Since 2013, LafargeHolcim has operated a Shared Services Center located in Ruta N, from which it supports its Americas operations with more than 400 employees.

“We will have the Americas Digital Center Information Technology in Medellin. This technological leadership site will generate in the first stage 250 jobs and in the final stage more than 1,000. This is the path for a Software Valley in this Fourth Industrial Revolution,” said Mayor of Medellín Daniel Quintero Calle.

Medellín’s new administration that took office the beginning of this year has adopted a strategy called “Software Valley” that seeks to develop a modernized economy through software and information technologies by taking advantage of opportunities to make the city a hub for Latin American technology and software development. Coordinated by investment promotion agency ACI Medellín, the expansion had the support of Ruta N, Mayor Daniel Quintero Calle, and Governor Anibal Gaviria Correa.

LafargeHolcim is a Swiss multinational building materials company present in more than 80 countries and employs more than 80,000 people. Its operation is divided into four segments: cement, aggregates, and ready-mix concrete, and it is currently the largest cement company in the world.

Above photo, left to right: Carlos Moreno, Latam Regional CFO of LafargeHolcim, Jochen Werling, Group CIO LafargeHolcim, Anibal Gaviria Correa, Governor of Antioquia, Daniel Quintero Calle, Mayor of Medellin and Alejandro Carballido Americas Digital Center Head LafargeHolcim.

For illicit price-fixing on Portland “Type 1” cement, the Superintendence of Industry and Commerce (Superindustria) hit Cementos Argos S.A. and Cemex Colombia S.A. each with fines of more than $25 million USD (73.8 billion pesos) and Holcim (Colombia) S.A. with a fine of more than $18 million USD (54 billion pesos).

The three companies, according to the agency, make up some 96% of the Colombian cement market and allegedly flouted the law with their pricing practices during an investigation period that covered a three-year period from the start of 2010 through the end of 2012.

Superindustria found what it called a “price parallelism” among the offerings from the three firms during this time, something that it says Argos, Cemex, and Holcim could not justify with an “economically reasonable or truthful explanation.”

Along with sales of some 8 trillion pesos during these three years, Portland type 1 cement prices rose by 29.9%, according to the Superindustria investigation. This greatly exceeded the corresponding inflation rate of 9.3% and led to suspiciously high profit margins for the named firms.

The agency added that “the characteristics and structure of the cement market” in Colombia make this sector “highly prone to collusion” and cartel-like practices. It noted that “multiple investigations and sanctions” have resulted against cement companies for related practices in more than 30 countries, including the United Kingdom, Germany, Spain, India, Brazil, and Argentina. At least five investigations have been carried out against cement companies in Colombia since 1997, stated Superindustria.

The Bogotá-based authority also levied fines ranging from around $90,000 USD to $120,000 USD against the presidents of the three cement companies in Colombia: Jorge Mario Velásquez Jaramillo of Argos, Carlos Jacks Chavarría of Cemex, and Miguel Ángel Rubalcava Méndez of Holcim. Two other executives of Argos and one other executive of Holcim were hit with fines ranging from around $8,000 USD to $37,000 USD.

Both Argos and Holcim have issued statements denying any wrongdoing and said that they disagree with the findings of Superindustria. Cemex last week told Reuters that it was preparing a response to the Colombian regulator.

“The company delivered timely and conclusive evidence that these anti-competitive behaviors never existed,” said Holcim in a statement. “The company reiterates that it has not engaged in any corporate activity or practice that could be questioned from a legal or ethical point of view.”

This weekend, in an interview with Colombian newspaper El Tiempo, Argos President Jorge Mario Velásquez reiterated his companies position that the fines were issued by a governmental body that used improper methods and reached an incorrect conclusion.

“We are not defiant — we are respectful of the law and institutions,” Velásquez told El Tiempo. “But, at the same time, we are outraged by the injustice of this decision … We will use all the legal tools at our disposal in order to demonstrate our good actions.”

Photo: An Argos cement truck working in Bogotá, Colombia. (Photo credit: Jared Wade)

The Roof of Ruta N’s LEED Gold Certified building serves as an al fresco dining area for tenants and employees.

Finance Colombia recently toured “Ruta N” (Ruta = Route) the giant business incubator on the city’s north side, and free zone sponsored by the government of Medellín; UNE, the regional telecom operator now merged with Millicom’s Tigo; and  EPM, the municipal owned utility. Ruta N is anchored by Hewlett Packard, but is designed to accommodate businesses as small as sole practitioners, and the leanest of lean startups. The facility, located in Medellin’s special innovation district of 114 hectares (roughly 282 US acres) around the Sevilla neighborhood, is not in one of Medellín’s luxurious south side neighborhoods or commercial areas, but just a block from the University of Antioquia, and steps from the University and Hospital metro stations. Adding to accessibility, within Ruta N’s green campus (the building is LEED Gold Certified) is a bicycle sharing station, walkways, as well as accessibility and secure storage for those commuting on two wheels.

The idea behind Ruta N is to create a shared working environment that mixes established businesses with startups, and various disciplines from high-tech to social entrepreneurs, professionals and researchers that can generate “sum is greater than the parts” synergies. Not only is this expected to stimulate employment, but to do so broadly across the social spectrum. In addition to flexible office space that can be configured according to an entrepreneur’s needs, rents for startups are low, starting at a remarkable (approximate) $60 USD per month for the smallest workspace suitable for an individual. The technology park is not only for startups and small businesses though; Ruta N is home in Medellín to Hewlett Packard, the software giant Globant, and other large firms such as the Swiss cement concern Holcim. This fits with Ruta N’s strategy of creating an environment where global corporate and early stage startups can breathe the same air, hopefully nourishing one another, and the surrounding city.

