Can you discuss the evolution of S.A. Lito Gonella e Hijo I.C.F.I. (Gonella) over the years?

Gonella was established in 1957 by Lito Gonella and initially focused on manufacturing pressure vessels. Currently, the third generation of the Gonella family manages the company, which has become Argentina’s leading pressure vessel manufacturer. Gonella expanded its production lines with gas tanks and oil and gas equipment, utilizing technology from Germany and the United States. In 1968, the company began producing gas tanks, which was timely since the number of gas plants in Argentina increased significantly. By taking advantage of this opportunity, Gonella became the country’s leading gas tank manufacturer. In the 1990s, Gonella ventured into manufacturing oil and gas equipment, serving the exploration, production, and refining sectors.

How did YPF’s re-nationalization affect Gonella?

After YPF’s re-nationalization, Gonella faced new competition. Before the re-nationalization, Gonella, along with companies like Tecna, was one of the few companies in Argentina that designed and manufactured oil and gas equipment. As a qualified engineering and manufacturing firm, Gonella supplied the primary oil and gas firms in Argentina. After YPF’s re-nationalization, the company started partnering with manufacturers that lacked technology and designs to create employment opportunities for these businesses. YPF provided these manufacturers with product designs, which they produced. As a result, Gonella faced competition from low-technology manufacturers. Despite this, the company continued to supply companies like YPF and benefited from YPF’s increased demand for oil and gas equipment from all its suppliers.

How significant are the three production lines to Gonella’s yearly revenue?

Gonella’s yearly revenue is approximately $60 million, with almost half coming from pressure vessels, and a quarter each coming from gas tanks and oil and gas equipment. The demand for each production line varies yearly, and pressure vessels are used in the leather, refrigerator, oil, sugar, or cement industries. Therefore, the demand for pressure vessels depends on the level of general industrial investment. The demand for oil and gas equipment fluctuates based on international oil prices.

How will the demand for Gonella’s products change in the short-term?

The Argentinian economy is facing challenges due to low commodity prices and internal production costs elevated by an overvalued peso. However, companies are postponing investments until the next elections. Gonella predicts that companies will begin to realize investments by June 2017. The demand for pressure vessels will increase in 2017, and the demand for oil and gas equipment will rise in 2018.

Who are Gonella’s competitors, and what makes the company competitive?

Gonella’s three main strengths are technology, financial capacity, and manufacturing capacity. Of these strengths, its technology is the most significant. The premium associated with having its technology reduced Gonella’s orders from YPF, but this did not affect orders from companies such as Pluspetrol, Pan American Energy, and Chevron. Despite this, competition prompted Gonella to internally restructure and become even more competitive without sacrificing its technological edge. Each production line has its own set of competitors, but the diversity of Gonella’s three production lines keeps the company profitable. When one production line has low demand, the others often compensate for it.