Why Astec Industries is sharpening its Latin America focus

US machinery and equipment manufacturer Astec Industries – a supplier to the roadbuilding, mining and energy sectors – is executing a global expansion plan. Company officials, to expand local knowledge and better understand and serve local markets, have devised a new business model and are piloting it in Latin America, where the firm is already present.

Tennessee-headquartered Astec – which in the region has a factory in Brazil that manufactures products such as mobile asphalt plants and equipment for the mining and aggregates industries like conveyor belts and screens – is building a Latin America HQ in Chilean capital Santiago. From this base, officials will spearhead a new regional sales, after-sales and marketing strategy. 

Astec’s Latin America managing director, Carlos Fonseca, is heading operations and a central goal is bringing the company closer to its customers. 

Astec, before expanding into other regions, will learn from its experience in Latin America. Beyond the US, Canada and Latin America, it has operations in Northern Ireland, South Africa and Australia.  

To find out more, BNamericas spoke with Fonseca, who, over the past year, has been building his Latin American team. 

Astec will have a stand at heavy equipment trade show Conexpo, taking place in Santiago from October 2-5.

BNamericas: We understand that Astec is expanding its footprint.

Fonseca: Astec is undergoing a global expansion. Latin America is trialing the new business model that will be rolled out. The idea is that they will learn from our experience. The plan is to get closer to the customer, providing products, parts, service and support. Partnering up and helping them grow. 

BNamericas: Why did you decide to establish your regional base in Chile? 

Fonseca: This is a very stable economy. It’s a country that has free trade agreements with almost everywhere in the world and you have a knowledgeable workforce to choose from and we just felt it was a good place to set up operations.

BNamericas: You’re clearly looking for opportunities across the region, not just in Chile.

Fonseca: In fact, Chile is one of our smaller markets. If we were 100% focused on mining, Chile would be one of the bigger markets, but we’re not; we’re principally focused on infrastructure. 

If you take kilometers of roads as your litmus test as to how big a market is, the largest market in Latin America is Brazil. Second is Mexico, third is Argentina, fourth is Colombia, fifth is Peru and sixth is Chile.

BNamericas: Where are you registering most sales?

Fonseca: Right now, most of our sales are in Mexico and Colombia. And Panama. Minera Panamá [which is developing the Cobre Panamá copper-gold-molybdenum project] is buying a lot of equipment from a distributor of ours. There’s a lot of requirements in terms of crushing and screening, for their internal processing of material, to build a tailings dam, a lot of their structures.

BNamericas: What targets and goals have you set? 

Fonseca: We’ve set ourselves a long-distance goal to be No. 1 or No. 2 in terms of market share in all the markets that we can, in the countries where we operate. It’s a very lofty goal and we’re up against some steep competition but we feel that the company is focused and we have the right team to pull it off. 

BNamericas: What work are you doing in terms of market research?

Fonseca: An important part of my organization is to develop the market knowledge and information to feed back to the US, to our different factories, as to how to localize products. For instance, some of the equipment that is made in the US is made for different dimensions and different requirements, and maybe they don’t translate that well to Latin America. We’ll go to the factory and we’ll say, ‘look, I really need a 3-5m tamper bar screed on a paver.’ In the US they use vibration on that screed, and no tamper. And we have to explain that’s what we need here.  Plus, in the US, asphalt plants are in the 200-500t/h range. In Latin America they’re not; they’re in the 80-120t/h range. So my team’s goal is to pick up that market knowledge and provide a business plan to the factory to make sure we have the products and services that are tailored to this market.

BNamericas: We understand that, to help potential customers who are looking to acquire equipment, you aim to partner with financing companies.

Fonseca: One of the differences between Latin America and the US and Canadian markets, for example, is that in Latin America a lot of customers require financing to buy our equipment. So, one of the things that we’re doing is trying to develop partnerships with regional and local financing entities to offer our customers solutions to purchase our own products. I am looking for options, for instance, for Paraguay, for Colombia, for Peru.

BNamericas: On the subject of Paraguay, the country is due to launch a tender next year to widen 140km of highway.

Fonseca: We just sold [in Paraguay] a Voyager 120, which is a 120t/h mobile asphalt plant built in Brazil. We sold it to a customer in Paraguay and they just showed it at a regional show. That has generated a lot of interest in that type of equipment and other equipment we have. We’re definitely seeing a lot of movement in Paraguay as a result of the tender.

BNamericas: Any other particularly interesting markets?

Fonseca: All markets are interesting for us. We have a great opportunity in Peru right now. We’re working in Ecuador. What is important to explain is that we’re still in the building phase right now. This initial year and maybe the next few months are about analyzing each market and figuring out whether we have the appropriate sales channel. The idea will likely be to consolidate and have fewer, but stronger, distributors.

BNamericas: So, to wrap up, you sound pretty upbeat on Latin America.

Fonseca: Very upbeat. We think the prospects are good. The good thing about Latin America is that it’s so varied that when one country’s up another country can be down. You have enough diversity that the whole region doesn’t drop at once. 

 ABOUT ASTEC

Founded in 1972, Astec Industries manufactures more than 260 products from rock crushing and screening plants to hot mix asphalt facilities, concrete plants, water, gas and oil drilling rigs, geothermal drills, milling machines, asphalt pavers, material transfer vehicles, and wood processing equipment.