While touring the business complex, Finance Colombia was able to have a conversation with Ruta N’s Angela Prieto, where she talks us through the aspects that make Ruta N unique both in and outside of Colombia.

Angela Prieto: I have been working here at Ruta N for 3 years, at District Management in the Center of Technology and Innovation. We belong to one of the most sensitive areas of Ruta N, so I will start by telling you what we do. Ruta N is the corporation of science, technology and innovation of Medellín, in charge of directing all those projects and businesses that focus in these aspects. Therefore we have a series of guidelines from the mayor’s office and a plan for science, technology and innovation, which is our guide, our reason for existence. This plan of science, technology and innovation gives priority to health, energy and information technology sectors. You might know that in Medellín there are six prioritized clusters.

Ruta N’s Angela Prieto with Finance Colombia’s Loren Moss

Finance Colombia: Yes, they were telling us about it.

Angela Prieto: The six prioritized clusters are construction, textiles, tourism, health, energy, and information & communications technology (TIC for its initials in Spanish). The three clusters, health, energy and TIC are located here, precisely because Ruta N offers the development support in knowledge sector businesses. Medellín has transformed itself from an industrial capital in the country. Due to its location and where we are today, the mayor’s administration has wanted to transform from an industrial capital to a capital of the knowledge economy. Precisely due to our location, we are not competitive with other cities [for things like heavy shipping and maritime logistics], so with the knowledge economy, we want to boost the market and to generate new businesses for entrepreneurs without abandoning the current industry base. So Ruta N, by giving tools to those entrepreneurs and to those companies to be able to boost their projects through the different tools; nowadays we have projects such as a pipeline in which companies come up with projects, from the very original idea, all the way up until its commercialization and internationalization.

Finance Colombia: So if for example, an entrepreneur is contemplating the possibility of locating his or her business here in Medellín, or the company already exists but wants to grow, do you serve as a middleman when connecting?

Angela Prieto: Yes, we facilitate, and Ruta N connects. For instance, here in the [Innovation] District, we have some 177 hectares around Ruta N. What we want to do, through the tools Ruta N offers, is to help those who want to establish here or are already here, to facilitate and give them the tools to launch those projects and businesses, based on science, technology and innovation. A company, for instance, who comes from a foreign nation needs help in the landing, that is why we are with [Medellín’s investment promotion authority] ACI, the right hand of Ruta N, where they help to do all that “soft-landing”, where we can help them to

One of several ViveLab training rooms accessible to tenants, agencies and organizations for classes or workshops.

gather human talent, along with schools and universities. There are programs devoted to acquiring human talent in the short, medium and long run, filling requirements for specific abilities, and additionally, we connect those companies with the market. All those arriving companies, we help to boost up and exploit all their capacity in order to be successful, that is our objective. We want those companies to be able to generate quality employment, knowledge work. We offer tools from this innovation ecosystem so we are able to continue generating projects and the development of new companies.

Finance Colombia: That is exactly what Silicon Valley has.

Angela Prieto: Correct. In the end, that is what we want and it is already happening, you can find it here. We now have in Ruta N, a network of companies. This ‘fabric’ so to say, is settling itself here. We have 51 companies interacting, generating the ability to approach and to get to know people from other companies and generating solutions.

In that sense, it is the same as being able to sit here with you and having you in Ruta N, in our facility, because the ecosystem brings you close to the main actors in the innovation system. And we can effect the connectivity with institutions of higher education, universities, research groups, the directors of the clusters of energy, health and TIC, also experts in those subjects—the 36 most important research groups from Universidad de Antioquia [across the street], that is, you have a group of supporting and generating actors surrounding you. It does not matter if, for example, one project is not successful, nothing happens to the ecosystem because the economy is so stable and dynamic that it won’t slow down. This fabric, the stronger it is and the more actors exist, the stronger it will be and people will find more opportunities for development.

Flexible, private workspaces are configured according to tenant needs, and are expandable.

As I was telling you, inside Ruta N we have a program, called “Landing” where we are partners with ACI. From there we bring in the companies, offer them a location completely adequate for them, and we help them to establish as a local company in a period of two months. All the legal aspects, the corporate by-laws, the visas, the cedulas [national identification cards], so people come here and have the support to look for not only where to establish, but also financial support, where they can live, etc. And the companies simply arrive: it is like “fly in and start to work.” We offer complete services, you pay a monthly fee, and with that you have the administration, cleaning and maintenance, security.

Finance Colombia: Full service.

Angela Prieto: Exactly. So, the companies are located in the three areas of the building. One of them is here, the fourth floor and on the third floor, 60% of the companies are foreign, the other 40% is Colombian. 60% is TIC (Communications and Information Technology), more or less 30% belong to other sectors like consultancies and social innovation, which are included because they are synergistic with rest of the areas. What they do is act as catalysts for growth and development in health, energy and TIC, and although they are not necessarily prioritized, we accept companies who have a high degree of innovation in their business model.

Finance Colombia: Is Ruta N focusing specifically in developing the north of the city or the Aburrá Valley [where Medellin is situated] as a whole? What is the purpose?

Angela Prieto: Ruta N in general serves the whole city, but we exist within the district, developing the northern part of the city. Ruta N’s impact is throughout Medellín, but from here we serve as an additional benefit to those establishing companies who are betting on the innovation district [in the Sevilla neighborhood].

This area has a mixture of institutions. Ruta N didn’t get put here because there was a space, but because of the mixture that exists here. We are near the most important hospitals, the Planetarium is here, the University of Antioquia, the research labs, the botanical garden, Parque Explora, museums—there is an interesting mixture so that the people who come here can live, and study and work; to have access to everything here.

Ruta N Administrative Offices