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Barranquilla drives diversification efforts through industrial zone and port investments

Article - March 15, 2016

The city of Barranquilla’s strategic location, talented labor pool, industrial parks and world-class port make it a top destination for investors

As a port city that is only 100 kilometers from Cartagena and Santa Marta, Barranquilla is strategically placed to be a nucleus of trade, transportation, and human capital. Its 12 million inhabitants live among the most prestigious universities and technological institutes that supply professionals for the entire Caribbean. The city is also home to several industrial parks – Colombia’s first industrial park was actually built in Barranquilla – and yet despite the abundance of industrial areas, the city still has high quality of life, with top-notch schools, cultural offerings and space to breathe. “The key to Barranquilla’s success is that it really has a diverse offering of resources that companies need and value – that’s what makes companies choose to operate here,” says Ana María Badel, the Executive Director of ProBarranquilla, an agency that promotes regional investment.

One of the main objectives of ProBarranquilla is to attract domestic and international investors and stimulate the economy while contributing to the creation of jobs. The agency’s strategy is oriented towards identifying both Colombian and foreign businesses that are considering expansion, and making it clear to them that Barranquilla provides unique and added value for a variety of reasons, including its geographic location, industrial parks, and port infrastructure.

Although it is ahead of the curve industrially, from a tourism perspective, Barranquilla still has room to grow. At present, its tourism industry retains more of a corporate feel, though that is changing. Health tourism has become increasingly popular, and in recent years, a free zone for health tourism has been developed with both public and private investment. 
In parallel, there has been a push to make Barranquilla feel less corporate and more leisurely. A large part of this effort involves the construction of an events and convention center that will surely invigorate the tourism industry with new entertainment and attractions. Strategically located on Barranquilla’s waterfront overlooking the Magdalena river, the new space will be surrounded by a hotel district, a shopping district, and a corporate district. “This is without a doubt a project that will change the face of Barranquilla because it will reintegrate the river with the rest of the city,” says Ms. Badel.     

Still, views on Colombia’s economy as a whole are mixed. While some believe that it will have the fastest-growing economy in Latin America this year, others are less optimistic. César Caro Castellar, President of Barranquilla Free Zone, has a different perspective. “The best way to visualize what is happening with the Colombian economy right now is to imagine a pressure cooker,” says Mr. Castellar. “The heat is up and the lid is on, so you must open it slowly if you don’t want to get burned.”

“The current infrastructure projects are the most important in the history of the country. They are marking the start of a new era – this is the consolidation of a truly multimodal Colombia”

César Caro Castellar, President of Barranquilla Free Zone

Although Mr. Castellar is well-aware that Colombia’s economy has been in a pressure cooker situation for several decades, he has faith that hard times will soon be over because of the rising need for products that Colombia is well-placed to supply. In particular, he cites the booming demand for natural and organic products, which require arable land that has not been exposed to chemical pollutants. Colombia already has this type of land available, and can accommodate the organic production of bananas, mangoes and avocados – all staple foods in the types of healthy diets that are becoming increasingly popular. Linking this organic food production back to infrastructure, Mr. Castellar underscores the importance of building roads, rivers, ports, and airports so that that freight corridors will be able to accommodate a boom in production and allow for the streamlined transportation of goods abroad.      

At present, Colombia faces an urgent need to improve its connectivity between regions. It does not have the full capacity to supply large markets mainly because its competitiveness is affected by the difficulty in transporting goods between ports and where the goods are actually produced. “The cost of transporting a container from Barranquilla to Bogota is higher than the cost from Miami to Barranquilla,” says Mr. Castellar. He suggests that if goods currently transported by road could instead be exported through a multimodal transport system – using the Magdalena River as the main freight channel to the port – the country would be able to take its competitiveness to an entirely new level. In a similar vein, Mr. Castellar argues that internationally plummeting oil prices have not been an entirely bad thing because they’ve pushed Colombia towards developing its non-traditional lines of production. “We are now expecting Colombia to recover its industrial and commercial manufacturing identity, as well as the agriculture and cattle sectors,” says Mr. Castellar. “The government and the trade unions must be very creative in order to make this a stable and long-lasting situation, promoting the investment and modernization of the production facilities.”

Mr. Castellar also acknowledges that attaining true peace in Colombia is inextricably linked with the country’s projected future economic prosperity. He stresses the importance of ensuring that the general population is aware of the legal, philosophical, psychological, and economic issues that have to do with the conflict, and thus be ready for a definitive solution. “We are promoting special training on the subject of the post-conflict context, including the basis for the strengthening of the public opinion in regard to the building of peace,” says Mr. Castellar, emphasizing that peace means not only eradicating weapons, but also the sources of illegally-earned funding that also had a harmful impact on Colombian society.

“Colombia offers advantages that no other countries in the region can. It’s a large and secure bet for foreign investors, especially from North America.”

Julio Gerlein Echeverría, President of Valorcon

In addition to a concerted push for peace, significant changes are already being made to facilitate Colombia’s emergence as a vibrant center of trade. ZOFIA – the International Permanent Free Zone of the Atlantic – is one of the city’s capstone projects, and consists of a 100,000-square-meter industrial park that was built to offer a solid, trust-worthy, and well-structured product to any investor  interested in reaching a wide and important market. Setting it apart from the rest, ZOFIA offers very modern and useful infrastructure which is difficult to find elsewhere in Latin America. It has 14-meter-wide roads, turns suitable for 22-meter-long trucks, and a traffic capacity of 1,000 trucks per day carrying 50 tons each. It also has security cameras controlling 100% of its operations and various energy sources with automatic transfer and price stability clauses that allow it to make the best use of the country’s different resources. Location wise, it is in the core of the Barranquilla metropolitan area, close to ports, airports, universities, and hotels.

