Fernando Illanes Alvarez – President, ICEACSA, Spain
Fernando Illanes Alvarez, president of Spanish engineering and consultancy group, ICEACSA, talks growth drivers, the company’s deep-seated links with the oil and gas industry, and its international footprint.
ICEACSA aims to be a diverse one-stop-shop for its clients, with a comprehensive portfolio that includes project management, civil engineering, and consultancy. Which of these elements generates the most growth for the business and how do you see demand shifting?
“Today, after having been present in Mexico, Panama, Colombia, Uruguay and Peru for six years, we are conscious that we still have a lot to learn and that we rely on local firms.”
Iceacsa’s initial growth was based on what nowadays represents one of its key points, which is service diversification. We decided not to increase the size of the territory in which we operated, but to try to be a generalist company and diversify our services, with a double objective to offer integral services to our clients. When a client wants to start an investment project, he can receive all the necessary support, starting from the beginning until the implementation and operation of his facilities.
Infrastructure made by Spanish engineering and Spanish consulting is our strength but is also our weakness, because we have had to expand to produce services more efficiently. Now we have the capacity to produce, but we don’t have clients. And we are not going to have them the way we did before 2011, although the crisis is coming to an end, at least for a couple of generations, because the infrastructure is already done. Now we continue to diversify and expand abroad.
In Spain, for a couple of years now, our main service and growth driver has been infrastructure integrated management, which encompasses how to make transport more efficient and comfortable, as well as how to make the infrastructure more secure. However, in Latin America where we are also implanted, we are in an earlier stage of development and continue carrying out classic services. For example, in this region we are working a lot with transport infrastructures and water engineering projects, which are highly necessary there.
What are the services that you provide within your ‘Industry and Energy’ unit?
Our focus is more industry than energy. Talking about integral services, we have helped many companies to implant themselves in Spain, including helping them to find site for their location, urban development, administrative management, the project, work supervision, permission and licenses; basically, the whole life cycle. We would like to do the same thing abroad but this can be difficult as it requires not only knowledge of administrative procedures, but also of the society and business environment in that country.
In terms of energy, we have completed projects such as the Galicia-Portugal pipeline. We can also now finally tell people about our formerly confidential technical assistance to the general management of Costas, from the Interior Ministry for the support of the Prestige crisis. There, we managed everything in terms of IT and Communications, environmental projects, supervising the works, economic controls, as well as coordination and control of Human Resources and volunteers, companies and the military. It was complicated, but we organized a team that was at the Ministry’s disposal in 15 days.
We do not do oil and gas projects per se but we do civil engineering projects, often for the oil and gas industry. Now we have a three-year contract with an oil company from Colombia, signed in April 2016, providing the services for exploratory wells.
Is civil engineering for the oil and gas industry a subsector that is growing?
We do see business possibilities. Moreover, we are offering to Refidomsa, a refinery company from the Dominican Republic who we have already worked with. We are among the selected companies to present a mooring line. We are also trying to take advantage of the energy reform taking place in Mexico. We have already been present in Mexico for six years and are trying to establish agreements with more specialized companies. We understand how the country works, what the clients want, the documents that need to be prepared, and how they do the things there. So, we try to offer this integral service to any company looking to enter Mexico.
A hallmark of your international expansion strategy has been alignment with local partners. What qualities do you look for when seeking out these relationships?
When we made the decision to internationalize, we realized that consulting requires physical proximity, language skills, as well as mentality. In Latin America we are now in the phase of consolidation of our implantation.
Why local firms? We like to make agreements. Today, after having been present in Mexico, Panama, Colombia, Uruguay and Peru for six years, we are conscious that we still have a lot to learn and that we rely on local firms. In local companies we look for complementarity, we want them to have similar principles and values to us to foster a mutually beneficial relationship from both a financial and experience perspective. Our policy in local firms is to hire both local and international personnel so we can acquire local knowledge and unite it with international experience. Foreign engineering companies, consulting firms, and our clients, often identify us as locals, which means we are doing well!
As well as Latin America, ICEACSA has also completed projects in West Africa, and is attempting to break into the Middle East market. What challenges are you facing in this endeavour?
