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Fernando Castillo: “We are evolving from a typical construction company to a business group”
ICCGSA has existed for 49 years, but in recent years the operation has sixtupled. Also engaged in forestry and agriculture, ICCGSA is preparing “for the next 50 years”.
The corporate headquarters of Ingenieros Civiles y Contratistas Generales (ICCGSA) are located in San Isidro. The offices are the result of joining four houses. The front occupies a large part of one of the blocks of Avenida Aramburú. The building is painted in white and a surveillance booth with tainted windows will welcome any visitors.
Four years ago, the company occupied one of the houses only, and 50 people worked in it. Today, there are 200 people. Expansion, they call it.
This major leap of the construction company is not the product of chance. “Our sales have sixtupled in four years,” says Fernando Castillo, General Manager of the company.
Such growth has literally taken the company to aim high. It has an office project on Andrés Reyes avenue, right in the very middle of the San Isidro financial district.
In 2016, the new corporate headquarters will be located in the future building, in which US$20 million will be invested.
ICCGSA was born for construction, mainly of infrastructure: road works, highways and some earth movements mainly for mining companies. In essence, ICCGSA remains such a construction company.
Castillo knows that, “in construction matters, when the economy is doing well, the sector fares even better; but when the economy is not going well, construction is one of the most affected.” “What we did was to prepare by diversifying.”
How?
With other businesses within construction. We didn’t develop real estate projects before. Now, we have created a firm, Valora (three years in the market). Construction is still a good business.
How many projects do you have?
We have one in Jesús María, two Surco, one in Villa María del Triunfo and one in Piura. We are basically targeting the B and C segments of the population. For the Piura project we purchased 23 hectares; we intend to do a major development of houses, apartments and businesses there. This is a medium-term project.
Are you planning to do your own shopping strips?
We probably will.
At what point did you decide to diversify?
What we did was to look into future prospects. We have an optimistic outlook that growth will continue, especially in infrastructure but, if something happens, in the event of any setbacks, we will have income from other sectors.
Such as which?
Forestry, for instance, We have revegetated an area in the Amazon. This is a long-term investment. We have 1,000 hectares that will start to be seen 10 and 20 years from now.
Is this a future bet?
We are preparing for the next 50 years. In addition to forestry, we have a business venture in Sullana, where we are going to grow grapes. We have purchased land in Olmos, where we have partnered with Agrícola Chapi. In November we will be delivered water and then we will start planting, mainly fruit produce.
Do you expect, as stated by the [daily] Gestión, to achieve income for US$500 million in 2015?
That is where we are heading. The challenge is very big.
Concrete Road
Forty-nine years ago, the father of Fernando Castillo, Augusto, founded the company with two partners. “Now we are in the second generation,” he says. His father still visits the company. He is 86 years-old. “His advice is very valuable,” he adds.
Castillo is the youngest of four siblings, but he is the only one holding a management position in ICCGSA.
The literature on family-owned companies has developed significantly, and at present there are tens or hundreds of books on how to go from the first generation to the second. Only 20% of those companies survive, he adds, and admits that he has been learning about this to prevent the tribulations of combining family and company.
Did your father prepare you for this business?
The first thing that has to happen is having the vocation. In our case, the three brothers are engineers. In the future, I will have to see what my children want.
How do you go forward in your business?
If we are going to start a business, we do so hand-in-hand with someone who knows it. Not necessarily a partner, but an operator.
Is everything done under the umbrella ICCGSA?
No, what we have done is create the ICCGSA Inversiones investment holding. Under this holding, we have many companies such as ICCGSA Agroindustrial, Grúas e Izajes, the company managing our share in Sections 2 and 5 of the Inter-Oceanic Highway, and also a Project such as Kuélap Telecabins, which will see the construction of the aerial cablecar.
When did you decide this arrangement for the company?
We had the idea to diversify three years ago, but ICCGSA Inversiones was created two months ago, it is very recent. We are evolving from a typical construction company into a business group. As I told you, we are preparing for the next 50 years.
What must not be forgotten
Concrete has paved the way of the company. An emblematic work remains like a postcard in Castillo’s mind: the Vía Expresa (Lima’s Expressway). This seems to be one of the turning points in the origin of the company. ICCGSA participated in construction of one of its sections, and in one of the Costa Verde sectors. More recently, ICCGSA was a part of the consortium that made Vía Expresa Grau and subsequently the central station of El Metropolitano. In the nineties –he adds– the conditions were to keep growing stronger.
Also, you survived very complicated times
Our strength lies in coping with all crises.
And is there a formula?
We knew how to grow and how to downsize. Otherwise, you die. You have to know how to be quick and adjust to existing conditions. If you see that the environment is not favorable, you have to make adjustments.
Is it risky to work with the state?
Not any more, in recent years. There was a time when it was risky, a time with no resources. You completed a project for which you were to paid, for instance 100 and they didn’t have them, so they gave you a paper that read: worth 100. It was complicated.
What did you do?
Look to the market and see who we could sell those papers to. You ended up selling them for 70% of their value.
And now, how many projects do you have?
About 25 in all of Peru.
How much is the investment?
I don’t have the exact figure, but it can be measured by our billing. Last year we billed US$280million.
The story of a manager
Fernando Castillo joined the company in 1983. “I have done everything here: I have worked as the assistant of the assistant. I went to the field as an engineer, then to the office overseeing equipment, then budgets. Later I world at the business part, and ended as general manager, a position I have held for 17 years.”
In those times, family gatherings included talking about the company. This thin line was overstepped.
But it has been a long time since it was like this. “We have managed to separate family from company,” he says. One thing we did to accomplish this balance was drafting a family protocol.
What is the internal challenge?
We have a full program for talent retention, identification of values and career lines.
Is it hard to find qualified personnel?
Yes, it is. We have grown very fast and require a lot of people in every sector. At some points, the lack of qualified personnel becomes a bottleneck.
How can you accelerate development?
We are focused on concessions and public-private partnerships. There, for instance, we saw an opportunity in the Kuélap aerial cablecar.
In addition to the business lines in which you have worked, are you considering entering other business lines?
Yes, but we will always focus on our core business, which is construction.
You built the Antamina tunnel...
At the time we did the 300 kilometer-long mine pipeline it was one of the largest in the world.
Have you lost any time?
Our main challenge is to satisfy our client. If, at any time, there is a miscalculation and we lose, then we lose, but the client has to be satisfied. We then analyze what happened to prevent it from being repeated. But when we make a decision we move on. If we looked back we would be ridden by doubt.
Source: Gestión 25/09/2014
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