two companies in the retail industry.

In terms of the legal and regulatory framework, what advantages does Colombia offer?

The legal protection that Colombia affords foreign investors is one of the key reasons why PPG and other foreign entities are investing in this country. This said, there is a need to broadly modify the legal framework in such spheres as environmental law. This could provide the company additional growth potential and increase the appetite of other companies to continue investing in the country.

What are your main environmental sustainability objectives?

We aim to remain the world's leading coatings and specialty products company with a focus on sustainability to ensure the success and lasting presence of our company for the benefit of our customers, our employees, our shareholders, our neighbors, and our suppliers. We act in a manner that helps to ensure the longevity and resilience of our environment, our economies, and our society. We aim to reduce spills and releases by 10% per year, hazardous waste to landfill by 20% by 2020, non-hazardous waste to landfill by 10% by 2020, and greenhouse gas emission intensity by 1.5% per year. In addition, we aim to reduce PPG illness and injury rates by 5% per year, and implement wellness programs at all PPG facilities globally.

What coating applications have the greatest commercial potential in Colombia?

There are opportunities across all segments. A combination of technology and innovation enables the customer to launch a better, and occasionally, a unique product to the market. All segments represent an opportunity and could be viewed as strategically important for us and the local market.

What is PPG's short-term investment plan for Colombia?

We are constantly investigating opportunities, and any prospective venture that makes sound business sense merits evaluation. We are committed to the country once we identify where we could best support the industry and our stakeholders, and adapt to it accordingly.

What is your medium term outlook for Colombia's industrial sector?

Government policy will play an important role—open business and free trade agreements (FTAs) are important in helping our sector thrive. And while these may pressure the industry, once it adapts and fully comprehends the nature of the competition, it has the potential to grow stronger. If Colombia continues to focus on bringing value and generating more local knowledge and innovation it will be able to grow, while industry becomes more sustainable. On the other hand, if the region seeks protectionism, it is likely to fail. An industry cannot grow by being safeguarded by the government, as it needs to focus on what can be done in order to improve current standards. I am a true believer in the fact that the Colombian industry will continue to grow, and that we will isolate niches in the market where we have advantages that can exceed those offered by foreign trade.