AN EXPORTER’S TILE

Ecuador 2013 | REAL ESTATE & CONSTRUCTION | INTERVIEW

TBY talks to Alfredo Peña Payro, Executive President of Grupo Industrial Graiman (Graiman Industries), on export markets for the ceramics business.

Alfredo Peña Payro
BIOGRAPHY
Alfredo Peña was born in 1964 and is the Executive President of Grupo Industrial Graiman (Graiman Industries). He studied at the Universidad Estatal de Cuenca and graduated in Civil Engineering. He then obtained an MBA from Instituto Tecnológico de Monterrey in 1999. Former positions include General Manager of Tuberia Galvanizada Ecuatoriana between 1992 and 2005, and Member of the Advisory Board at Produbanco Sucursal Cuenca between 2005 and 2010. In addition to his current position, he is also serving as President of the Chamber of Industries of Cuenca.

Could you tell us about Graiman's background and evolution?

It all began 55 years ago as a family business, like most of the businesses here in Latin America. Graiman was the answer to the group's need to obtain an income in hard currency, mainly in US dollars. At that time, Ecuador's currency was the sucre, and, like most of the currencies from developing countries, it was ever subject to devaluation. Our main business at that time was importing steel as a raw material and producing steel pipes and structures for the construction industry. We bought raw materials in US dollars and sold them in sucres, and while we collected our sales, the price of our basic raw materials was subject to international demand. Obviously, this was a big problem at that time. Around 20 years ago we developed an industry that used raw materials produced in the region, like clay and sandstone. We started exporting our finished products, including ceramic tiles for walls and floors. This activity gave us an income of much needed dollars. Since then many positive things have happened. Ecuador opened up its economy to the world through capital investment in new and modern technology directed at many industries to produce for local consumption, as well as for exporting finished products. We continued to search for new resources to optimize our production process, and we identified long ago that our bottleneck was our sources of energy needed for the industrial process. The main issue then became very clear; Graiman needed to change its energy suppliers. Until then, we relied on the use of LPG, but today we use natural gas. At that time, natural gas as a source of energy was not available for industry. We did our research and found out that Ecuador had 20 sources of natural gas, but as there was no infrastructure for exploitation; the industry was not using it. We worked with the government to develop these projects and we are proud to be the pioneers of natural gas usage. This cost us around $10 million, just for the infrastructure.

What was the impact of having your own source of natural gas to use?

It allowed us to compete with our neighbors. Our competitors in Colombia and Peru already used natural gas in their ceramic and porcelain industries, as well as in their surrounding industries. Graiman uses a lot of energy to produce and transform raw materials into finished products. If you don't have the right energy source or the right cost base, you won't be able to compete or invest in the future.

How would you describe the evolution of Graiman's exports?

Our exports have been successful. We started exporting in 1993-1994 and now export 40% of our porcelain production. We can do more, because right now the economy of the region is really hot and demands many products from us. We are currently investing in production capacity. In a couple of months, we will inaugurate two kilns producing 20,000 sqm a day of porcelain or red clay products. Right now, we produce it all here in Cuenca. We have deals with other factories in Europe to produce our products; however, what we sell under our name is manufactured here in Cuenca.

Are you planning to expand into other markets?

There is a very good market in Central America, but it depends on macroeconomic development. Ecuador just signed a trade agreement with Guatemala, which opens a market for us because it allows us to sell our products without restrictions. We also have one with El Salvador. For us, Central America is very interesting. There are some markets that produce the same products, but they have different structures. For us, Central and Latin America are very important, as well as North America and the Caribbean. Those are the markets that are developing and we can enter if we have the right product at the right price with the right marketing, and at the right time. I think we are ready.