Managing Complexity

In Focus

NAME:Andrea Colombo

COMPANY:Bonatti

POSITION:CEO

LOCATION:Parma, Italy

Words David Agren

Bonatti CEO Andrea Colombo says the Italian energy sector contractor is transiting in one of the most ‘complex times’ for the industry. He is confronting the complexity by pursuing a strategy of empowering local managers and playing to the company’s strengths.

International contractor Bonatti operates around the globe, and has been constructing pipelines and energy infrastructure and providing services to the energy sector for more than 75 years. Though the Parma, Italy-based firm operates in 13 countries, Bonatti considers itself a local company in many of those markets – overwhelmingly employing a local workforce and providing autonomy for managers to make decisions.

It’s a key strategy for Bonatti moving forward, according to CEO Andrea Colombo, who explains, “It is to give more power to the regions in order for them to be able to foster the creation of local companies.”

By doing so, Andrea tells The CEO Magazine, decisions are made more quickly, while providing more flexibility and an ability to react better to challenging situations.

He cites the experience of Bonatti in Mexico, where 97 per cent of the workforce is local and it has forged a close relationship with suppliers and opened an engineering centre. “We are local,” Andrea says of Mexico. “We are far away” – in the head office – “but we are local and 90 per cent is done there. The logistics are all there, the people are all there.”

Construction All-Rounder

Founded in 1946, Bonatti has built a reputation on constructing infrastructure for the energy sector, including pipelines, power plants and logistics infrastructure such as work camps and storage tanks for refined products terminals.

As a total-approach contractor in the engineering, procurement and construction sector (EPC), Bonatti manages “every detail of the construction site”, according to the company, “from logistics to startup, workface planning and smart construction techniques”. Bonatti has now moved more into the maintenance space, too.

“If we want to succeed in these projects that are related to the green system, we need to verticalise.”

“There is a lower risk,” Andrea says of maintenance. “There is a fair margin – a lower risk, though – and long-term contracts.”

Additionally, Andrea continues, “Now we are moving to the diversification of our business.”

Bonatti’s Three Pillars

Under Andrea’s leadership, Bonatti is focusing on three pillars: tradition, continuity and the future. Tradition includes plant and pipeline EPC and stand-alone construction, with Bonatti perhaps best-known for the latter. Continuity involves areas such as operation and maintenance and production enhancement services.

The future incorporates green energy with projects such as installing carbon capture and hydrogen plants, while for solar plants the company is focused on challenging areas only. Bonatti has also taken on contracts for water pipelines and infrastructure in Chile for supplying the mining industry. Its wholly owned subsidiary Carlo Gavazzi Impianti, purchased in 2006, has developed a deep expertise in all the ranges of green systems the Group is focusing on.

“ITT Bornemann enjoys the close cooperation with Bonatti to serve upstream market opportunities in extremely challenging environmental conditions. The strengths in technology, integration and operations are the perfect symbiosis for the success in our joint market efforts.” – ITT Bornemann

“We are still using our competence from pipelines or plants, but we need to move into other markets that are not linked in the same logic of hydrocarbons,” Andrea says.

The switch is challenging. Bonatti is partnering with other companies on its green projects and, moving forward, Andrea says, “If we want to succeed in these projects that are related to the green system, we need to verticalise”.

“I believe, nevertheless, that partnerships are fundamental: our business model relies on directly controlling critical areas of success for projects.”

Navigating a Legacy Sector

There are also questions about seamlessly making the transition away from conventional energy projects toward green initiatives.

“From an oil and gas contractor to an energy contractor, to a green contractor. Is it really possible for the business, for the sector? I don’t think so, to be honest, because the inner complexity of the project is different,” Andrea says.

“The oil and gas projects were traditionally bigger and more complex than the green projects; the value chain of the project changes a lot.”

“I believe that we are in one of the most complex times in our industry.”

The challenging environment of Bonatti speaks to the complexity of the landscape for the legacy energy sector since Andrea became CEO of the company in 2021 – an elevation from the COO position he held three years prior.

“I believe that we are in one of the most complex times in our industry,” Andrea says, pointing to the COVID-19 pandemic driving down demand for petroleum, the shift toward sustainable energies and banks shying away from conventional energy projects – to name just three issues. “These have had a cascading effect for contractors.”

Simplifying and Streamlining

Andrea is addressing the challenges of complexity through simplifying processes and streamlining the company, while playing to Bonatti’s strengths and not taking on projects exceeding the company’s capabilities.

One strategy has been creating local companies. Another strategy is picking its projects carefully.

“Big is good. It’s nice if it goes well. But if it goes bad, it is dramatic,” he says. “We are a private company. We are not super major. We must be sustainable. So now we are looking very carefully at projects in terms of risk profile.”

Another factor causing complexity for Andrea is finding talented personnel, especially as the workforce ages and young people opt for other career paths.

“You find young people coming from more developing countries,” Andrea says. “We’re pushing a lot in developing our people internally and also developing people that are present in our countries abroad to make them of more use internationally.

“We must be sustainable. So now we are looking very carefully at projects in terms of risk profile.”

“We will need to work to make our industry more attractive also.”

Developing and recognising internal talent has been important for Andrea since becoming CEO; in the new company course, only one person of the senior leadership team came from outside the company.

“We need to empower and help grow people who were already attached to the company,” he says. “Here, we need leadership that is inclusive.”

Additionally, he says, there is a need for audacity.

“We need people that are thinking out of the box,” Andrea says. “I cannot be the only one who has to think what we have to do in this complex environment. Enhancing our management team must be our priority.”