Possibilities & Limitations for Fuel Retail Contractors in MexicoBy Pedro Alcalá | Fri, 08/28/2020 - 09:40
Q: How has the Artelia Cal y Mayor merger and consolidation process advanced this year?
A: We continue working under a single-client framework, but it is possible that this consolidation process will also lead Shell to distance itself from other EPCMs and assume Artelia Cal y Mayor as its main EPCM partner in Mexico. It has been a bumpy road to get to that point, particularly at the end of 2019 and at the beginning of 2020. ACYM took that major growth Capex challenge. This has led to the critical decision of us doubling our workforce between February and April of this year. We decided to make this investment after analyzing the future of our situation with Shell and our place in Mexico. It turned out to be a good bet to make. The workforce expansion also created confidence in our consolidation process. It generated interest in our future prospects and in our areas of expertise, through which we can grow beyond this current single-client framework.
The original idea behind this investment came from Artelia Group’s headquarters in France. Obviously, it seemed unusual given the prevailing industry context. As I mentioned before, 2020 began with some challenges regarding our partnership with Shell. This led to a general evaluation of the situation in Mexico. External experts arrived in the country to analyze whether or not we had the right profile, team and approach to run stakeholder management in this market. The results were mostly positive, except that it became obvious that the workload distribution was excessive in key areas. This created unnecessary bottlenecks and led to the decision to double our workforce and redistribute it across three important areas: project management, project control and HSSE. This allowed us to delegate tasks and responsibilities more efficiently. We presented these changes as part of a new business plan to Shell in April, and they supported it
Q: To what degree have your projects expanded beyond service stations?
A: Shell’s policy is focused on opening as many new service stations as possible. We are working on some flagship projects that are on hold because of the COVID-19 pandemic. Nevertheless, Shell had a relatively high budget for those types of projects, which had to be cut to adapt to the present situation.
Prefab, mobile and modular units are becoming a trend in our sector to reduce construction times. We are in the process of obtaining the necessary permits for this type of construction, which we believe will not be that difficult to do. Modular construction can represent at the beginning significantly increased CAPEX costs, but over time we can save money on operation, management, risk and exposure. This approach can help us optimize our entire operations and open service stations faster.
Q: What are the possible paths forward for Artelia Cal y Mayor?
A: As part of this transition process, which will take place throughout this year, Artelia Cal Y Mayor also invested in executive advisory through September. This executive adviser is helping us to approach potential new clients while we focus on our ongoing operations. These explorations involve future clients in some categories that go beyond fuel retail and into the broader downstream segment, such as large-scale storage projects and refining facilities. We have been in contact with companies looking to participate in some of the eight bidding rounds that will take place in the short to medium term. Before we get further involved in that, we want to make sure to consolidate our new team. As a result, we are not planning to get involved in the first of these bidding rounds, but rather in the later ones. There are also other French companies that are looking to develop a presence in Mexico and are looking for a partner like us to help them benchmark their engineering. We have had good rapport with many potential clients in Mexico’s oil and gas sector. Nevertheless, our strategy in this regard has to be redesigned to adapt to the economic and pandemic crises that are affecting the industry. What we are realizing in all of these meetings with potential clients in Mexico is that foreign companies, and perhaps more specifically European and French companies, like ours have many new perspectives to offer clients here.
Artelia is a multinational, multidisciplinary consultancy, engineering and project management group specialising in the construction, infrastructure and industry sectors. With 5,900 employees, Artelia is a leading player in the European engineering sector.