Eduardo Eurnekian

Lunes, enero 9th, 2012

Doing business entails changing

His business philosophy is based on movement, on following the changes of reality and the changes of business. Founder of Corporación América, he took his first steps in the textile industry to later do business in widely diverse industries, always accompanied by success. In 2011 he opened the “Terminal C” of Ezeiza airport, he won the concession of foreign airports and promoted the Bioceánico Aconcagua corridor. He announced investments for USD 650 million for 2012. Based on those initiatives and his career trajectory, Prensa Económica honored him with the title “Businessman of the Year”.

He is one of the most successful entrepreneurs in the last decades. If something characterizes him is movement, as his assets have passed from the textile industry, to multimedia, to airport services, routes, energy and today he is behind the ambitious initiative of building a corridor by drilling the Andes Range. At 79 he is owner of an energy and vitality to be envied. His passion is what he does every day: working and then swimming in his heated swimming pool. His definitions reveal a character solid as a rock, but also an irony based humor, that slips every now and then.

-          Your first job was in the family business. What was it like?

-          My father and mother were born in Armenia and they came to Argentina when they were young, but they met here. My father founded a textile company in 1928. In the beginning it was a factory of threads to sew, embroider, darn, baste, crochet, and all that was worn at that time. At 17, right after my graduation, I started working in my father’s enterprise. I was a laborer, a hand, a sweeper, I made packages, and delivered goods. I didn’t have any privilege. I was just like anyone else who was starting. Promotions came as you showed your skills, willingness and desire to work.

-           Did it prove to be a good experience for your later career as a businessman?

-          At that time I wasn’t really aware, but, yes indeed, it later turned out to be really important, because I had vast experience in the basic work, I knew how to package, I could separate weavings, receive payments, I made mistakes and I accepted the subsequent reprimand… All in all, it let me grow in the human aspect, giving me the bases to then develop the gift of leadership and, at the same time, it helped me to generate the necessary wit for problem-solving.

-          What did you learn from your father as a businessman?

-          The greatest thing I learnt from my father, and from the immigrants of that time, was the strong sense of justice and honesty: if you gave your word you would comply with it no matter what. I learned that the most important thing a person has is his own name and you have to take care of it both in life as in business. By fulfilling your promises a virtuous chain is created that distinguishes you from others.


-          You were a pioneer in cable TV in the country by creating Cablevisión. How did this break in your business career happen and what inspired you?

-          I suddenly realized my father had been a visionary by devoting to the textile industry in the 20’s. And I was a fool for still doing the same thing 50 years later. That made me redefine my position as a businessman and made me think what I should be doing at that time. Business changes, it moves, at par with reality, and the secret is to grasp the movement and move accordingly.

-          What did you do then?

-          I traveled, I observed, I studied, but above all I saw that by embracing democracy Argentina was going to undergo a great transformation. During the time in which Argentina did not have a constitutional government, the country was stifled in terms of information, while the world was changing at high speed. There was the satellite technology, cables no longer transmitted only one channel, but 15 or 20, some of which were from other countries. There was a sense of freedom and communication. And it was obvious that sooner or later Argentina was going to catch up with this reality. At the time there was only one channel in the interior of the country that was Canal 7. With the cable we could give them 20 or 30 channels including the most important channels of Buenos Aires, some from Brazil or Europe. This was the cable revolution.

-          How did Cablevisión start?

-          By purchasing a small company in La Lucila, province of Buenos Aires. How much did it cost? Nothing…the company was doing really badly and I bought it for the value of the debt.

-          But then it expanded and you even created a multimedia conglomerate…

-          By the late 80’s the cable market was pretty much developed, with 30 signals that then we increased to 60. We bought Radio América, Del Plata, we reached a total of five radios when we bought Del Plata. We had the first TV channel and radio -América- exclusively for news. We also bought El Cronista Comercial, and the television producer company Pramer was also installed, where we used to produce 17 TV channels. We had two newspapers. If fact we became the country’s first multimedia group.

-          Until one day you decided to get rid of the multimedia conglomerate…

-          I had already sensed the eagerness for information the public had, as well as that of interconnection. An interest that continues today, but in a completely different world, much more technologically advanced. That’s why, when I though that the media cycle in terms of business was done, I left. I think I made the right choice.


-          And then you turn to the airports…

-          Yes, at that time I started focusing on the airport world. To master this business I made use of my experience in the textile industry. How do they relate? Well, the textile activity is creative, artisanal and communicative. In this sector many decisions concentrate in the hands of the businessman, this is why this activity provides a mental preparation to see things that any other businessman cannot see.

-          At that moment many services were privatized. Why did you choose the airports?

-          I noticed that the airports were in very poor conditions; they were definitely not places that offered good quality service for tourists; they were somewhat in a rack and ruin state that could be seen in everything, even in the structures of the building. I realized that there was a lot to do in this area. This brought about a transformation in terms of airport system service in Argentina.

-          After having refurbished the airports in Argentina you started exporting the know-how to different parts of the world…

I thought I could repeat this work abroad and I found a globalized world in which everyone competed. The airports also compete against one other and that brings about a decrease in costs, improvement in services and creativity to promote them. In general, the organizations Aeropuertos Argentina 2000 competes with are large and complex structures. These companies have an early expiration date. They put the cart before the horse: they only want to make money, with the lowest possible service. I learnt that money comes when you deliver a good product, not when you eliminate the competition. United, American, Eastern and so many more, bankrupt or filing for bankruptcy, are good examples of how worthless it is to have a great business structure with poor services. After witnessing the failure of these companies, some younger firms have started focusing on quality service and assistance.