We have a double objective now. On the one hand, we need to consolidate our presence in Latin America. We should also highlight the difference between internalisation and export. We are now internationalised in five Latin American countries, from which we export to countries such as the Dominican Republic, Guatemala, Bolivia, and Paraguay. We also have a relationship with a Portuguese engineering firm in Brazil.
For an SME such as ourselves, the Far East seems very far away in every sense so our next step could be Africa and the Middle East. We currently export there, do some small projects, and are testing the market to see if we understand it. Latin America is already different to Spain, and each country in Latin America is different. Even within Mexico, the south of the country is completely different to the north. Africa is very diverse, and the Arabic world as well. But we are conscious that we need to consolidate and cannot lose the territory that we are gaining now, so, we need to see if we can enter Africa and Middle East, using the measures available to an SME.
What about the ability to follow the Spanish construction firms when they go the Middle East and Africa?
Historically, this has been totally atypical. Before the financial crash, when there was a lot of work, many engineering companies preferred to work with the administration rather than with construction firms, but ICEACSA continued working with construction companies. A construction company is a very demanding client, with criteria, they know what they want. Engineers from construction firms are usually those who know more about construction techniques, solutions, costs, and planning. Thus, while working with them, you receive a lot of feedback and it is an enriching experience for both sides. There are a lot of engineering companies that expand abroad thanks to construction firms. When we decided to expand, maybe a bit later than the others, we were not well known abroad. Our first contracts were our clients that knew us, or had ordered some previous projects abroad from us. They started to hire engineering firms that made the first step to implant. Therefore, our first projects were with multilateral funds such as World Bank, BID, CAF, then with public companies, and only after that, when they understand that our services were good, would they call us. We are also working with many Latin American construction companies such and from USA, a lot of construction firms from Panama and Costa Rica, Chinese companies that have started to gain position very fast in Latin America and Africa, as well as north American companies. All of these organizations identify us as locals and see us as something between a tropical and Anglo-Saxon mentality.
Spanish engineering consultancies are increasingly building a strong brand reputation abroad. Why is that? What is so special about Spanish firms?
The capacity for adaptation and accumulated experience. In Spain in the last 20 years we have turned from mediocre infrastructure to good infrastructure, globally known. This happened both for Spanish engineering and construction firms. The fruits of experience rather than master’s degrees or doctorates give us this positioning. The difference from the engineering that we find in Latin America is not the training of the professionals, but the versatility. Our model is not the Anglo-Saxon model of a super specialist. Our clients need global solutions. A specialist will do, when there is a conductor that coordinates, otherwise, we will have car parts, but no car. And this is exactly what Spanish engineering and construction firms can do. Spain is not a big country, but we have a very diverse geography, with geographically very complicated areas and therefore we have learned to respond to complex problems.
Is it fair to say that the crisis has helped this recognition of Spanish companies abroad in terms of pushing them to leave the local market where there were not so many opportunities?
Big companies had left before the crisis, both construction and engineering firms, but it is true that small and medium sized companies were obliged to go abroad with the crisis. When you get to a point when it is hard to hire qualified people, start projects and works, you need to deal with this situation and take a risk to go and sell goods abroad. Did the crisis push us? Yes. But for ICEACSA, internationalization is not a random thing, it is an strategic bet for the future; we have taken this step by step, and want to grow in sustainable and moderate way.
In some countries you are identified as a local firm, but in terms of competing for tenders internationally, how useful is it that you are a Spanish firm?
To be a Spanish brand abroad and in the engineering sector is a great business card. But that alone is not enough. It can open doors, but after that, if you do not generate respect and trust with a client, based on the quality of your service then there is nothing you can do.
When we come back in five years, what is the one thing you really want to have accomplished with ICEACSA?
We want sustainable and moderate growth, consolidated in the countries where we are present in Latin America, not only in the public and construction sectors, but also in the private, industrial, real estate, and urban development sectors. This requires training, stepping into civil society, and showing that we truly are locals. I also hope that we can be, at least close to the same level we are in Latin America in Africa and Middle East.