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Mexico 2013 | INDUSTRY & MINING | B2B: MANUFACTURING

Manufacturing growth is tied to the US market, with Mexico considered a solid base for exports to the region.

Luis Carlos Silveyra
LUIS CARLOS SILVEYRA
President
Prolec GE International
Steffen Huber
STEFFEN HUBER
Managing Director
Endress+Hauser

What is the history of your firm in Mexico?

LUIS CARLOS SILVEYRA The joint venture between GE and Prolec happened in 1995, and it was very fortunate that GE decided to go out of the transformer business and explored this new business. GE had several transformer factories in the US, which were struggling to survive at that time, and had the policy to be number one or number two in the regions in which it operates. Initially, we worked on some buy-and-sell projects with GE, but those did not really work. Its executives then proposed transferring factories that were closing down in the US to Mexico to be more competitive. At that time, Prolec was earning about $100 million per year. Then we started transferring the factories from the US, and by 2005 we were selling around $800 million. For us, it was a dream come true; we got into the US market.

STEFFEN HUBER Endress+Hauser came to Mexico in 1999, and before that we were present through representatives. Over the last few years we have been focusing on special markets, including oil and gas, food and beverages, water and wastewater, life sciences, energy, mining, and chemicals. When I came in 2006, Endress+Hauser had a turnover of approximately $10 million. Since then, we have developed into a company worth $35 million with 90 employees, offices in Mexico City, and six more in other locations around the country.

To what extent can Mexico serve as a hub?

LCS Our factory in Monterrey is one of the largest in the Americas. We manufacture the whole range of distribution and power transformers. Monterrey has a lot of universities, with their strengths in engineering. This is a competitive advantage. Of course, we are close to the border. The Texan economy is as large as Mexico's, but that does not mean that we only ship to Texas. We ship all over the US, as well as to other international sites. We go through GE and Xignux distribution networks around the world.

SH We actually import approximately 70%-80% from our production centers in the US and the rest of the products come from Europe. We have to be present in the most important market, which is the US. That was the first decision, and the second was that our products are not subject to low cost factors, meaning there is not much labor involved. The biggest part is development, electronics, and hardware. These prices are equal across the world because of the limited number of producers. Endress+Hauser is also present in Germany, Switzerland, France, and 50 other countries.

What are your development plans for the year ahead?

LCS What we really have to do is to grow in a stagnant market, and that is the US. The strategy we have is to depend on our capabilities in marketing. Marketing means listening to our customers and identifying what they specifically need. For strategies, we have to listen carefully to our customers. We still have room to grow our market share in the US, and we are competitive. We compete with the domestic manufacturers because our costs are better.

SH Our target is to develop. We are number two today in the instrumentation business, but there is a lot ahead of us in the automation business. There is the potential to go from instruments and move into the other two sectors we have; services and solutions. This is our strategy in the oil and gas and food and beverage markets; to balance our business between the different sectors. We have a strong partner in the mining industry; however, I would not necessarily say it is our future. Now it is good and the opportunity is there, but tomorrow if the prices of metals drop, everyone steps back. You have to balance, and this is our secret. Even in 2009, we showed growth when our most important competitor had to fire people; we were hiring. Thankfully, we are a family-owned company with no shareholders pressuring for profit; our owners are looking for sustainable growth, so in difficult times we do not fire people because maybe the next year we will need them again.