Cables in Mexico Becoming a Price Market

Q: What is the company’s strategy for capturing such a significant market share?

A: Our main strategy is to expand and search for new markets, while constantly improving the quality of our products. Tele-Fonika has a strict production process, and a prestigious global service network. We prioritize the development of specialized cables that are innovative enough to break national benchmarks in each market. Within the mining industry, an increasing amount of players are convinced of the mechanic properties that polyurethane can offer for electric pulling cables thanks to its physical properties that have double the resistance of other traditional rubber bases. In the case of Mexico and South America, the company has a primal focus on manufacturing electric cables for mobile equipment. Our TPU cable not only has mechanical polyurethane advantages, but also, a patented shiny material composition that covers 100 percent of the cable. The product is called Jumboflex Reluciente as it is mostly used in jumbos, drills, and anchors in the interior of mines. It has been quite successful as it eliminates damage and grants security to users that are in total darkness, while our competitors limit themselves to strips that only cover 30 percent. Most of our growth in Mexico is enrooted in the mining industry.

Q: In what ways can Tele-Fonika provide more productivity, efficiency, and safety in the Mexican mining sector?

A: We are constantly developing strategies to offer competitive prices that reduce logistic and transportation costs for our clients. The company recently finalized the implementation of a fiscal precinct in its distribution center in the US to generate efficiency both in importation and the customs office. In January 2014, Tele-Fonika Cable Americas, negotiated a 3-year blanket contract, for USE-2 type cables, for a large public utility, in the south central US. This boosts our position, particularly in markets that do not commercialize these type of cables. TeleFonika targets the mining cable market, but third parties frequently invite it to participate in the cable bidding rounds that CFE grants for large distribution projects. That large amount of investment that the bidding rounds for deepwater extraction and exploration attract is an additional growth opportunity thanks to the market gap our cables can satisfy within those industries as well.

Q: What type of challenges or resistance has Tele-Fonika experienced and how has it overcome these?

A: Our biggest challenge lies in facing resistance to change and new technology. The Mexican cable market has unfortunately become a price market. Many national and foreign manufacturers eliminated intermediary distribution channels in order to directly supply mines, which in turn started a price war. Sometimes it is difficult to convince users that our cables offer long term savings and added value. Electric cables for mobile equipment in mines are regulated by international security agencies for dangerous environmental work. In Mexico, users commonly request the international certificate MSHA from our machines as it is related with security and occupational health in mines.

Q: What are the main business objectives of the company for Mexico in the short and long term?

A: Tele-Fonika’s main objective is to widen its participation in 8kv wires. Nonetheless, our 600v and 5kv cables are well known and used in the mining industry. We have the advantage that our commonly manufactured 8kv and 15kv pulling cables for mines are rare in Mexico. The company is working on an intense specification campaign for the latter. Likewise, our short term objectives are in strengthening our promotion and specialization efforts for our electric high voltage cables, particularly targeting companies in the utility sector like CFE and PEMEX to be able to take full advantage of the country’s Energy Reform.