Roberto de Andraca

  • Interviewed 26 May 2008 in Santiago, Chile, by Andrea Lluch, Research Fellow, HBS
  • Clip Duration – 2:37

Mr. de Andraca profiles the different stages in his business career at CAP, pinpointing various company phases and the privatization process. He also discusses the highs and lows that the company has weathered. He summarizes CAP’s diversification and modernization processes, funding and internationalization strategies, organizational changes, and the main features of corporate labor and environmental policies. To conclude, he describes the characteristics that have defined him as a businessman.

Interview Excerpt

R: El 1 de marzo de ese año, entré en la CAP. Eso fue hace 48 años. Ingresé como ingeniero. CAP era una empresa mixta, 53% privada y 47% estatal, y funcionaba con una gran influencia norteamericana. Se había creado en 1946 y había empezado a operar en 1950. En un momento, alrededor de 400 norteamericanos enseñaban cómo se debía operar una industria, la cual, en un principio, fue de acero solamente y, después, con los años, incorporó la minería.

Cuando yo entré, era una compañía de acero con una fuerte influencia norteamericana. Funcionaba como empresa privada con acciones en el mercado, de las cuales 43% estaban en manos del gobierno. En ese tiempo, tener una siderurgia en cada país estaba de moda. CAP disfrutaba de una serie de ventajas tributarias, de aduana, etc. Nadie podía competir con nosotros; el acero en Chile costaba de 2 y medio a 3 veces más que en el resto del mundo. Vivimos una época muy feliz, nos sentíamos importantes y producíamos acero, pero la industria estaba muy protegida. Luego, en 1969, Allende fue elegido presidente y asumió en 1970. En los primeros meses de 1970, Allende nacionalizó la compañía. Esto significó que les quitaron todas las acciones a los privados y se las cambiaron por bonos que no se pagaron. La compañía quedó estatizada casi totalmente, en un 98%, porque algunas personas no firmaron los traspasos porque se habían muerto, se habían enfermado, o estaban fuera de Chile. Operamos como empresa estatal hasta 1986.

Primero, bajo el régimen socialista del presidente Allende y, después, bajo el régimen militar que le siguió. La empresa se había transformado. En 1960, se había creado una subsidiaria minera -que ha ido creciendo a través de todos estos años- principalmente para abastecer a la planta siderúrgica de Huachipato, en el sur de Chile. La primera mina que se abrió resultó suficiente para abastecer la planta, de modo que el excedente económico de 2/3 se destinaba a la exportación del mineral. Esta mina creció durante la presidencia de Allende; además, se nacionalizaron otras minas y se compraron algunas minas norteamericanas. Algunas las compramos nosotros, como la mina Romerales, entre otras. Para entonces, el negocio de la minería tenía un peso casi equivalente al del acero. Es decir, operábamos una compañía de acero protegida y otra de minería que abastecía a Huachipato y exportaba al mundo.

En 1978, se introdujo en Chile una reforma económica muy importante y apareció en escena la persona que tal vez inventó el capitalismo en Chile: Sergio de Castro. Primero se desempeñó como asesor del ministro de economía y, más tarde, pasó a ser ministro de economía y ministro de hacienda. En determinado momento, de Castro implementó ciertas reglas para todas las empresas, que también nos afectaban a nosotros. Estas reglas impedían a las compañías endeudarse con cargo del gobierno y suspendían todas las protecciones que tenían, es decir, las asimilaban a cualquier empresa normal que se hubiera creado en el país, sin ventaja de ninguna especie.

Esto produjo cambios enormes en la CAP entre los años 1978 y 1987. Enormes. Muchos estuvieron en desacuerdo y se marcharon. En su opinión, eliminar estas ventajas y protecciones era una irresponsabilidad. La compañía perdió dinero durante muchos años y aplazó sus inversiones, porque no tenía capacidad para generar dinero propio para invertir y tampoco podía endeudarse. En última instancia, se decidió privatizarla, junto con un paquete de otras empresas. El gobierno resolvió privatizarla y, en cierta medida, dejó en nuestras manos determinar la manera de hacerlo.

A: On March 1st of that year, I joined CAP; that was forty-seven years ago. I joined as an engineer. A mixed company, CAP was 53% privately-owned and 47% state-owned, with a strong American influence. It had been created in 1946 and started operating in 1950. At a certain point, 400 Americans were teaching locals how to run a business which had started out as a steel concern and had expanded into the mining sector.

When I first entered CAP, its main focus was on steel, with a strong American influence. It operated as a listed private company, with a 43% government-owned share. In those days, establishing a steel company in every country had become a current practice. Here in Chile, CAP enjoyed a number of tax and customs benefits, among other things. As a result, we had no competitors, and the cost of Chilean steel was two and a half to three times higher than world levels. It was a great time for us, we felt important producing steel, but the industry was heavily protected. Then, in 1969, Allende was elected president. He took office in 1970. In the first months of that year, he nationalized the company, which meant that the government took over privately-owned stocks and exchanged them for bonds that were never paid. Thus, CAP came to be almost fully state-owned; 98%, actually, since a number of people were not able to sign the ownership transfer because they had died, were sick, or out of Chile. We operated as a state company until 1986.

In the initial stage, under Allende’s socialist regime, and, later, under the subsequent military government, CAP was changed. In 1960, it had created a mining subsidiary –which has grown steadily over the years- to supply the Huachipato steel plant in the south of Chile. The first mine opened proved enough to supply the plant, and a two-thirds surplus had driven the subsidiary to export iron ore. This mine grew during Allende’s time; other mines were nationalized, and several American mines were bought. We bought Romerales, among others. By then, CAP had become a powerful mining company. It operated both a highly protected steel business and a mining business that supplied Huachipato and exported to the world.

In 1978, an important economic reform was introduced in the country, and the person who perhaps created capitalism in Chile, Sergio de Castro, came on the scene. First, he served as an advisor to the Economy Minister and, later, he himself became Chilean Minister of the Economy and Minister of the Treasury. De Castro implemented regulations that prevented companies from becoming indebted to the government and discontinued the current protections they enjoyed. In fact, these regulations were intended to make these protected companies into regular businesses, without benefits of any kind.

As a consequence, between 1978 and 1987, CAP experienced dramatic changes, huge changes. Many people simply walked out, because they did not agree with official measures. In their opinion, eliminating advantages and protection was highly irresponsible. The company operated at a loss for several years, and delayed its investments, since it lacked capacity to generate funding and was not able to borrow money. Eventually, the government decided to privatize it in a block with other companies, and charged us with the task of determining how to go about the ownership transfer.

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