Generating Energy Stability Where Mexico Needs It MostBy Cas Biekmann | Fri, 09/04/2020 - 09:16
Q: How has your company evolved in Mexico and what services does it provide?
A: Generac acquired Ottomotores in Mexico in late 2012, followed by Selmec in June 2018. The key to our success was the purchase of these two companies that focus on the manufacturing of energy generators. Generac, the leader in the US in this segment, has over 60 years of experience. In total, we boast over 200 years of experience. Generac provides the technical and financial support, which has resulted in the ideal company mix.
We focus mostly on the following sectors: residential, commercial and industrial, data centers, and the telecommunications and health sectors. The latter three have grown especially in the past year. We manufacture energy generators, ranging from 10KW up to 3.2MW in a single motor. Furthermore, we commercialize and distribute various products running on gas in Mexico and LATAM.
Q: How has demand for the company’s products evolved during the pandemic?
A: Due to the current situation, the digital sphere has been pushed ahead more than three years in its development. Constant interconnection has become crucial for communication and work from home has become the norm. This situation has fostered the necessity for reliable and constant energy supply. Our products can help guarantee energy supply. From domestic use to the biggest industrial users, we have solutions that can be adapted to our client’s needs.
Various Mexican hospitals have been equipped to deal with the pandemic. We are supplying many of them with power generators, as we are a direct supplier of the Ministry of Defense who is in charge of this project. We provide solutions to Mexico’s new Welfare Banks as well.
Q: Which products in the company’s portfolio are experiencing the highest demand and how do you expect this to evolve?
A: We are experiencing an uptake in demand. Solutions that range between 5KW and 200KW are in greatest demand. Diesel beats gas narrowly in terms of the fuel they run on. The products that run on gas are growing in demand. This is thanks to our national natural gas infrastructure, which is growing steadily.
With data centers, capacity is being reduced. Before, the trend was to have large data centers, powered by 2.5MW generators. Now, we are seeing micro data centers, which will need smaller equipment of around 0.5MW to 1.5MW, running on either diesel or gas.
Q: How has the company’s natural gas business developed in Mexico?
A: Generac leads the worldwide segment of natural gas-based generators in terms of quantities manufactured and sold. We have three major development centers, where we develop new equipment and motors. These are very efficient and cleaner, and have a lower environmental impact. They are tied to the development of Mexico’s and Latin America’s infrastructure as well. We already have solutions in place, but depend on these project developments to deliver our solutions.
Unfortunately, gas is still seen as a liability in Latin America. Because we live in an area prone to earthquakes, people think a gas pipeline poses risks. However, infrastructural safety is up to a very high standard and able to deal with such natural disasters.
Q: How does the company approach the private sector to ensure it is fully aware of its necessities?
A: We have over 450 engineers working in three offices worldwide. They are located in Mexico, Europe and the US. Here, we are constantly working on the evolution of our product while identifying new demands and trends. This includes the necessity for clean energy generation. We constantly interact with our clients, find out what their needs are and respond to them. We know that many important technological changes are coming, such as the switch to 5G networks. Therefore, we are already working with teams to cover the new demand, such as micro antennas and repeating stations. The constant evolution, research and development of our products is what ensures our success in the market.
Q: How is the company working to bring energy generation plus storage solutions to the Mexican market?
A: In the US, Generac has a market share of 75 percent in the residential energy generation segment. At the moment, we are working on delivering a more integral solution, which includes solar panels, batteries and a backup power generator to adjust and manage all this energy. In Mexico, we are experimenting with this new model, revising and adapting the product to the local market. In 2021, these solutions will be available for the Mexican market as well. These solutions target those that are on CFE’s High Consumption Rate (DAC) for residential segments, as well as for commercial areas such as convenience stores. These types of businesses can benefit from energy savings and enhanced energy security with storage.
Q: What characteristics and competitive advantage does your new manufacturing plant provide?
A: We invested MX$600 million in the construction of a new manufacturing plant, located in Villa de Tezontepec, Hidalgo. Here, we will manufacture energy generation plants through diesel or gas. The construction of the plant began in April 2019 and ended in May 2020. We kickstarted operations with a line of prototypes in July and hope to be completely operational by October 2020.
Q: What are the company’s goals for 2020-21?
A: We have seen our share value grow 50 percent in the past few months, reaching US$180 per share. The entire company is focused on providing energy solutions. We will not branch out to other segments, but remain in the area and foster our expertise. We are dedicated to growing our solutions portfolio. Another objective is to invest in our infrastructure and in our employees as well. We are trying to get the best people on board so that we can manage the best teams. We will continue growing our gas and diesel-based business and offer the best possible solutions to our clients.
We are investing this much capital in these trying times because we have faith in the Mexican market. We know that we will make a return on this investment and that the current situation is merely temporary. We believe that Mexico’s precarious energy infrastructure and electrical grid need our solutions to continue running efficiently.
Generac Mexico is part of Generac Power Systems group. The company operates in the residential, commercial and industrial segments. It offers gas, diesel, bifuel and gasoline on stationary, mobile and portable electric generators from 800W up to 3.2MW.