SAFETY FIRST

Mexico 2017 | INDUSTRY | INTERVIEW

TBY talks to Horacio Fajer, Director General of KDM Fire Systems, on becoming a more service-oriented company, its business composition, and changes in the fire safety culture.

Horacio Fajer
BIOGRAPHY
After graduating as an industrial engineer from Universidad La Salle in 1985, Horacio Fajer pursued further studies at the AGI-Goldratt Institute, Georgia Tech, IPADE Business School, and the Darden School of Business at the University of Virginia. He has held a number of senior executive positions, including General Manager of Interlake Material Handling in Mexico from 1995-2003, developing its local and regional operations, as well as managing key accounts from the company’s Chicago headquarters from 2003-2005. He then took over as General Manager for Kidde’s Mexican operations, now KDM Fire Systems.

What has the recent change of brand and ownership meant for the company in your business in Mexico?

We were a wholly owned subsidiary, which meant we had to follow strict disciplines, procedures, and policies even when the local business required a different strategic direction. In 2008, we moved the development of the business into a more service-oriented company; we never manufactured many things in Mexico. It was the best opportunity to capitalize on our knowledge and product lines and the opportunities in Mexico. We grew in the service business with a contract with Pemex from nothing to USD95 million in 10 years. We became so relevant as a service business that it presented a situation for the large corporation; we were a services company owned by a manufacturing company, so the interests were not equal. We began the process of selling the business in 2013, doing the financial and legal processes, and in the end we became a part of EMX, a medium-sized Mexican capital investment group.

Did you provide a different experience to what EMX was used to?

2016 was the year of transition; since we were tied up during the years of selling the company, we needed quickly to acquire the proper talent, back office, and business plan to truly transform the company into a completely service-oriented business. At the same time, we were delivering results, keeping up our contract with Pemex and, since the energy sector for oil and gas was declining, we needed to quickly move away from a dependency on Pemex. We now have a composition of sales where Pemex represents no more than 25% and we find ourselves facing what we knew; the rest of the market was not properly served and needed a large contractor for fire and security. We maintained a financial security arm to run multiple projects of a certain amount for large Triple-A companies, as this is our target customer. We only serve companies that are committed to fire safety and security and understand the proper norms, standards, and insurances that are around. This includes multinationals and some Mexican companies. We are in the process of re-conducting those to have the same level of security that they would expect in other parts of the world. We have changed from being a wholly owned subsidiary to a full business dedicated to doing mainly the following things: identify risks and engineer, install, and sustain the solution over time.

What are the conditions like in Mexico in terms of fire security?

We performed a market study whose results were astonishing. The compounded annual growth rate for each of the verticals that we did not look after was over two digits. Doing the right things in these other verticals would increase our chances of being successful. There have also been changes in regulations and many other aspects of the environment in Mexico. It was thus relevant that we became a wholly national company that can elaborate a strategy to increment the total integration of other companies getting into the energy sector, either for electricity or for oil and gas.

What is the extent of fire protection regulation in Mexico?

Major efforts have been put into the NOM002 since 2012, in which we had extensive participation. NOMs require a verification unit that polices the compliance with the standard, but these units do not truly make a big difference. The Secretary of Labor does spot audits here and there and is now cutting its budget. We work closely with the secretary to train some of its people to understand how to install the detectors. If NOM sends inspectors to ensure regulations are being followed, they need to know what to look for.