With the European economy in crisis and continuing shifts in the world order, manufacturers must re-think their business strategies if they are to succeed. Seasoned survivor Pasquale di Iorio, CEO of construction testing equipment specialist CONTROLS Group shares his plans for the future - Kristina Smith met him in Italy
Pasquale Di Iorio has been at the helm of construction testing equipment manufacturer
After two years of preparation, CONTROLS Group presented a new pavement testing equipment division, PAVELAB SYSTEMS, in November last year. With the dual aims of meeting the needs of emerging countries and the transition in testing methods from an empirical to a more performance-based approach, CONTROLS Group is taking a new tack with PAVELAB SYSTEMS. Through PAVELAB SYSTEMS, Di Iorio will be selling not only his machines but the expertise of the team he has assembled too, experts such as Pietro Ferrari, a recognised authority on bitumen who sits on the European working group for bituminous mixes.
“The one thing that really distinguishes CONTROLS is its capacity to provide consultancy, especially in emerging countries. Our experts can give support and advice not only on the choice of machine but on the test as well,” says Di Iorio. “We want to be close to the customer, close to the market. That is our mission.”
A different kind of crisis
With a track record in business that started in 1978 when he joined CIFA, a concrete pump and equipment manufacturer, Di Iorio can claim first-hand experience of previous recessions. But none, he said, compares to the current situation. “This is quite different from in the past,” said Di Iorio.
“I have seen many periods when the economy was down. Then we discussed how long it could take to recover: sometimes two years, but we were sure it would change. Now the crisis is structural, it’s not about a period. “The problem now is the lack of budget. This is affecting many more countries than we imagined, countries like France and the UK, not just Spain and Portugal. I think it is a general problem that could have enormous consequences for the industry in general. In some countries, industries will disappear altogether.”When asked to give an estimate of the possible time the downturn will last, Di Iorio gave this reply: “It is very difficult now to understand where we are going, the risk we are facing and how to reduce and reverse the situation. In particular, I am referring to the Euro countries,” he said. “There is no idea about what evolution is required and how to manage it, even among the political leaders.” 2012 has been a particularly difficult year for Italy with some companies going to the wall.
CONTROLS Group had already restructured well before this point. “We made some adjustments three years ago,” said Di Iorio. Having experienced ‘incredible growth’ since 1996, the financial crisis hit CONTROLS in 2007/2008. “After two years, we started to grow again, although we have not yet reached the peak of the good times,” said Di Iorio. Di Iorio’s main strategy has been to strengthen CONTROLS’ export business. In the past two years, he says, the proportion of export turnover has grown from 75% to nearly 90%.
“Areas in Europe, particularly Spain, Greece, Portugal and Italy in 2012, declined dramatically. On the other hand, areas such as Central and South America, the Far and Middle East and Africa are developing.” How to grow a companyWhen Di Iorio took charge of CONTROLS, it was in serious need of a rethink.
“In 1995, CONTROLS, in which I was a small partner, was suffering so we decided to re-organise, re-positioning the company,” said Di Iorio. At this point Di Iorio – who studied engineering at Milan Polytechnic and a Masters in business at Bucconi University – became the major shareholder, with his family. And CONTROLS branched out to provide testing equipment for asphalt and soil as well as concrete, with the ambition to be a world leader.
Pursuing its ambitions, CONTROLS Group bought UK soil testing equipment specialist Wykeham Farrance in 2004, a brand which was established in 1941. “It was the oldest in the field, very well known all over the world,” said Di Iorio. “We transformed it into a specialised division within CONTROLS Group. With CONTROLS a recognised name in concrete testing and Wykeham Farrance, a strong player in soils testing, Di Iorio is now looking to establish the PAVELAB SYSTEMS brand as a leader in pavement testing. A background in engineering is a good background for business, says Di Iorio. “A mechanical engineer can do everything, everything,” he said. “Engineering gives you two main things: analysis and synthesis ability. And as the Greek philosophers teach us, analysis and synthesis are enough for everything.”
For those readers not familiar with Greek philosophy, analysis and synthesis are philosophical terms denoting the processes of mentally breaking down a whole into its constituent parts (analysis), and reconstituting a whole from its parts (synthesis). In doing so, the argument goes, you reach a new understanding of how the parts work and how they interact with each other.This seems very apt for a materials testing equipment manufacturer, whose range depends on the innovative combination of many different technologies. As well as his engineering brain and business education, Di Iorio attributes much of his management nous to his ‘maestro’, the late Rafael Emdin, CEO of CIFA. Among other things, Emdin taught Di Iorio the importance of nurturing and retaining young talent, said Di Iorio.
Product manager Andrea Carlessi is an example of CONTROLS Group’s home-grown talent. He joined the company 12 years ago and is now an important part of PAVELAB SYSTEMS’ expertise and consultancy offering.
