Moving beyond structured cabling

Thursday, April 21, 2011

Panduit, one of the biggest players in the structured cabling market, is seeing increased activity in the government segment in Argentina and is continuing to experience growth in the corporate segment in Chile.

To find out more about the company's plans and strategy for the Southern Cone market, as well as some of its current projects in the region, BNamericas spoke with Maximiliano Schlez, Panduit's general manager for the Southern Cone.

BNamericas: What's the outlook for the Southern Cone unit this year? Are you expecting to see high growth over 2010?

Schlez: We're expecting to grow this year. In Latin America, growth rates vary, but the important thing is that we're talking about growth. The two most important markets across the region in terms of volume are Mexico and Brazil.

In the last few years, Brazil has been experiencing very impressive growth rates and, due to this, has become a key market for Panduit. In the Southern Cone, we can also talk about Chile. This country has a macroeconomic stability that enabled us to have constant and predictable growth in this country. We can say that we've been growing at double-digit rates in Chile and we expect to continue experiencing similar growth levels. Last year, the earthquake that hit the country affected the market but also offered new growth opportunities in terms of infrastructure, in which we participated.

In Argentina, despite certain political and economic uncertainties, we also continue to expand. This year, it will be difficult to predict our growth since 2011 is an electoral year. However, Argentina's public sector is a relevant player in our business. We also experienced significant growth in 2010 versus 2009. Government-related projects continue to fuel our growth in this market; we're seeing increasing activity in government projects this year. In 2010 we also participated in a number of projects in this field due to the country's bicentennial celebrations. We're working on projects at national, provincial and municipal levels.

BNamericas: And what is the expected growth rate for the Southern Cone division?

Schlez: We're expecting to experience double-digit growth this year. In certain countries such as Chile, growth will be higher compared with others. In Uruguay we have an interesting mix between government and corporate clients. Government-related projects are mainly boosted by large state-run companies such as Antel and Ancap. We have several initiatives in the government segment in Uruguay. In Paraguay, we have limited activity in which we only provide support to global or regional clients.

BNamericas: What's the revenue contribution of the two main markets in this sub-region?

Schlez: Chile accounts for approximately 55% of Southern Cone revenues, followed by Argentina with approximately 42-43%. Uruguay and Paraguay account for the remainder.

BNamericas: In which large projects is Panduit currently working?

Schlez: In Chile, we're working on a very large project with [retailer] Cencosud. In Argentina, we are working on several initiatives. In the government segment, we're collaborating on several projects related to this year's elections, such as electronic voting. In Argentina, we also recently finished a project with [Latin American e-commerce company] MercadoLibre where we implemented our solutions in the company's new office in Buenos Aires. We also expect to replicate this project in other Latin American cities where MercadoLibre has operations.

We're also developing a very large project with Telefónica Argentina, in which we're working on the company's internal infrastructure. This is a five-year project with a very significant investment.

BNamericas: The company mainly focuses on solutions for data centers, industrial automation and intelligent buildings. How much does each segment contribute to its revenues in the Southern Cone?

Schlez: The data center and the intelligent buildings segments currently account for approximately 40% of our revenues each, while solutions for industrial automation represents the remaining 20%.

BNamericas: How do you structure your sales across the region? Do you sell exclusively through a channel network?

Schlez: Yes. We operate through large distributors and integration channels. We have good coverage in terms of distribution channels. Each channel is expanding geographically, so we don't need to recruit additional distributors in the markets where we operate.

Regarding our integration channels, we have three different categories, namely gold, silver and standard. Our gold partners mainly focus on large and complex projects. In Chile, we have four distributors; in Argentina we have three, while in Uruguay and Paraguay we have two and one distributor, respectively. Each distributor has a specific profile in line with the market on which it focuses.

BNamericas: You mentioned that the company sees increasing opportunities in government projects. In what sort of projects is Panduit usually involved?

Schlez: We're usually involved in projects to implement infrastructure for public buildings at a national or provincial level - to develop data centers as well as for certain video surveillance projects. The weight of government projects in terms of revenue contribution varies from country to country, but we can say that these projects account for approximately 35-50% of our Southern Cone revenues. We believe that revenues from government projects will remain stable in terms of revenue contribution in the coming years.

BNamericas: What are the differences that you find in terms of technology adoption in the countries you oversee?

Schlez: We can perceive some differences in terms of structured cabling adoption. For example, in Chile and Uruguay, we're seeing demand for category 6, which is an intermediate category, and 6A. Meanwhile, in other countries such as Argentina, there is widespread demand for category 6, but also continued demand for lower categories. This happens because many SMEs in Argentina require lower categories of structured cabling compared to large corporations.

BNamericas: How many data center projects is Panduit currently involved in throughout the region?

Schlez: We are working with América Móvil, with HSBC, SAP, Edelap. There are several initiatives in this field. Some of these are for new data centers, but most of the projects are to expand existing ones since we have solutions for high-density data centers.

About the company

Panduit, which has been traditionally known for selling cabling, is diversifying its portfolio to implement total infrastructure solutions that incorporate cabinets, management systems, power-over-ethernet and physical network security, among other equipment. The company calls the concept unified physical infrastructure.