THE COOPERATIVES, EKIN AND AMPO, JOIN FORCES TO CARRY OUT AN INTERNATIONALISATION PROJECT IN BRAZIL

The cooperatives, Ekin (cutting tool) and Ampo (valves and foundry), both of which form part of the NER (New Relations Style) group, have joined forces by setting up a joint company, Ekin Ampoby Ner S.L.. to achieve international expansion for Ekin in Brazil. This is an initiative whereby Ampo provides Ekin with financial backing to be able to make the investment and thus avoid having to request bank financing to do so.

For Ampo, this alliance does not just mean providing a third party with financial support, as with this operation, Ampo sets out on a new business diversification path, a strategy to which it is willing to earmark 17% of its cash flow. The entry of Ekin into the project is Ampo’s first external diversification initiative - as confirmed by Peio Arcelay, general coordinator of Ampo -, but it will not be the last, as they are willing to analyse other projects that they may be presented with. Until 2008, the cooperative, Ekin, mainly exported to European Union countries, but as a result of the crisis, it decided to reorientate towards developing countries. Thus, they entered Mexico, through an own implementation, which was followed by India, where they firstly allied with a local partner, which they finally ended up purchasing.

From 2014 to 2017 Ekin has planned to make strong investments; around 3 million in Mexico and another 2.77 million in India. But, in September 2013, a good opportunity to enter Brazil arose, which involved an investment of another 6 million. Xabi Salcedo, coordinator of Ekin, pointed out that altogether, in four years, this cooperative had to make joint investments amounting to 10.5 million, for which its own resources were not sufficient, and it did not want to have to resort to the banking market and increase its borrowing.

Based on this internationalisation, Ekin foresees to be able to multiply its turnover by three, to reach 46.7 million Euros and increase its staff to 420 people.

Both Ekin and Ampo belong to the NER Group and as a result both cooperatives started to talk and they decided to join forces in this new project, where Ekin needed financial resources and Ampo needed diversification projects to invest in. The new relations style that entails forming part of the NER Group has been a determining factor for this operation, as indicated by those responsible for both cooperatives.

Diversification

Ampo, a cooperative that employs 700 people, 98% of whom are cooperative members, mainly operates in the areas of industrial valves for the energy and mining sectors; highly alloyed foundry parts for very corrosive environments such as mining; and engineering for regasification plants. 98% of its production goes to international markets.

At the last general meeting of Ampo, its new strategic orientation was approved, based on which it must earmark 50% of its cash flow to investments in its own activity, 33% to financially strengthening the cooperative and the final 17% to entering new businesses. In this context, Peio Arcelay affirmed that “the Ekin project presented an opportunity for that diversification” and the decision to go ahead with it was taken in practically one week.

Arcelay emphasised that Ampo has more financial resources to enter new activities and that they are willing to study new proposals, but always based on the philosophy of the NER Group.