What have been the main highlights for the company in Panama?
PowerGen began operations around 1999, selling generators in a small office in downtown Panama. We have been in the market for almost 20 years and have developed into one of the biggest rental houses in Central America. At present, we have over 1,800 units in the rental fleet with an original investment in excess of USD50 million. Also, we cover most of the different aspects of the construction industry, including aerial equipment, construction earthmoving equipment, compressors, generators, material handlers, and so forth. Additionally, we employ close to 180 collaborators and have six branches; the main office is in Panama City, and we have secondary offices in Colón, Chame, David, Chiriquí, Santiago de Veraguas, and Costa Rica. Some of our customers in the logistics end of the business are Agencias Feduro, Productos Alimenticios Pascual, Empresa Panameña de Alimentos (EPA), Nestlé, and Farmacias Arrocha. In addition, we serve clients like Panama Canal and First Quantum Minerals. We have actively participated in a variety of construction projects like the metro, Panama Canal expansion, airports, Pier 16 Colón, the cruise terminal, and more.
Is the growth of the company related to the fact you had some bonds operated by one of your partners?
The bonds in reality are purchased by several financial institutions. The fact that we have been able to issue bonds creates special regulations in the business. This business has to operate and is regulated by the stock market. Thus, we have to follow the same standards as a public company. We have to submit the results of the business every three months to the stock market, which then regulates it. There are certain parameters we have to meet, and this makes us different from the majority of other similar companies in Panama.
Would you like to target a specific sector in the medium and short terms?
That depends largely on the kind of projects breaking ground. For example, there are talks about building a bridge over the canal, and that project will require equipment like the ones we have. Other similar projects include the third line of the metro and the expansion of the canal. We follow the projects closely, so when a project is assigned to certain contractors, we contact them and offer our services.
How have you managed to be competitive with your current business model?
In the construction side of our rental business the important factor is utilization, in particular every machine's percentage of utilization. A utilization rate of close to 70% or above is good for both us and the contractor. The market we operate in is unique. A well-managed contractor will maintain a 70% utilization rate of his own equipment and satisfy his peaks with rented equipment. However, the rented equipment must be as effective in order to maintain the project schedule. We supply equipment in good condition and tailored to the contractor's needs. Renting equipment is the most economical way of operating a business. This allows an investor to keep investment at 90% or 100% utilization. If a contractor owns all the equipment, the utilization rate goes below 70% or 60%. That will mean the business model is not economical. This is where we come in. That is how we serve the market. The contractor needs a company with good rental equipment.
What are your targets and goals for 2019?
Our goal is to maintain our clients and operations and post a growth rate between 10% and 15%, which is a conservative growth rate in our sector. Even though we have been established for many years, the type of rental business we are in is a relatively new business in Panama.