What were the market factors that led to the establishment of Confervio Agregados in Colombia?
The political, economic, and security situation in Venezuela pushed us into Colombia, where we set up Confervio Agregados. Additionally, we have to keep in mind that security levels in Venezuela are far from optimum. Colombia was and is a booming economy in which the oil sector has yet to reach its full potential. We see the opportunity to transfer all our knowledge and experience in this sector into Colombia. Arriving in this country and starting from scratch was a big challenge because the cultural and sector difference are palpable. In fact, Venezuela's oil reserves are larger than Colombia's. However, it was a great learning experience and pushed us to diversify our business portfolio, targeting other industries such as cement.
What industries offer the highest potential for Confervio Aregados?
The food and beverage and the cement industries are our two top priorities right now and we put a lot of effort into entering and consolidating our activity there. In fact, we manage concrete production plants in Venezuela and we aim to do the same in Colombia. We currently have two offices, in Bogotá and Cartagena. We will be opening a new office in Villavicencio and Barrancabermeja. This move is aimed at allowing us to participate in two key projects, the expansion of the Barrancabermeja refinery and the construction of the Meta refinery. We have the aim to introduce and consolidate the JC valves and the high-pressure cylinders we commercialize through these projects. In this context, we have certified all our products and represented products in Colombia, something that has been a challenge in itself due to the fact that if you do not provide certified products, you are not competitive in this market. Our products have already been purchased for key projects such as Reficar in Cartagena. We have managed to pick up a lot of projects so far despite being in Colombia for a short period of time; last year alone we took part in 80 projects between Ecopetrol and refineries.
What are the main factors behind your success?
Our experience in the oil industry has been one of the key elements in our success. Also, despite the large number of players in the sector, there are segments in it in which there is still not much of an offering, such as valves. In this context, we have been competitive with delivery dates. Our quality and certified products have also contributed to our rapid expansion. It is also increasingly in demand for suppliers to have certified processes. Confervio got its processes certified last year. Our success and consolidation will most likely be based on companies considering our products for their engineering projects.
What are the main differences in doing business in Colombia and in Venezuela?
Legal security levels in Colombia are much higher; Colombia has reached high levels of finance and legal security thanks to the strengthening of its finance and banking systems. For example, there is more certainty to get your invoices paid within the terms agreed in Colombia. The bureaucratic burdens or steps toward registering businesses are faster and much more organized in Colombia as well.
How has the devaluation of the peso affected the company?
It has had an impact on our business. We import products from China, the EU, and the US. Consequently, the depreciation has generated unexpected extra costs. However, we must be steadfast and continue with our business consolidation. This is our main business objective along with the diversification of our products and customers. With time, we believe we could be producing high-technology products in Colombia, something few companies do in the industry.
What are some of the other competitive advantages of Colombia?
Having access to the sea is a competitive advantage for any country. Both Colombia and Venezuela, for example, have access to the Caribbean Sea. However, Colombia also has access to the Pacific Ocean. This means access to the East and West coasts of the US, Caribbean countries, Europe, China, and the rest of Asia. In Colombia, import and customs clearance procedures are also much faster and organized than in other neighboring countries.
What are your expectations for the oil industry in Colombia for 2015-16?
The recovery of oil prices will not happen in the short term. However, now is the time to expand the activity of the refineries to create added value. Companies operating in the sector need to rethink the way that we do business and probably diversify the business portfolio. In this case, exports are a great opportunity.
Where do you see Confervio in five years time?
I think by 2018-20, Confervio will have an established and high level of reliability for high-technology equipment and products. It is unlikely that we will have local production in this time frame. However, we aim to become a reliable supplier and partner for our customers. We also want to expand our business portfolio with project management for companies, for example.