New division, new machines
It was no coincidence that as CONTROLS Group launched PAVELAB SYSTEMS, it also launched a range of new dynamic testing machines, all clothed in a bright new yellow and black colour. Among them is the PAVELAB advanced multi-size slab compactor, the wet and dry double wheel tracker and the Gyrocomp gyratory compactor series. “We wanted to associate the launch with something we could touch,” said Di Iorio.Dynamic testing equipment supports a performance-based approach to road material testing, pioneered by the US’s Superpave Method approach. This approach predicts a road’s performance based on engineering characteristics such as stiffness, resistance to fatigue, permanent deformation and behaviour at low temperature. This contrasts with the traditional empirical approach where tests such as the Marshall test, for example, are calibrated by comparing a product’s performance to the performance of existing, known products. “The empirical approach was worldwide, accounting for 90% of tests until the 1990s,” said Ferrari. “From 2000, this percentage reduced dramatically, to between 40 and 50% today.” Developed countries are slow to move from the traditional approach to the fundamental or performance-based approach. And now the change has been additionally hampered by a lack of projects and funds to justify buying new equipment. “Some of our clients say ‘This is the machine we need, I should integrate it into my laboratory’. But they have no jobs, so they have to wait,” said Di Iorio who predicts that it will take a decade before all the European countries have taken up the new approach. With developing countries, there is a different story. “The richest emerging countries are not investing in empirical approach testing equipment, tending to go directly to the fundamental approach,” says Ferrari. CONTROLS is keen to help emerging countries in making this decision. Part of Carlessi’s role is to deliver seminars worldwide, informing local professionals about Standards, testing equipment and practice. “When we do seminars, people are very interested, they are learning,” said Di Iorio. “This is not associated with direct sales at that time. It’s an investment for the future, to create a relationship.” In order to try and meet the needs of emerging – as well as existing – markets, Di Iorio invented a sort of mantra, introduced two years ago: ‘Customer’s Value drives Innovation’. Shortened to CVI-Tech, all the machines which bear this badge have been designed to a series of underlying aims, among them getting the best quality-to-price ratio; making machines expandable by modules; and maintaining value over time. “Modular and expandable systems allow customers to buy new functions, or systems which allow higher level tests after the initial purchase, allowing investment to be spread over different phases,” said Di Iorio.So, for example, the slab compactor can be bought with the ability to test one dimension of slab and added to later to allow testing of other sizes. Or the double wheel tracker can be bought with the wet version of the test, with the option of adding the dry test version later, or vice versa. This is a sensible approach, which other manufacturers also follow. But why did it need a name? “The name helps to identify the objectives and to define the company culture,” said Di Iorio. “The CVI-Tech approach is a concept that our specialists and engineers follow, with the aim of maximising value to the client with the best quality-to-price ratio.”
The next revolution
Di Iorio does not expect a revolutionary technology to come along and transform asphalt testing equipment. Instead, we come back to that idea of analysis and synthesis. “Our sector involves using all available technologies: hydraulic, electronic, pneumatic, electrical, the list goes on.Our company’s skill is to apply these technologies in innovative ways in order to make the test affordable, easy to do and energy efficient, while completely conforming to the standard.” Here, Di Iorio believes that CONTROLS Group has an advantage over many of its competitors. While most materials testing equipment companies tend to specialise, CONTROLS has expertise from three sectors to draw on and learn from. And as we can expect CONTROLS Group’s products to keep developing and changing, to meet new market requirements and standards, so the company itself can expect to adapt and change too. PAVELAB SYSTEMS is the next step. After that, only Di Iorio knows.
THE UPS AND DOWNS OF CONTROLS GROUP
1968 CONTROLS SRL, was established as a concrete testing equipment manufacturer by Umberto Granelli and Rafael Emdin.
1970s CONTROLS followed Italian contractors to their overseas projects, establishing a distribution network.
Mid-70s Export accounted for over 50% of turnover with the Middle East a major contributor.
1980 The Persian Gulf crisis put paid to the Middle East market, causing a big drop in turnover. CONTROLS looked to Europe.
1983 CONTROLS UK established to target UK and Commonwealth markets.
1989 CONTROLS Spain established.
1993 CONTROLS France established for French market and French-speaking African markets.
1995 CONTROLS Mexico established.
1996 Pasquale Di Iorio joins the company as managing director.
1998 Launch of the MCC computerised compression machines, a milestone in automatic concrete testing.
2004 CONTROLS Group buys UK soil testing equipment specialist Wykeham Farrance, to establish its position as a world leader in this field.
2004 CONTROLS Poland established.
2008 The European crisis hits and sales decrease. CONTROLS increases its export activity.
2010 Having restructured, CONTROLS starts to grow again.
2012 CONTROLS launches PAVELAB SYSTEMS, a division focussed on the asphalt industry.
Today CONTROLS has a head office in Milan with branches in the UK, France, Spain, Mexico and Poland and more than 100 dealers and distributors around the world. It sells over 4,000 products across three areas: concrete, soil and pavement testing.
