Focus on Quality in the Face of Low-Cost Competitors

In a cyclical industry such as infrastructure, companies are under more and more pressure to remain competitive on prices. But Jesús Arredondo, Director General of construction company ARTRON, says it is necessary to find a balance between these low-cost products while still providing high quality.

“Often, our biggest challenge is that big companies outsource the project managers,” he says. “The outsourcing companies usually will not hire a firm such as ours, but instead, contract a lower-cost company.” Although he admits ARTRON’s services do not come cheaply, he maintains that this is a guarantee of the company’s quality. “We are a committed and responsible company that has civil insurance coverage of up to US$3 million, qualified and certified personnel and the most innovative equipment,” he says.

ARTRON was established 18 years ago by Arredondo as AT Servicios y Mantenimiento del Noreste after he worked as a plant maintenance technician and realized that there was a lack of related services in terms of quality and added value. “ARTRON’s slogan is ‘innovating in the quality of service’ because we have redefined our clients’ ideas of quality, based on their needs and on the failings of many other construction companies,” he says. “Over the last 30 years, Mexico has experienced rapid growth in infrastructure, which outpaced all contractors, including myself. This is why my company started to generate a different culture among our people. We not only provide quality, but also passion, and I try to foster that passion within my clients so they trust our company.”

For ARTRON, the opportunities lie in the private sector rather than the public sector. Arredondo says that prior experiences with public-sector companies like PEMEX and CFE have been largely negative. “Our target has always been the private sector, which includes industrial parks and related maintenance services,” he says. “Public sector companies are extremely vulnerable to governmental changes.”

He says ARTRON’s quality is what sets it apart from its competitors. “We have to knock on all doors and attract the attention of construction companies to show them that we are better than their regular providers,” he says. Although ARTRON’s services may come at a higher cost, the company guarantees its service for a fixed period of time, meaning if something fails or is not suitable, it will fix it free of charge. “All these factors contribute to our value proposition, which adheres to more of a long-term vision,” he says.

Unfortunately, not all companies share this vision, with many having more of a focus on the short-term bottom line. Arredondo gives the example of a 10,000m flooring project for Toyota, a project on which ARTRON recently bid. “Our competitor, a Japanese firm, had a poor-quality product, which made me think that the deal was ours,” he explains. “But when the manager saw the invoices he gave the project to the other company. This shows that companies are not prioritizing quality anymore.” This is how the company realized that the only way to offer competitive prices without sacrificing quality was to become a producer.”

Last year, ARTRON established manufacturing operations in Monterrey. For 2020, the company’s target is Queretaro and from 2020 to 2022 it is planning to open an epoxy manufacturing division in Aguascalientes because many of the materials used to fabricate the resin are produced there. “We are a very practical company, consistently trying to streamline operations and remain competitive,” says Arredondo. “For example, when we were outsourcing the renting of equipment, our costs went up by 10 percent so we set up our own equipment rental company to cut this expense.” Right now, ARTRON buys epoxy from Chicago, which is expensive so it is looking to set up the facility in Aguascalientes as a way to reduce this cost.

So far, ARTRON has financed its expansions through its own funds and Arredondo does not want this to change in the future. “We hope to keep growing with our own capital,” he explains. “So far, we have not had to look for investors, although several have offered to buy in. All the projects we have planned for the next five years will be financed with our own funds.”