Abengoa S.A. - Construction Business in the 1940s

Construction Business in the 1940s

Abengoa was founded in Seville, Spain, in 1941 by Javier Benjumea Puigcerver to provide installation services as Spain built out its electricity grid. After conquering the Seville region, Abengoa launched a national expansion drive. The company also broadened its capabilities, beginning installation services for the country's telephone network as well. By the end of the 1950s, the company had grown into one of Spain's leading providers of engineering and construction services to both industries.

Having consolidated its hold on the Spanish market, Abengoa turned to international growth in the 1960s. The South American market was the logical choice for the next phase in the company's development. Before long, Abengoa had added operations in Chile, Brazil, Argentina, Peru, and elsewhere in South America, becoming a leader in that market. The company also extended its operations as far north as Mexico. Abengoa developed operations in other European markets, primarily in France, Belgium, and Switzerland, over the following decades. Its main focus outside of Spain, however, remained the Latin American market.

Abengoa not only expanded geographically, it expanded into new areas of business, adding new expertise in areas such as instrumentation, automation, supervision, and surveillance systems. A major milestone in this effort came with the takeover of Sociedad Anonima de Instalaciones de Control (Sainco) in 1969. Sainco, founded in 1963, focused on developing, manufacturing, and maintaining control systems and related industrial process supervisory systems, while entering the road traffic control market in 1968. As part of Abengoa, Sainco took over the company's existing operations in the electronics field.

The company proved especially strong in developing its own proprietary systems and technology, helping to consolidate its position as a market leader both in Spain and abroad. The company's technology capacity also enabled it to expand its capacity for control systems, such as traffic control systems, with the launch of turnkey systems in 1974. This activity in turn allowed the company to develop a level of expertise in information systems, digital electronics, and real-time computing. In 1989, Abengoa created a new Communications Division, which combined the company's interests in control systems and telecommunications systems integration, with Sainco as its core.

Nonetheless, the large majority of the group's revenues came from its construction and engineering operations. Into the 1990s, the focused nature of Abengoa's operations had become something of a liability. The downturn in the construction market at the beginning of the 1990s especially exposed the group's vulnerability to cycles in the market. At the same time, the market for installations had become relatively mature, promising slower growth in the near future. Abengoa was all the more vulnerable because of its reliance on the public sector—in particular, the Spanish telephone monopoly Telefonica—which represented 80 percent of its sales in the early 1990s.