Juan Vargas
President and CEO
Guantes Vargas
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View from the Top

Quality Protective Clothing Priority in Assembly Plants

Mon, 09/01/2014 - 12:18

Q: What role will the automotive industry play in the future growth of Guantes Vargas?

A: The automotive industry represents 33% of our business. Another 33% is composed of the oil and gas industry, and the last 33% is made up by the mining sector and the beer industry. In the automotive industry, we have had long- term contracts with companies such as Ford, Volkswagen, and Magna, and we have been continually growing along with them. Every time they open a new plant, we get more work. Now as Mexico sees plants being opened up by many different companies, Guantes Vargas is ready to grow in size, adding more plants and more employees. This will be a great opportunity for us as we are already well-known for our automotive experience. Beyond Mexico, our short- term priority is to expand to Argentina and Brazil. In the immediate future, we want our first international plant to be set up in Brazil, and then Argentina. In the medium-term, we will open a facility in Detroit to give us a presence in the US and to be closer to some of our clients, such as Ford. Right now, we are also looking to start working with Nissan. Today, our business is purely with major companies, as we do not deal with small or medium-sized companies. Obtaining these large contracts is facilitated by our history and certifications. We are growing at about 7% annually across every industry we operate in and have survived several challenges, such as the entry of Chinese companies into the market in the 1990s. Guantes Vargas came out stronger thanks to our quality.

Q: How has your company’s integration helped it maintain its competitiveness and expand its business?

A: Having integrated processes has helped us not only to grow but to survive globalization as well. Each branch of our business acts as a separate company. We are very proud of our ‘6 in 1’ business model as it extends throughout our entire value chain, helping to ensure quality and reduce costs. Our products cover all manner of protection, from head, eyes, body, hands, legs, feet, and respiratory apparatus. This integrated approach allows us to protect a worker from head to toe. We now have more than 250 moldings of gloves, and also produce a great quantity of clothes and shoes. We have over 4,000 employees across all of our plants, making gloves, clothes, and shoes for a total of 7,000 products. This makes us the biggest manufacturer in the Americas for these products. These employees receive training in how to apply the latest innovations, solutions, and technology, as well as specific training in order to reach our objective of zero accidents. We are now taking this one step further. In the automotive industry, we have expanded to maintenance and tool production. This flexibility also sees many of our products being made exclusively for a certain company or even for a certain plant.

Q: What innovations and certifications guarantee the efficacy of your products?

A: Our biggest innovation concerns the machines we use to build various products in a fully automatized manner. We have been in the market for 62 years, during which we have remained a strong company under the same name, managed by the same family. Volkswagen has been hailing our performance for a long time. Back in 1998, we received the Corporate Supplier Award for flexibility, quality, and service from the Volkswagen Group in Germany. We remain the only Latin American company to have received this award in our sector. In 2012, Volkswagen’s operations in Puebla gave us a similar award for North America. In Mexico, the Treasury awarded us the National Personnel Protection Award in 2011 for the products we provide to the public sector. We sell our products based on a desire to eliminate all accidents, reducing downtime and insurance costs for the automotive sector, while our focus on ergonomics results in productivity increases. This has to be provided to our clients at a price that is internationally competitive. Competitors that could not achieve this are long gone.

Q: How confident are you that you will reach your targeted growth rates?

A: We are very cautious about our growth rate, as seeing very accelerated growth is not healthy. It also does not just depend on us. The government must work on reducing taxes for Mexico to be able to compete internationally. We have very high taxes compared to the Asian market. We compensate somewhat with our lower cost of labor, but we continue to lobby the government so that, at the very least, taxes do not go up. The government has been able to reduce inflation, and Mexico now has a stable economy which allows our company to grow in this country and across South America.