COLOMBANG!

Colombia 2016 | INDUSTRY | INTERVIEW

TBY talks to Col. Juan Manuel Padilla Cepeda, General Manager of Indumil, on the affects of the exchange rate, innovation, and prospects for the future.

Col. Juan Manuel Padilla Cepeda
BIOGRAPHY
Col. Juan Manuel Padilla Cepeda graduated as an infantry second lieutenant from the General José María Córdova Military Academy in 1987. Colonel Padilla also has a bachelor’s degree in business management, a postgraduate degree in human rights and international humanitarian law from the Nueva Granada University, and a postgraduate degree from the Colombian War College. He attended the Higher Business Direction Program (PADE) at Inalde Business School. In 2014 he was the Colombian Military Representative to NATO in Belgium. After 30 years of service he retired from active duty in February 2015 when he was appointed as the General Manager of the Colombian Military Industry.

How is the dollar exchange rate affecting your growth?

We expect growth to be in the double digits in 2016. In 2015, our growth will be similar to 2014 — around 5-6% —­ but the situation with the dollar is going to impact us significantly; most of our factories work with raw material coming from abroad, especially explosives. Explosives use ammonium nitrate, which is something not really produced in the area. This kind of raw material has to be imported from Eastern Europe or Asia. We export about 2.4% of the production and are trying to increase exports but, until now, our focus has been to produce for consumption within the country. In the last three to four years, Indumil has been looking to export more, but so far it is a small part of our total production.

What steps has Indumil taken over the past years to diversify its product portfolio?

Indumil has to perform based on what the constitution dictates—to produce and commercialize arms, ammunitions, and explosives. In the beginning explosives was a minor business line for us; however, it is growing, in large part due to mining activities and the construction of mining roads and tunnels. The core of our business has not changed necessarily, but it has given us the opportunity to expand our business. In Colombia we have a different situation compared to the rest of Latin America or even the whole world, as private companies are not involved in the production and commercialization of arms and explosives.

What are some examples of research by Indumil that has increased innovation in Colombia?

There are many things that we have done in the past; for example, we invested considerable resources in developing prosthetic arms and legs for people that were injured in combat. That is a project that we are undertaking with the Universidad Militar. Currently, we are investing heavily in mining research. Right now we have a scientific and technical research plan in one of our factories, in collaboration with universities and the Presidential Office in charge of mining, to conduct research on increasing efficiency in mining.

What are your main priorities for Indumil the coming years?

Our first priority is growth. We want to diversify the portfolio that we are offering to our customers, not only in terms of products but also in terms of services. Indumil is a production-focused company but we have not been providing the service to our customers that we should. If we provide an explosive, we should also provide the knowledge of how to use it, such as the calculations needed to use the explosive. We have eight laboratories that we need to use not only for production but also for providing knowledge services for the customer in different aspects. Explosives account for around 68% of our sales, but we need to diversify and we have a huge metal working capacity in one of our factories in Eramosa.

Where do you see Indumil by the year 2020?

I see Indumil continuing to fulfill our potential as the biggest provider for the armed forces. We will continue being that as that is the mandate of the constitution. Even though we are thinking about industry, mining, and tunnels, we will not lose our focus on providing the police and military forces with what they need and what we can provide for them. However, by 2020, I see Indumil as being the provider of many products for the development of the country. We want to participate in this development and we will do whatever is needed. Because of the current infrastructure situation of Colombia, roads and railroads will be one of the main engines of this development. Right now we are participating in the construction of tunnels; for example, in Antioquia there is the construction of 39km of tunnels and we are there providing explosives directly to the tunnel.