Prospects in Emerging Markets Drive CEO Confidence
Total Page：16
File Type：pdf, Size：1020Kb
www.pwc.com/ceosurvey Growth reimagined Prospects in emerging markets drive CEO confidence 14th Annual Global CEO Survey Armando Garza Sada Chairman of the Board of Directors, Alfa, S.A.B. de C.V., Mexico Interview Transcripts Armando Garza Sada Chairman of the Board of Directors, Alfa, S.A.B. de C.V., Mexico Alfa is a Mexican company incorporated Summary in 1974. Its corporate offices are located in San Pedro Garza García, Nuevo León. • In recent years, our companies have Measured in terms of its income, Alfa is been able to increase their market one of the largest diversified industrial share, while our customers were doing companies in Mexico. It comprises four so too. This has allowed us to grow. business groups: Alpek (petrochemicals), • We serve our markets “from the Nemak (high-tech aluminum auto bottom up”; that is, we try to discover parts), Sigma (refrigerated food) and or anticipate the needs of our Alestra (telecommunications). Alfa has customers in order to provide them manufacturing operations in Argentina, with the best possible solutions. Austria, Brazil, Canada, China, Costa • In Alpek we have interesting Rica, the Czech Republic, the Dominican investment opportunities. We recently Republic, El Salvador, Germany, entered into a process of acquiring Hungary, Mexico, Peru, Poland, Slovakia petrochemical plants from Eastman and the United States. Alfa markets its Chemical Co., which produce raw products in more than 70 countries materials for polyester in all its around the world. applications. Armando Garza Sada has been the • In Nemak, the expectation of Chairman of the Board of Directors of accelerated growth of the automotive Alfa since March 2010. However, he has industry in Asia has driven us to worked with the Company since 1978, develop our business in that region. holding important executive positions, We have top executives living in among the most important of which China, whose mission is to open spaces were Vice Chairman of the Board of for our products and explore new Directors, Senior Vice President of alternatives in which we may benefit Corporate Development, and President from our knowledge and experience. of the subsidiaries Versax, Sigma, Polioles and Selther. He is currently a • Our subsidiary Sigma is expanding member of the board of directors of internationally, both in the United FEMSA, Liverpool, FRISA, Lamosa, MVS States market, with a primary focus and of the Instituto Tecnológico y de on the Hispanic segment, and in Estudios Superiores de Monterrey South America. We wish to adapt to (ITESM). He is also a member of the these markets the business model board of Stanford University and of the we have implemented with great Advisory Board of its business school. success in Mexico. Armando Garza Sada has a major in Alestra has found in the business niche Engineering from the Massachusetts of the Mexican market a significant Institute of Technology and a Master’s growth opportunity through offering its degree from the Stanford Graduate customers a solid platform of value School of Business. added telecommunications services. 14th Annual Global CEO Survey Interview Transcripts • Although we have always been In the case of the economic regions, Armando Garza Sada significantly aware of our corporate we have seen that the recovery of the Chairman of the Board of Directors, social responsibility in Mexico, we North American and European markets Alfa, S.A.B. de C.V., Mexico have now expanded this concept to has been slower than everyone would encompass our activities in other wish. Also, risks persist in the Euro countries and regions. We have Zone which could affect financial gotten involved with the needs and stability. On the other hand, the ambitions of our employees and of economic horizon looks clearer and the communities surrounding our more promising for the emerging facilities, actively participating in the nations of Asia and Latin America. promotion of their well-being and quality of life. In any case, the good news is that our companies have been able to increase • In Mexico, it is important to have a their market share, in tandem with our “country vision”, which is accepted customers. This has allowed us to grow. by all or at least a vast majority of our In summary, the crisis has strengthened population. This would allow us to us, leaving us better prepared to recognise the areas that are really continue steadily expanding. relevant so that we can advance in the correct direction. Change of strategies Global environment Living markets from the bottom up Indicators and trends Our business models are solid, as The virtuous circles of demonstrated during the global crisis competitiveness we have undergone. We did not have The economic crisis of 2008 brought to restructure these models or submit very different challenges and them to significant organisational opportunities for each of our businesses. reengineering, although we did take The crisis was not