What have been the reasons driving Daltile's continuous investments in Mexico?
The company was originally established in Monterrey in the 1950s with a focus on the export market. I have been with Daltile for 33 years and have seen how the company has evolved over the years. Mexico has been the cornerstone of our operation for many years. Daltile invested more than USD160 million in plants not only to export from Mexico, but also to meet the needs of the local economy. That is the idea behind our most recent plant in Salamanca, Guanajuato. We manufacture more than 230 million sqft of tile a year and provide direct employment to more than 450 people. 98% of the Salamanca plant's production is destined for the Mexican market. In the last 10 years alone, we have invested USD500 million in Mexico. In total, Daltile relies on 10 plants across the country to produce 550 million sqft of tile per year, of which 50% goes to the US and Canada. The remainder stays in Mexico and South America. In 2010, Daltile had a workforce of 2,500, a number that has increased to 4,000 now. In this context, we have taken advantage of Mexico's skilled labor, though we have also worked to empower and develop our employees and make them feel safe and happy.
How does the growth in second-tier cities in Mexico impact the demand for tile?
Dynamism in these cities brings dynamism to our business. The ceramic industry has changed significantly as a result of manufacturing technology, allowing us to create designs aligned with consumer preferences around the world as well as the technical requirements of the place in question. Daltile has been able to build a strong distribution network in Mexico; in total, we have more than 600 points of sale. We have seen higher growth, especially in the Bajío region, with many hotels and buildings under construction, as well as Jalisco and Nuevo León. Moreover, the tourism industry continues to grow at a healthy pace as usual. In this context, growth is expected, but not as dynamic as in 2018. The ceramic industry will grow between 3% and 5%, and Daltile will likely grow at a faster rate to capture greater market share.
What are the main export markets for Daltile, and what is the role of quality in reaching further markets?
Our mission is to provide quality and service at a fair price. Our designs are subject to strict quality controls, which is why we are able to export extensively to the Canadian and US markets. Specifically, the state of California has extremely stringent requirements. Over the past two years, we have been exploring markets in South America, especially Peru, Colombia, and Chile. Our consumer audit department has played a vital role in making it all happen. It guarantees that ISO and other quality standards are met, and addresses consumer satisfaction.
What is your perspective of the future of Mexican economy?
Given the uncertainty around tariffs for exports to the US, companies in Mexico need to work to become resilient and be ready for changes. This will allow the overall economy to also become less sensitive to external factors. Constantly working to be a competitive company provides greater flexibility in prices and gives room for action when a potential tariff arises or any other event occurs. Given Mexico's manufacturing capacity, integration with suppliers and customers is extremely important. As for the economy in general, unfortunately, 2019 will not record as much growth as we all would like, and 2020 will be challenging. However, certainty will return. What is important is that we must link the growth of the south with the dynamism of the north.