Given ZOFIA’s free zone status, it will also make it easier for companies to take orders and ship them to buyers in a few hours, thereby making it easier for Colombians to purchase goods from abroad.  

Built according to the highest international standards for industrial areas, ZOFIA includes a system of underground wiring to avoid visual pollution, as well as water treatment facilities, wide roads, large green areas, and a system for the recovery of rainwater which will provide water to the population. It is also prepared to welcome industry of any kind, and especially well positioned to accommodate industries that are experiencing fast growth. “The current infrastructure projects are the most important in the history of the country,” says Mr. Castellar. “They are marking the start of a new era – this is the consolidation of a truly multimodal Colombia.”

In addition to ZOFIA, Barranquilla will also soon be home to a superb airport, given that its geography allows for excellent security and visibility, and its location at sea level makes it possible for it to operate at the maximum freight. Likewise, there is a port terminal being constructed at Salgar Port, which when combined with its other offerings essentially gives Barranquilla the best logistics corridor in the whole country.

According to Julio Gerlein Echeverría – the President of Valorcon construction and engineering company – all of these logistical improvements will bring Colombia to the level of Chile, which is already one of the best-connected countries in the region.

“The Superpuerto project will bring industry and employment to the city, together with development that is good for Barranquilla, for Colombia and for all those connected to it”

José Manuel Daes, CEO of Tecnoglass

Having spearheaded the design and execution of several leading civil engineering projects, Valorcon has been the driving force behind the Colombian Ministry of Housing’s push to provide 100,000 housing units to families in need. It was also responsible for the construction of the 60,000-seater Metropolitan Stadium of Barranquilla, now considered one of the most important infrastructural projects in the city.

Ultimately, he believes that big infrastructure projects will benefit Colombia, but also strengthen links with other countries in the region. He describes a particularly important project – the dredging of the 1500km long Magdalena river – which will improve the navigability of the river and contribute to a significant reduction in the cost of transporting goods from the center of the country to Barranquilla.  In parallel, he mentions that free trade agreements have led to increased real estate projects, an increase in the value of land, and a surge in different industries expanding their operations to Barranquilla.

“Colombia offers advantages that no other countries in the region can,” says Mr. Gerlein. “It’s a large and secure bet for foreign investors, especially from North America. We no longer have to fear kidnappings or guerillas – we are signing post conflict protocols and looking forward to a very different future.”

Nonetheless, according to Christian Daes, Chief Operating Officer of Tecnoglass – a NASDAQ-listed company that specializes in providing windows, glass, and aluminum to the construction sector – challenges remain.

“When a country like Colombia forgets about its industrial roots, it naturally relies more heavily on imports,” explains Mr. Daes, adding that industrial operations are especially challenging because light and water cost double what they do in most industrialized countries, and gas is up to five times the price it is in the U.S. Adding currency devaluation makes salaries exponentially more costly for employers, not to mention taxes and transportation costs, which also come at a heavy premium.

“Barranquilla is strategically located and has the best workforce in the region – its people are dedicated, hard-working, and highly skilled. The only thing it’s missing is the type of connectivity to the rest of the world that allows for export on a large scale.”

Christian Daes, Chief Operating Officer of Tecnoglass

“That said, there are ways the Colombian government can stimulate industrialization and promote a more export-savvy culture. By providing businesses with greater access to credit, lowering the cost of things like energy and gas, and filling current infrastructure gaps by facilitating projects such as the “Superpuerto” – a port that will also accommodate large containers and have specialized terminals for different types of products, Colombian exports will necessarily rise. “We’re the only country in the region that lets inexpensive Chinese products enter Colombia without imposing a tariff,” explains Mr. Daes. “It’s no wonder that we can’t get our own industry off the ground.”

To do its part in bringing back a more industrialized Colombia, Tecnoglass is outfitting its own soft-coat glass factory in Barranquilla. This is especially noteworthy because there are only about 20 soft-coat glass producing machines in the world, which puts Barranquilla at the technological forefront of glass production. In addition to boosting its sales to the U.S., Canada, and Mexico, it is expected that the new technology will also help Tecnoglass expand its reach across all of Latin America.

“For us, Barranquilla is strategically located and has the best workforce in the region – its people are dedicated, hard-working, and highly skilled,” explains Mr. Daes. “The only thing it’s missing is the type of connectivity to the rest of the world that allows for export on a large scale,” he adds. “Once Barranquilla has the Superpuerto, not only our company – but Barranquilla as a city – will make an unimaginable leap forward.”

“The Superpuerto project will bring industry and employment to the city, together with development that is good for Barranquilla, for Colombia and for all those connected to it,” adds Tecnoglass co-founder and CEO, José Manuel Daes.

René Puche, President of the Port of Barranquilla (Sociedad Portuaria Regional de Barranquilla S.A.), is of a similar mind. He explains that it currently costs around $1,200 dollars to move a container from Bogota to Barranquilla, but it sending from Brazil to China only costs $150. He adds that is precisely why the Colombian government needs to create incentives for companies to relocate their production lines in the areas near the ports. “We are aiming, among other goals, for the recovery of exports from the agriculture sector, and many of our projects are intended to help in terms of the logistics,” says Mr. Puche.

The idea, of course, is not only for local companies to benefit, but to also make Colombia more hospitable to foreign capital. “Barranquilla has the blessing of being a city of immigrants,” says Puche. “It belongs to everyone and to no one at the same time. It’s a city of productive opportunities, and it is famous for the quality and diversity of its people. Without question, this is the best city in Colombia.”