The World Bank’s investment arm, the International Finance Corp., is only a few weeks away from deciding whether to invest $10 million in Guatemala’s largest paint manufacturer, Latin American Paint Co., or Lapco, for the construction of a larger facility in Escuintla, according to a spokeswoman for IFC in Washington. If so, production is expected to increase by 30 percent to 20 million gallons as a first stage of modular expansion, said Yara Argueta, the CEO of Lapco, which is a unit of Grupo Solid.
Replacing the Villa Nueva plant, near Guatemala City, in the more industrial town of Escuintla, and nearer to the port of San Jose, is the first goal of the IFC funding, according to Argueta. The second goal is to increase capacity, which is already being considered at a level of 25 million gallons per year in a later expansion phase. The third goal of the new facility project is a greater level of automation. New equipment from Germany, Brazil and perhaps Singapore will be included in the new plant.
Apart from greater volumes, Lapco plans to diversify production and pursue more niche opportunities. A greater presence in automotive and wood coatings, as well as sales of paint-related products including brushes, solvents and other hardware is part of the plan. The company also hopes to produce latex resins in addition to the current production of alkyd feedstock.
Lapco already produces twice what the Guatemalan market consumes in terms of paint, so exports are key to the company’s strategy to growth. With over 6,000 points of sale, the company’s distribution network in Central America is expected to be strengthened through the loan as well. The company has offices in Costa Rica, El Salvador, Honduras, Panama and Nicaragua, apart from Guatemala. Newer country targets include Colombia, Cuba, Mexico, Peru and Puerto Rico. With approximately $100 million in sales, Lapco controls about a third of the Central American paint market, according to Argueta. “Over the past year our regional market share has increased, but because most of these companies are privately owned, the numbers are difficult to confirm,” she said.
As part of the deal, Lapco will develop a decommissioning plan for the existing Villa Nueva plant. Lapco also will implement a comprehensive plan to handle environmental and occupational health safety at the new facility based on ISO 14001 and OSHA 18001 standards. The work will include a new solid waste plan by end of this year.
Greater proximity to Puerto San Jose, the largest port on Guatemala’s Pacific coast, also will improve Lapco’s distribution network from Escuintla, which is located about halfway between Guatemala City and the port.
The IFC has been expanding its portfolio of manufacturing companies recently, according to Adriana Gomez, a senior communications officer responsible for Latin America at the organization. Among other goals in making loans to private companies in countries like Guatemala are job creation, general economic improvement, increasing financial access for small- and medium-sized companies, and fostering regional trade, she said. In addition to its direct lending business, IFC also operates it Business Advisory Service, which helps companies build their financial profiles and tap global financial resources, among other activities.