Mexican O&G Companies Adapt, Globalize: Flusell

Q: How has Flusell adapted to recent changes, and what factors have guided the company’s strategy over the past few years?

A: Over the past five years, specifically in the post-pandemic era, Flusell has worked on its sales channels. The current situation in Mexico's oil industry is chaotic, which has compelled us to shift our focus from the Mexican market to other regions. Flusell is a 100% Mexican company but currently our largest clients are now in the United States, Canada, Guatemala, Argentina, and Colombia.

Q: What have you found upon entering these other markets? How did the Mexican market prepare Flusell to tackle its challenges, and what advantages does Mexico offer today in terms of commerce?

A: Mexico’s industry has driven us to become a high-quality company. The Mexican market is incredibly demanding, and this has pushed us to create a very robust product. When we entered the South American market, competitiveness was not a matter of quality standards. Rather, these markets are accustomed to American products. In Flusell, they found a company that spoke their language, had cultural proximity, and, crucially, offered better quality than American competitors.

In the American market, we offer delivery times that break with their traditional timelines, which gives us a significant advantage. Our current challenge is crossing the border, as the global political situation is now compelling us to consider establishing a plant in the United States.

We initially viewed nearshoring primarily in relation to the United States, our major neighbor. However, our current challenges in Mexico have opened our eyes to other markets. We now see South America as a form of nearshoring as well. We plan to leverage nearshoring to expand southward. 

We currently operate in an environment with tariffs that do not yet apply to our segment, as we do not use much steel. But tariffs remain a possibility. This is essentially forcing us to consider building a plant in the US. This would also open new markets for us. Our main operational base will always remain in Mexico, but for the US market, setting up a plant there has become a necessary strategic move.

Q: How has demand behaved regarding a decrease in upstream activity and an increase in downstream investment in Mexico?

A: The upstream drilling sector is currently in a state of investment and project execution, so our participation there is on hold. We are heavily involved in the maintenance of the distribution network for hydrocarbons. This is where we see much more work, particularly in pipeline cleaning. Mexico's pipeline network is growing, with more private companies like TransCanada building and distributing their own gas. We are also involved in new construction projects.

This leads to our diversification strategy. We do not enter the electrical part of the business, but we are involved in the distribution, specifically, the cleaning of pipelines that supply natural gas to these plants across the country. Our business is also heavily dependent on the development of new industrial parks with high energy demand.

Dealing with different companies has been a significant change. In the past, PEMEX represented large purchase volumes. Private companies, however, are much more conservative and meticulous. This has reduced our production volume, but it has drastically increased our production quality. We now have a higher standard of quality and consistency in our production. It has also forced us to be more precise and clearer in our processes.

In Mexico, it is very difficult to completely work outside of PEMEX, as the NOC is ultimately the end customer for everyone. However, by working with third-party service providers, we are optimizing resources. Besides PEMEX, we also work with CENAGAS. While PEMEX has a strong presence across exploration, production, refining, and transportation, CENAGAS is focused solely on distribution, which requires a very agile process. 

CENAGAS has become a significant reference point on the government side, alongside other gas companies that demand high quality from us. This high demand from the Mexican market makes our entry into any other market much easier, as companies see that if we can produce for Mexico, we can produce for anyone.

Q: How much are international standards required of you, and how has this evolved since the entry of private companies around 2016? 

A: The importance of certifications and quality standards in our processes lies in achieving standardization. We are a micro-enterprise serving large corporations, and our small size allows us to be extremely agile in this standardization. We are ISO 9001 certified, and while we do not have a rigid, prescriptive blueprint for our manufacturing, we rely on our internal quality standards that have positioned us as a market leader. Flusell has been producing these products for 38 years, which is why we are at the forefront of this sector.

Stepping out of the comfort zone we had with PEMEX has made us more competitive, more profitable, and faster to respond. This new market openness, the new competitors, and the new clients have all forced us to be better. It certainly makes things more complicated, but it also makes us very efficient. This dynamic, with less volume but more efficiency, is exactly what we have had to embrace. We must be highly efficient in our processes to deliver what our clients need.

As the global market says, "If you can make it in Mexico, you can make it anywhere." This experience has been a wake-up call, opening our eyes and highlighting the necessity for change. The pandemic also shook us, teaching us that being confined for a year or a year and a half is catastrophic.

Our challenge today, and I believe it is a challenge for the entire logistics and transportation industry, is to achieve greater agility in transporting our products to Central and South America. While China has a very clear and straightforward method of transportation, delivering our products southward remains a significant challenge.

Q: What are your short-term objectives for the company?

A: Our strategy is to survive. This year has been very challenging. We have only reached 30% of our annual goal, a significant decrease from 2024. We have to make adjustments and rethink our strategy. For 2026, we hope to at least maintain our 2024 performance and enter the Middle Eastern markets. We are also initiating a transition within the company to move away from being a family business and become a more autonomous organization. We were founded in 1968, so we have survived many challenges, but today's dynamic is faster.

Flusell is a manufacturer and distributor of specialized products and equipment for the oil and gas industry.