fesanco (pdf) - Babson College

Miguel’s invitation was accepted, and on March 19, 1998, Comercial Fesanco S.A. was
founded. Miguel chose this particular day in which Catholics honor St. Joseph the
Worker, who was designated as the protector of the personnel. As his initial equity,
Miguel invested US $10,000 he had received as a severance payment from Agunsa.
Ricardo agreed to invest $4,000 and Miguel’s wife Monica added $1,000 from her
savings. Fesanco’s first office was in Miguel and Monica’s house. During this stressful
period, Monica was the mainstay for her family and also for her husband’s
entrepreneurial adventure.
Lemonade
In the ensuing months, the Asian Crisis continued to hammer the worldwide economy.
The demand for consulting services and spare parts declined precipitously. Ricardo was
ready to end the Fesanco project, but Miguel was convinced that the economic crisis
would force them and the entire industry to improve their administrative and operational
efficiency.
One year after it was founded, Fesanco was suffering from a serious cash flow deficit.
Miguel was unwilling to use his family’s house as collateral for loans. By that time, he
and Monica had the six children they had dreamed of when they were young. Instead
Miguel made a phone call to Heinz Hinrichs, the sales director of Gottwald, to ask if the
company would hire him as its official representative in Chile. He proposed to be their
exclusive agent for $2,000 monthly for a period of two years.
The timing was not ideal; the effects of the crisis were serious, especially for companies
involved in foreign trade. Miguel thought that the worst-case scenario would be an
immediate no. Instead Heinz said he would analyze the proposal with Andreas Moeller.
Within a few days, Heinz and Andreas sent a fax with a positive response. It was a nice
surprise when Miguel saw that the entire $24,000 had been immediately deposited in his
bank account as a sign of their confidence in him.
New beginnings
In August of that year (1999), the ports of Valparaiso, San Antonio and San Vicente
were privatized, in a concession model for a period of twenty years. Two months later,
the Port of Mejillones was also privatized in the same way.
The continuing Asian Crisis meant that the following year was still bad for sales (see
Exhibit 6), and Miguel watched each dollar as if it were his last. Fesanco was close to
bankruptcy when, in November of 2000, they received an urgent phone call from TPS,
the company that had the concession for the Port of Valparaiso. The voice on the other
end of the line said, “Miguel, we need to buy and assemble a port crane right away. Can
you help us solve this problem because we’re in trouble. The only person who can do it
is you, so please do your best. If you can solve our problem, the purchase order is
yours.”
Miguel called his contacts in Europe and America and by the end of the day, with the
help of Andreas Moeller, he was able to tell TPS that a crane was available and the
problem was solved.
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