Bogotá, Colombia — Not many companies in the world, and even fewer in Latin America, are on the eve of celebrating 140 years of existence. The Corona Organization is one of them.
Founded as Compañía Cerámica Antioqueña in 1881, and initially focused on the production of earthenware and glass, the company now has operations in the United States, Mexico and Central America, in addition to Colombia, from where it exports to 47 countries.
Its product line-up, which include bathrooms and kitchens, surfaces, materials and paints, industrial supplies and tableware, are widely known in the hemisphere. The group also entered the Colombian cement market with the Alión brand, a joint development with Cementos Molins of Spain.
In addition to the industrial sector, Corona is a majority shareholder of Sodimac Colombia, owner of Homecenter and Constructor chains, as well as Falabella in Colombia and Banco Falabella, among others. The list also features Ikso, the company through which Ikea stores will be operated in Colombia and are scheduled to open in 2023.
With 6.1 trillion Colombian pesos ($COP) in sales in 2020 (its figures did not decrease despite the pandemic) the conglomerate, which employs some 18,000 people, is optimistic about its future. Roberto Junguito, president of the Corona Organization since January 2019, discussed these and other topics in an interview with Bloomberg Línea. This is the edited version of the interview:
The Covid-19 Challenge
Initially, it was a great challenge because, for example, we were forced to turn off the kilns, something that should never be done in sectors such as cement or ceramics. Resuming the process was a great challenge and led us to change the way we work. Whenever there is a crisis, one always asks oneself what is most important, and it was clear to us that the list started with our employees, their health, and preserving jobs as much as possible. We also focused on supporting the communities, strategic allies and maintaining the liquidity of the business. We spent the first few months doing that. After that, the focus was on reactivation.
Lessons learned
We saw an extraordinary response from our people, our customers and the people with whom we interact. When you have a company whose purpose goes beyond generating profits, you get the support you need in times of crisis. This is something that continues today, as the main challenge lies on international logistics chains and securing supplies. There are many narratives. For example, we had people who decided to stay overnight in the plants to take care of machines and equipment during the worst part of the lockdown. Knowing that our people have a sense of ownership of the company allowed us to resume operations quickly, ahead of our competitors. And the customers we trained (teachers, builders) returned to their brand. You could say that you reap what you sow.
Crisis management
Once you have made preparations to deal with eventual crises and manage risks, you go by the book. In our case, the entrepreneurial spirit is particularly important. Ideas of how to reinvent oneself, of setting up new businesses, sprouted. To cite one case, touchless faucets, which were delivered to airports or shopping malls, began to grow rapidly. And in the case of remote sales, which grew exponentially, we managed to multiply ourselves and ensure that orders were delivered on time. In short, we combined discipline to face the crisis with innovation. We found a number of creative avenues. And the final lesson learned is that when you have values, culture and leadership, and you stick to them in times of crisis, you come out stronger.
How is the Corona Organization doing?
We are doing well. We should feel very fortunate. We are in a sector in which people realized the importance of their homes. People used their resources to buy what we make. So we have done very well on the social front, on the environmental front and on the economic front. When we talk about results, we include those three.
The social front
We are fully focused on health and we were among the pioneers in the vaccination effort promoted by the Andi. Thanks to this, at Corona Industrial 90 percent of our employees have at least one dose and 80 percent have been fully vaccinated. In Homecenter, it’s 86 and 68 percent, respectively. So I can say that we are finishing the drive with no major setbacks. In terms of jobs, we increased the number of job openings in Colombia during 2020 by 5.5 percent. And in the last 12 months we hired 670 additional people. With the Chamber of Commerce we decided to go further and set up a spectacular scheme called “Todos unidos” (Everybody together), which is equivalent to mentoring for small and medium-sized companies in areas such as strategy, accounting and sales. We are convinced that if they do well, we do well. And that is in addition to the social responsibility front, which goes back to before the pandemic.
The environmental front
We have been working very hard on something that is going to become more and more relevant, such as the circular economy. In our case we focused on our operations’ closed-cycle systems, ensuring that we can make the best use of waste and water. Today we take advantage of 86 percent of the former and recirculate 81 percent of the water. We are in the process of collecting packaging and containers, and we are also going to construction sites and looking for materials in the debris that we can recycle and reuse in the manufacturing process. There is a big change in mentality. On the other hand, we’re focusing on energy efficiency, with the installation of 32,000 solar panels, together with Enel, at the Sopó, Madrid and Girardota plants, with a total capacity of 14.5 megawatts. That is the equivalent of the consumption of some 15,500 homes. At Homecenter, we were also the first in retail sales to obtain ISO 14,000 certification.
The financial front
Results have been very good. If we look at revenue, both in Corona Industrial and Homecenter, we’ve been achieving double digit growth year-on-year from 2019 to date. All of our plants are operating at full capacity and the warehouses are very active, which is a privilege. It is part of market dynamics, on the one hand, and also the work that the teams have done. In Colombia, it is also relevant to talk about our cement project. We opened the plant a little less than two years ago and we have already reached 8% of the Colombian market share. We have done very well with the Alión brand. We have achieved good positioning, a good acceptance, and we have fulfilled our business plans. In addition, and thanks to the works for taxes program, we set up a school for more than 500 students, which was a result of a $COP10,000 million investment. And in Homecenter we have grown 3.4 times in distance sales in the first eight months of the year.
