INSIGHT ON Latin America

2014 Aug 18

Our report from the Ituango hydropower project in Colombia in this issue is a clear reminder that economic growth and prosperity in the countries of Latin and Central America is deeply rooted in their natural resources. Here, Jon Torpy, a man with close ties to the region, shares his impressions.


Q: How do you see the region today?

A: Having grown up in Peru during the first half of my life, it is amazing to see the changes that have taken place over the past decade. The Peru of today, with its larger middle and upper middle class, is certainly not the Peru I grew up in during the eighties.People have some disposable income now and they want the opportunity to buy nice things, have nice homes, take nice vacations and provide a better life for their kids. They can now realize these opportunities within their own country.

Q: Do you see the same

trend across the whole region?

A: Yes, I think the same sort of economic confidence can be seen almost everywhere. Take Colombia, for instance. I remember traveling there eight or nine years ago and I had to carefully plan the itinerary based on U.S. State Department recommendations due to the activities of the FARC guerillas. Since then, the country has really focused on fighting terrorism and that has contributed to the economy, which is thriving.

A few years ago, nobody would have dreamt of going to Colombia on vacation, but today it is growing in popularity and it?s a beautiful country.

Q: Will this economic growth continue?

A: Yes, no doubt about it. I think NAFTA was probably one of the catalysts for some of the growth, and that concept can now be seen in The Pacific Alliance which includes Chile, Peru, Colombia, and Mexico. The Pacific Alliance will enable more growth to take place and many of the countries will further diversify their exports. With agreements like these, the countries and people can work closer together. The boom in China has also helped to accelerate growth in the region.

Q: How noticeable are these changes?

A: Well, take air travel for one thing. It?s better than ever. The large number of available flights represents a big change. When I grew up in Peru, a plane was considered on time if it left on the day it was supposed to leave. Today, with investments in infrastructure related to air travel, they are better at departing on time than the flights I take in the U.S. these days, and I may have two or three airlines to choose from, whereas before I had one.

Q: What about Atlas Copco?s reputation in Latin and Central America?

A: My experience is that we enjoy very strong recognition and respect throughout the region. We are seen as a company that customers trust, and that?s very important. The fact that Atlas Copco has been in these countries through good times and bad ? in some cases, very bad ? helps to demonstrate that we are there to stay.

Q: How do you see the

construction sector developing?

A: It seems there is a lot of investment pretty much everywhere. I have been told that there are something like 700 approved hydroelectric projects in Latin America. The roads have gotten much better and, as I said, flying has become much easier with investments in airports. When I was in Brazil last year, I think every airport I spent time in had a huge construction project under way associated with the upcoming World Cup and the Olympics.

Q: What role does mining play here?

A: Mining has always been an important part of the region?s economy and for the past decade it?s been booming. When it comes to mining, Latin America has a bit of everything and if you throw oil and gas into the definition it becomes even more important. Brazil is a key world supplier of iron ore, Chile is the global leader in copper production, Peru has copper and gold, and Mexico has silver, copper, and gold. Colombia and Venezuela have coal. For these countries, mining and mineral exports play an important role in the economy.

Q: How is Atlas Copco supporting

these customers at this time?

A: It is important that we continue to be present and invest in our capabilities to support the region. We need to be actively working with our customers, understanding their businesses, and offering solutions where we have expertise. There is a lot of talk about cutting costs and we need to listen to our customers and partner with them to ensure they are successful. Cutting costs is not all about lower prices. That may be part of it, but our customers will pay for innovative solutions that help to reduce operating costs, which is something we excel at. We must also provide great after sales support. With our rotary drills it?s not unusual to accumulate as much as 6 000 hours of runtime in one year. That doesn?t leave much room for unplanned downtime. Also, having capable service teams in place that can respond quickly when needed is key to making sure we continue to be first in mind and first in choice.

Q: What about remanufacturing?

A: Remanufacturing is important in helping companies to manage their Total Cost of Operation (TCO). Having a reman part that can perform and live as long as a new part, but at 70 to 80 percent of the new price, can make a big impact on running costs. We have taken some steps to develop this service in Latin America but there is still a lot of opportunity for expansion.

Q: What are the main challenges and opportunities going forward?

A: For the mining industry, the direction of China will be important and, as it appears now, a challenge, as their consumption of raw materials slows. With lower mineral prices, mining companies are working hard to make their businesses more efficient to ensure they can weather the storm. Government and currency stability will continue to be important. Countries with efficient mines and government policies favorable to mining will continue to see opportunities in this sector.

Q: Is the concept of sustainable productivity alive in the region?

A: Yes, in most countries, but not necessarily to the high standard we set at Atlas Copco. There is definitely progress being made in most areas. We are dealing with global companies and many of them have adopted policies where they will not compromise their standards of safety or sustainable productivity, just because local laws give them the flexibility to do so. Instead, they have decided they will use the same high standards as they use in other operations.  These commitments flow over to their suppliers who then instill the same types of policies, helping to raise the bar for the whole industry.

Q: What will the next 10 years bring?

A: I think many of the countries have the opportunity to be successful over the next decade, and even with slips in mining there are other sectors that will continue to develop, including oil and gas, industrial manufacturing, agriculture and tourism.

In Chile, for example, mining continues to be the top export, but they are seeing strong growth in other segments too such as agriculture, forestry, and fishing. And Brazil has established itself as a key exporter of industrial products such as airplanes and automobiles as well as agricultural products.

Epiroc operated under the trademark “Atlas Copco” prior to January 1, 2018.