Álvaro Chacón
Managing Director Mexico and Central America
Martin Engineering
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View from the Top

Generating Roi By Prioritizing Quality And Expertise

Mon, 10/22/2018 - 11:13

Q: In what ways is Martin Engineering benefiting from the industry’s positive outlook?
A: The company is experiencing growth for the third consecutive year and we have not seen these kinds of results in two years. Part of the performance is due to more selectivity in terms of purchased products and better-trained employees, which makes us more competitive. The industry is expanding in terms of volume and percentage and in 1Q18 we were able to hit monthly targets within the first week of each month.
On a global basis, mining represents 30-35 percent of our effort and resources and in Mexico, our participation in the industry is similar, with 35-40 percent dedicated to the sector. Our number one client is Goldcorp and we have a site in Peñasquito with a team of 25 technicians. Goldcorp recently awarded us an additional two-year contract. We are working on diversifying our portfolio and acquiring new clients and we have already reached a deal with Operadora de Minas, a subsidiary of Grupo México in Cananea. Originally, we were working with it through a distributor but believe that it is more efficient to deal with the operator more directly.
Q: What is the company’s main added value in comparison to companies that offer similar services?
A: We differentiate ourselves by prioritizing quality and providing multifaceted services and solutions. Unlike other companies we make sure that we have an experienced team of technicians who can help operators onsite. One downside is that it can be quite costly to maintain this quality as companies do not want to pay for the added value. For example, in one project in Coahuila with Grupo Altos Hornos de Mexico, we are providing a team of 25 technicians who work onsite all year long although the operator does not fully pay for these costs. This greatly impacts our profit margin and makes it difficult to balance quality with earnings, which is a normal paradox within the industry. We find that we are selling more but earning less.
Q: How do you overcome resistance from companies that do not want to pay more for higher quality services?
A: In effect, we are analyzing our business model and production process to find ways to become more competitive without compromising quality. One way we are doing this is by an alliance we created with Pennsylvania State University Department of Minerals and conducting a study to identify the ROI that the presence of these technicians is providing clients in terms of security. We are doing this because we believe increased safety often implies higher productivity in comparison to projects that do not have a team of technicians and we are using data to prove this. This study is already having a significant impact on the industry and we have coined a new term, Return on Conveyor Safety, to show the true value of what we offer the sector.
Q: What would Martin Engineering like the next administration to prioritize when it comes to the mining industry?
A: I would like the government to understand the differences between what the public and private sectors can offer the country. They both play important roles in Mexico and the administration should do its best not to inhibit investment.
Authorities should also try to diversify FDI in the country as we are highly dependent on Canadian companies and we could have more investment from other regions such as Latin America and Europe. They should also facilitate processes and regulations, and one welcome effort would be to overturn the recent regulation that dictates operators must wait 10 years to deduct exploration investment. Allowing them to do so within the first year would greatly help the industry. All these factors are important because Mexico can be a difficult country to work in as it has ejidos and surrounding communities that have the power to impede projects.