so severe in food steps to protect our cash flow against or in petrochemical products, since the risk that the financial crisis could demand continued growing or at result in a generalised lack of liquidity. least did not fall. Neither was the crisis Thus we can state that the strategic severe in the telecommunications changes made in the last few years, services sector, which is in the and those contemplated in the short forefront of the technological wave. or medium term, were not made in Hence, our only business sector affected response to the crisis or its aftermath. by the crisis was the one supplying the The only exception, as expected, was automotive industry. Nemak, in the automotive industry, In 2010, the first three businesses where, in view of the problems faced mentioned continued growing. The by our customers from mid 2008 to fourth sector experienced a strong the first quarter of 2009, we had to recovery, as a result of the rebound of implement emergency measures and the automotive markets, which grew reduce our labor force. strongly although not achieving pre- At Alfa, we serve our markets “from the crisis levels. The steps adopted by our bottom up”; that is, we try to discover or subsidiary to cope with the difficult anticipate, as precisely as possible, what situation proved their worth and, with 14th Annual Global the needs of our customers are, so as to the increase in the demand, allowed it CEO Survey provide the best solution. It is this to generate record cash flow figures. Interview Transcripts “upwards” approach that has allowed Growth and geographic Armando Garza Sada us to increase our market share, diversification Chairman of the Board of Directors, whether through organic growth, Alfa, S.A.B. de C.V., Mexico acquisitions, joint ventures, or Markets on wheels innovation and development of new The automotive industry, of which and improved products. we are suppliers, has faced a difficult situation recently. In addition to the Long-term planning pays off financial crisis, the industry faced As mentioned above, except for the its own crisis, characterised by the automotive business, the crisis did not oversupply of vehicles, a trend of rising force us to make any significant fuel prices, technological advances, changes. Thus, for example, in the and changes in the preferences of petrochemical business, the market consumers, who are increasingly factors continued to be raw material sensitive to ecological and prices and energy costs; as well as the environmental sustainability problems. manufacturing of products increasingly We have a fairly clear picture of the friendly to the environment. In the new trends and of how the automotive case of refrigerated foods, the industry markets will be in the short and inclination of the consumer towards medium term. We know that the most healthier products or the search for dynamic markets will be those of the specific nutritional content, trends that emerging countries, mainly Asia, while had already been present prior to the the markets of Europe and the United crisis. The same may be said for the States will grow at a considerably slower telecommunications markets, where rate. We see that there is a clear trend the key factor is found in the design of toward manufacturing vehicles with convergent connectivity solutions more efficient engines, but without (voice, data and internet services), sacrificing power, as well as toward tailored to the specific needs of our replacing large vehicles with lighter current and potential customers. ones and with compact SUV’s. We are Our strategic approach has been ready to quickly take advantage of the maintained within the framework business opportunities in the markets of of the mid- and long-term planning the future, and those resulting from the exercise, which is valid even for the transformation of the automobile to big acquisitions we made this year, which I have referred. such as those of BAR-S in Sigma, and the petrochemical plants of Learning Mandarin… Eastman Chemical Co., in Alpek. In the near future, it is anticipated These acquisitions were not the result that the global automotive industry of a chance opportunity, but rather will come principally from the Asian of the process of planning, resource continent. For that reason, we are management and negotiations over closely observing those business is a long period of time. done in that region. 14th Annual Global CEO Survey Interview Transcripts For a few years now, we have been transaction is closed, Alpek will Armando Garza Sada manufacturing and selling our products redimension its capacities, becoming the Chairman of the Board of Directors, in China. Now, we are building a plant company with the best technology in Alfa, S.A.B. de C.V., Mexico in India. Even though both efforts are North America, which will place us in a still incipient, our commitment is good position to expand beyond this strong: we have sent top-level executives region, which has until now been our to the region, with the mission of natural market.