Chile is one of the most stable, competitive and fastest growing economies in the world, and certainly holds that position within Latin America. In 2013 Chile’s maintained its positive recent growth rate, recording 4.1 percent increase in its GDP – just a little lower than last year but still an enviable figure. Much of that growth has been driven by the country’s mineral resources, with the state mining company Codelco accounting for a third of the nation's economy.
It has been a benign environment for the growth of Pesco, Chile’s leading equipment supply partner. Founded in 1998, it has grown to a medium sized company with a turnover in excess of $60 million. Its early development and its customer base was established mainly in the municipal sector, with contracts to provide equipment needed to support infrastructure and general services, from refuse collection, firefighting and electricity networks to water services and dust control.
Through these services Pesco became the partner of choice when it came to specialised mobile equipment, as opposed to standard ‘off the shelf’ products. It holds agencies for an impressive list of manufacturers from the United States, Europe, Australia, Canada and a host of other sources – wherever, in fact, the best equipment for the job is to be found. With forestry being such an important industry, not just in Chile but in South America generally, it made sense for this expertise to be sued in developing solutions in that industry too. Today many logging operations in the region depend on machinery supplied by Pesco.
But to return to Chile’s current mining boom, despite the diversity of its client base it is not surprising that mining is rapidly becoming the major contributor to Pesco’s expansion. Mining related business now contributes a third of its turnover and about the same proportion of the company’s profits. Inevitably a good amount of equipment supplied by Pesco ends up working on the operations of Codelco, though it is not Pesco's model to partner directly with the end user but rather through a third party, usually a leasing company. The company supplies mine operators and mine construction companies, helping them to meet their contractual obligations to the principal, whether a state mining operation or one controlled by inward investors. It is not Pesco's model to partner directly with the end user but rather through a third party, usually a leasing company.
The company’s growth has been achieved using two basic principles, development of markets to increase the volume of business done, and the addition of new products to the range in response to customer requests – a policy that has resulted in a relationship with more than 30 international brands from the German hydraulic lifting and loading specialist Palfinger through Elliott, the American truck mounted crane and aerial work platform manufacturer, and the French fire protection company Desautel to Helesi, the Greece/UK supplier of refuse bins. These examples are just a taster. The company goes to great lengths to source the right equipment for its clients visiting OEMs that may be interested in establishing a presence in Chile, and attending trade shows in China, Europe and America.
It is a dynamic process and Pesco does much more than source the equipment itself. It has a strategy to become an expert in every product it sells, training its own employees either by sending them to the manufacturers’ premises or by bringing their technicians to Chile. Often a product imported for one client will turn out to have applications in another sector or application. Fire trucks, for example, are used by municipal fire services, on mine sites, and also in forestry operations. In fact it’s hard to think of any large operation that does not have to think about fire hazards.
Much of the equipment supplied is for cleaning of a specialised nature (municipal cleaning, mine sites etc), so vacuum trucks figure large in the list, whether for cleaning the shovels and large plant in the mine, or in another version, adapted for conveyors. One particularly hazardous operation used to involve cleaning beneath moving conveyors: now Pesco is supplying a new remote control mini shovel from Movex that physically distances people from the conveyor – with safety the number one priority in today's mines this product is attracting a lot of interest.
Among other recently supplied equipment are fire trucks and safety equipment destined for Codelco's Andina project, vacuum trucks for Siemens working at a Codelco/Rio Tinto joint venture, further vacuum trucks for services contractor Sierra y Plaza and telescopic cranes for the leasing company Relsa for the world's biggest copper mine, Codelco's Chuquicamata. In order to extend its range of specialised cleaning equipment, Pesco has introduced Altec insulator-cleaning equipment – essential for clearing the power supply lines to the mining facilities.
With stock valued at around $20 million on its books, this is a capital-intensive business. During 2012 Pesco augmented its main six-acre Santiago facility, with its five office buildings and 50,000 square feet of warehouses and workshops, by opening two subsidiary sales and service depots. These are strategically placed at Los Ángeles to the south and Calama to the north, giving excellent access to clients operating anywhere in the 2,700 miles north-to-south extent of Chile's territory.
The company has grown to a position where it can satisfy its domestic markets adequately. From here on in any major growth will probably be seen beyond the borders of Chile. Peru is the first target, and Pesco is actively looking for the right partner to help it grow from a base there. Each country has its own culture and way of doing business and it will be essential to integrate local knowledge with Pesco's unrivalled expertise and scale in the region. For now the most attractive economies are the mining 'tigers' of the Pacific coast – Peru, Ecuador and Colombia. Pesco does have a dealership in Uruguay however at present this is mainly concerned with forestry products.
Another step that may recommend itself to Pesco is the local assembly or even manufacture of certain items. Pesco already supplies a forest trailer to Uruguay, assembled in Chile using only key components that are imported. That model could be extended, with Chile becoming a platform for supplying such equipment, value added, to many South American countries, on much more favourable terms where import duty is concerned.