Question Everything to Break ParadigmsFri, 03/02/2018 - 10:46
Q: What processes have made Proteak a disruptive business model for the Mexican industry?
A: It is the combination of three different factors. The first is that Proteak was built by entrepreneurs with the help of industry experts who had access to capital. The second factor is a lack of respect for paradigms. The same combination of entrepreneurs and specialists has allowed us to break different paradigms because we question everything. The last factor is that Mexico has fabulous conditions. The country has a great capacity to develop any kind of industry due to its internal market and because of its export strength. For instance, Proteak exports teak logs to China and India, even though the teak industry is not as developed as it is in Asian countries. We are on a crusade to make the forestry industry one of the most important industries in the country. Forestry in Mexico has been totally disregarded and underdeveloped, despite the country’s great potential.
Q: What strategies can help develop the sector?
A: Unfortunately, Proteak’s efforts to develop the industry are not enough. What we need is a public policy coordinated from the highest possible levels that focuses on the different aspects that require development, such as access to land. In Mexico, access to land has always been highly fragmented and there are multiple regimes surrounding land ownership, which sometimes lead to conflict. Our largest land extension is around 900ha but we have competitors in Brazil with 250,000ha for a single field.
The tax scheme is also not suitable for boosting the industry. By this I do not mean that we need tax cuts or subsidies. We need to level the playing field so the sector’s tax burden is similar to that of other industries, while taking into account its specific needs. We also need to develop financing and insurance schemes for the industry and educate investors who usually focus on other types of industries, such as automotive, telecommunications or retail.
The Mexican forest industry’s trade deficit is almost US$7 billion but the industry has the export potential to create a surplus. With the proper political reform, I am sure that in five to 10 years we could become an exporting country.
Q: How has Proteak tackled the Asian market, which is one of the most important teak-producing regions?
A: Teak is native to Asia but breaking paradigms in Mexico has allowed us to succeed in the rest of the world. The Asian teak industry is characterized by having large extensions with low productivity. Proteak prefers to have fewer tracts of land but with high productivity and quality levels, which allows us to be very competitive and to develop business niches in which Asian countries cannot compete because their products do not meet certain physical qualities.
Q: In which emerging business niches do you see the greatest possibilities?
A: We would like to develop a competitive furniture industry through the use of wood panels. To achieve this, our strategy is to educate consumers. The lack of a local furniture industry has made imports necessary to meet local demand. When compared to other countries, Mexico lags in this industry. For instance, Brazil’s medium-density fireboard (MDF) production is approximately 4,500 million m3 per year. In Mexico, the industry only generates 700,000m3 per year.
Q: How does Proteak establish a working relationship with local communities?
A: Our operations are in the least developed and most marginalized rural communities in the country, where the main activities are related to the agricultural sector. This sector is has the largest percentage of informality. For this reason, we developed a program called “Fair Employer” in which we have worked to increase employee productivity; we provide all our employees with better work conditions, fair salaries, social security, access to banking services and safe and efficient transportation services. We have many rural employees and in the high season we have almost 1,000 rural employees between our permanent and temporary staff.
Proteak is the largest Mexican forestry company in the country and one of the largest teak producers in the world. It was founded in 2000 and became a public company in 2010. In 2017, Proteak opened the first MDF plant in the country