Operations outside Colombia
We are doing very well in Central America. The performance is very similar to that of Colombia. We bought a new plant in Mexico, in Ramos Arispe, near the U.S. border. We are adapting it to Corona’s standards and now we have been able to enter Lowe’s (which is the second largest chain after Home Depot) with our Mansfield brand, in almost 2,000 stores. Between what we export from Mexico and what we produce in the United States, we have almost 7% of that market, which has shown a great growth dynamic, although it has been affected by what has happened with Chinese imports.
Between what we export from Mexico and what we produce in the United States, we have almost 7% of that market, which has had a great growth dynamic, although it has been affected by what has happened with Chinese imports.
Opportunities in the market
We have done better than expected because the Chinese have generally had great difficulties to export their products to the Americas. And that has opened the door for more customers to look at the nearshoring opportunity, to have their supply sources close by. For example, with tableware, we have both products for homes and a more institutional one. With the former, we do very well on Amazon. With the second, we used to knock on the door of restaurant chains but they didn’t buy much. But after the pandemic they immediately started calling us because many wanted to diversify. So, we are at full capacity serving restaurant chains in the United States with our product made in Caldas, Antioquia. The only difficulty we have in the United States, which is not minor, is that it is being difficult to hire and retain people. The news talk of 10 million unfilled positions. Because of this situation, it is obviously difficult for us to reach the production levels demanded by the market.
The challenge of reactivation
More people started coming to the stores as soon as the third Covid-19 peak passed, although we’re not yet at pre-pandemic levels. Depending on the month, we are between 10 and 20% below. However, the average ticket is higher. That is why we are still growing in the stores, because when people go to the store, they arrive with a bigger list to buy. On the other hand, the issue of supply chains is a gigantic challenge. Every day we are looking for different raw materials, trying to find packaging in the market, reinventing ourselves and replacing international products that we used to sell for local products. So the teams here have not stopped looking for alternatives. It is also a challenge to reduce the costs of imports, because the value of a container from China has tripled and obviously that ends up impacting us. All of this leads us to be more creative, to reinvent ourselves and to look for ways to supply the market and our customers better locally.
It is a challenge to mitigate the costs of imports, because the value of a container from China has tripled and obviously that ends up impacting us. All this leads us to be more creative to reinvent ourselves and to look for how locally we are able to supply the market and our customers in a better way.
Young people and the business sector
There is a disconnection that was partly ilustrated by the marches, but especially with the disemmination of fake news and disinformation, which can lead to an institutionality crisis. That is why we must ask ourselves why the institutions have lost so much credibility and what can we do about it. It seems to me that it is necessary to look for more direct lines of communication, so that people, especially young ones who did not live in the country before, understand that Colombia is faring much better than we were and better than our neighbors. I believe that this disconnection with what has been our progress requires showing that in reality the vast majority of people here want to do things right. We need to reassure young people that there is hope for the future of the country. The results will be in line with expectations and if the expectations at the end of the day are negative, it will be very difficult for the country to grow. That is why we need to build solutions together and for that we have to go out to the streets and to the spaces available for dialogue.
Concern about politics
Like everyone else, I am concerned about the uncertainty and volatility surrounding the upcoming elections. Like all companies, we are looking at the different scenarios and thinking about what can happen. I am optimistic, in the sense that what is happening with the economic growth, the reactivation of employment and the genuine interest that we Colombians have in things continuing to progress, will lead to a shift from idea that the system has to be completely changed to one that thinks there are many things to correct and a lot of things to work on. I believe that there must be a growing sense of awareness that these elements of improvement can be achieved under the same pro-democracy and pro-free enterprise regime that has governed the country. I hope that this understanding becomes common and leads to a rational scheme of adjustments, of changes, of what we have to do.
Corona’s secret for lasting 140 years
The clarity of the company’s values. This is a group that has always had a very balanced vision between the benefit of its companies and the elements that contribute to the country’s progress. Apart from what is done with the foundations, we have supported numerous NGOs that work on multiple issues. This shows that there is a genuine interest from the shareholders in the search for solutions. The second thing is the governance scheme, because as a family company it was decided that the control of the Board of Directors should be professional. So much so that six of its nine members are independent, external. By the way, no family members are allowed to work here.
The Corona Organization of the future
The family is already working on the 2040 vision. Those goals set us as an organization to think 10 and 20 years ahead. I think Corona’s growth potential is very interesting. I am referring not only to the businesses we are in today or to the entry of Ikea, which we will have at the beginning of 2023, but also to the international expansion that comes from bringing more products to the countries where we operate. The key here will continue to be the entrepreneurial spirit that identifies us and that we are going to strengthen with the rise of all things digital.