-          What’s the future like for Aerolíneas Argentinas?

-          The best thing Aerolíneas can do it to compete. The privilege of a monopoly can never be good, neither for the company nor for the staff. We have what it takes to renew it and have a competitive flag carrier among the leading airlines in the world. The staff is well-trained, we have to do our best. The community will back the capitalization of the airline if they see these improvements.


-          Given your investments in biodiesel we can infer that you foresee a bright future in this area.

-          The biodiesel is an alternative and it is still in the research process. When we started this business, technology was not what it is today, and the price, expensive. In just a few years we made a great process in the yields per hectare, and in the case of ethanol we went from an 8% yield per ton of cane, to 12%. The growing demand for the product triggered technological improvements in order to lower costs amid fast-increasing competition. The same is happening with other alternative energy sources, such as solar, wind or biomass, as well as others that will be developed as the tidal power o the thermal energy. Needless to say, the future belongs to the renewable energy sources.

-          What are the investment projects for the group for 2012?

-          We are planning a number of investments for this coming year. The projects range from mining, oil drilling in the south, extension of the biofuel plant, follow-up of the works in Ezeiza and Aeroparque airports. We predict that the group will invest USD 650 million of its own capital throughout next year, without considering reinvestments.

-          It is said that your group will buy Banco Industrial…

-          We are studying different investment options, among which there probably is some in the financial area, but nothing has been settled as of now.

-          What’s the secret to business success? What are you most proud of?

-          I want my group to be remembered for its versatility, its creativity and its good ideas. We have constantly been changing to be always one step ahead. There are no permanent business activities, for they are always mutating. You need to create possibilities. You need to know when to enter and above all when to leave a business.

-          So, you’re always in the quest for new business…

-          We have always been ready to open new fronts, whenever we are done with some activity. This is thanks to a team, even though I am the head and public face. A qualified team that is always in the lookout of new opportunities.


-          You must have lots of proposals. How do you make the decision to enter a business?

-          We use the put and take spinner (laughing). Seriously speaking, we do our calculations, but decisions cannot be fully rational. There is always a great deal of intuition and also some risk attached to it. There is no businessman that would always make brilliant decisions, or that would always invent things out of nowhere. The most valuable businessman is the one that with effort overcomes his mistakes and the one who leaves the business at the right time. I’m all about trial and error like everyone else.

-          Do you have a “major state” that advices you on your decisions?

-          I do not consider the business organization as a rigid structure. I believe in consulting my ideas with the different areas of the company and their experts. These talks help to shape the ideas. I can say that the decisions are made by a multi-team.

-          What qualities do most value in your advisers?

-          I deeply value the intellectual honesty of my employees, and I am glad whenever I find out that they have not done the things exactly the way I told them. This can always contribute something to me, and if they do as I say to the letter, I would not have any “filter”, which is never advisable for companies.

-          What drives you to keep on working and keep on undertaking projects?

-          Need motivates me to keep on working. There are many in my family, I have a lot of advisers and a large tax burden (laughing). In fact, what I have is a great desire to keep on living life with passion and satisfaction. And for me, happiness means working. Likewise, I am increasingly getting involved in social issues. It is not that I consider companies should solve social problems. I think companies should create jobs, look after their staff and pay taxes. Businessmen themselves should look at what happens around them and do something, but in their personal capacity.


Mr. Eurnekian’s most recent great initiative is the construction of the Bioceánico Aconcagua corridor, planned to establish a new physical connection with Chile, at a cost of USD 3 billion. How did this idea come about? Eurnekian puts it this way: “When I proposed it I was just analyzing the business. Up to 1980 the largest traffic of goods, products and people around the world was monopolized by the Atlantic Ocean. Once South East Asia appeared as a player in the world’s economy, this trend gradually changed. Currently, the volume transported across the Pacific Ocean is 30% above the volume transported across the Atlantic. In 50 years that figure will be twice as much. The only gateway that exists from Argentina to the Pacific is the one constructed in 1910 to transport 4 million tons. If a century later we still have the same operating capacity is because something went wrong. The bioceanic corridor project entails the creation of a 51km-long base tunnel in the Andes; it is a private initiative by a consortium with capital from different countries, so that it can be self-sustained.


-          In 1995 Eduardo Eurnekian sold Cablevisión to TCI for USD 750 million, so far the highest price paid for an Argentine company

-          In August 2011, Corporación América sold its free-shop business in airports of Argentina, Uruguay, Ecuador, Armenia and Martinica, to the Swiss group Dufry (Advent Funds) for USD 957 million.


Corporación América’s main business activities are the following:

-          Airports: Concessionaire of terminals in 49 airports of Latin America and Europe.

-          Infrastructure: Road concessionaire of over 1200 km of routes in Argentina. Constructor of road works, airport terminals and runways.

-          Energy: Biodiesel full cycle plant with projected capacity of one million tons in the coming years.

-          Agro-industries: Over 100,000 hectares, with 20,000 hectares under irrigation, for different crops. 20,000 head of cattle, state-of-the-art genetic technology. Winemaking production, winery.

-          Services: It controls an important bank in Armenia and the postal services in that country.

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