Adapting to Break into New MarketsWed, 10/18/2017 - 13:14
Canadian companies control 70 percent of gold production in Mexico and many more are present in other metals - not to mention the supply chain - due to Mexico’s proximity and favorable conditions. But the Mexican way of doing business is unique and these Canadian companies must have a deep understanding of the country and its culture to ensure success when entering this market. The idea is to adapt and respect the needs of the region to better anticipate and introduce new products, says Rene Valle, General Manager in Mexico and Central America of Canadian heavy machinery supplier MacLean Engineering.
The best way to introduce new products to Mexico, Valle says, is to constantly exhibit the machines in demonstrations and trade shows across the country. “The key to breaking resistance is allowing end users to become familiar with the machines,” he says. “Companies only purchase equipment that they feel comfortable with and that can bring benefits to their mining process.”
Mexico is known for being a stubborn market that does not adapt to change easily. But the mining industry in the country is starting to crank its gears again after a less than favorable year in 2015. It is a good time to restart mining projects in Mexico and companies are beginning to buy more equipment, an area of opportunity for MacLean.
“One of the main issues with this approach is that Mexican operators do not often attend international shows,” says Valle. “In effect, they are kept in bubbles, away from new technological trends and best practices that can improve efficiency and productivity. Another problem is that few engineers in the mining industry speak English.” MacLean strives to build its existing relationships with large Mexican companies and to provide more solutions for them. “We want to keep strengthening our existing relationships with Canadian mining companies that are in Mexico because our value proposition of hard-rock equipment performance, reliability and innovation is already known to them,” says Valle. For MacLean, Canadian operators have become attractive clients because there are fewer barriers to overcome.
Valle also sees a meeting of minds when it comes to sustainable practices, even if the Mexican side is more hesitant to accept change. The industry is starting to move away from diesel-powered engines, for example, and into more green technologies that use battery-powered engines. “We are preparing products for the future of diesel-free mines,” he says. “Mexico is slowly embracing this mindset and I predict the trend will quickly grow in the country. But transforming its rigid mentality will be a challenge. Canada has already shown itself to be in favor of this technology.”
To promote use of more high-tech equipment and strengthen the industry’s supply chain, Valle believes the government and the Mexican Tax Authority (SAT) could be supporting the industry more efficiently by implementing policies that do not dramatically impact company budgets. “The extra mining royalties and taxes in the country were adopted at one of the worst times,” he says. “Relaxing these fiscal obligations would allow companies more cash flow to invest in optimization and high-tech methods, providing greater cash flow for the country.”
Despite this context, Maclean saw surprisingly high sales in 2016 that far surpassed the company’s expectations thanks to the improved landscape for metal prices. “Our company has already sold approximately 100 machines in our time in Mexico,” says Valle. “In 2016 alone, we sold approximately 20 machines to companies like Fresnillo.” Valle emphasizes the need to differentiate to guarantee this kind of success. MacLean stands out by offering its clients heavy-duty machines that have between oneyear and seven-year guarantees, is a unique offer in the market.