Could you give us an overview of Pochteca and highlight any recent changes and developments within the company?

We have seen slow growth in the Brazilian and Mexican economies as well as continued falls in commodity prices. As a result of this challenging environment, we have focused our strategy on products with higher added value such as specialty products, blends, dilutions and services. Approximately 40% of our product line undergoes some value-adding process. As an example, in the oil and gas sector, we are developing new products and applications: chemical blends to aid with drilling, processing and other stages. This is also the case in the meat, beverages, sauces, personal care, housing and coatings industries. Some of our new products are in the process of being patented. Our strategy is to provide solutions for our clients and improve their productivity.

This required additional investment in human resources, engineering and laboratory capabilities. We have chemical engineers with outstanding experience on our team. We need excellent human talent to develop the formulas. Another key component is our specialized sales people with technical knowledge to work with our clients and guide them in product applications. With all of this, we still characterize ourselves as being financially conservative, which allows us to remain competitive and sustainable.

Finally, our logistics services are an important part of our business. We have 300,000 square meters of warehousing capacity and provide other solutions such as tanks and railway terminals. We just inaugurated a terminal in Guadalajara with state of the art technology. These low-cost operations improve our sustainability and represent an area we are looking to expand.

What role does sustainability play within Pochteca’s business strategy?

Sustainability is a core value in Pochteca. We are very proud to have received the 2019 excellence award in Responsabilidad Integral from ANIQ (Asociación Nacional de la Industria Química).

Aside from operating with a reduced environmental impact, our products and services allow companies to improve their efficiencies and savings. A few months ago, we launched a new division offering integrated environmental solutions to our customers, including recycling, co-processing, zero waste to landfill programs and responsible confinement/disposal of industrial waste. We go as far as contributing our own personnel working in-plant at our customers´ operations. In the case of solvent recycling, we are developing a new solvent treatment facility and continue working towards improving and expanding the existing one. Our logistics infrastructure, including warehouses and trucks, has all the certifications and licenses necessary to handle and store industrial waste.

How do you view the Mexican economic outlook and what effects do you forecast on the chemical industry?

At one point, Mexico´s chemical industry accounted for as much as 4% of its GDP; now it only represents 1.7%. Of the approximately US$45 billion chemical consumption, more than 60% is imported. Our commercial deficit in the area shows that we rely on what is happening abroad. The shortage of gas, ethane and methane negatively impacts the competitiveness of our chemical industry and many downstream industrial segments. There is strong competition from foreign manufacturers. This situation, together with slow overall economic growth, represents a challenging environment for the coming years.

We want the current government to be successful, and we are seeing some improvements already through the expansion of oil production and more oil processing in existing refineries. However, the challenge is not minor since Pemex has a delicate financial situation and the existing facilities need a lot of investment to get them back to high operating rates.

Middle class expansion being a driver for economic growth, how is Pochteca trying to promote its workers to be better off?

Together with two other companies, Pochteca launched the “Empresas por el Bienestar” initiative.  We now have more than 100 companies from various segments in the initiative, committed to paying $6,500 pesos per month as minimum income to our employees starting December 2019. We are confident that this initiative will spread to other companies and have a significant impact on the well being of Mexican families. We believe that many of our region’s grievances are a result of social inequality and poverty. This is why we are playing our part with our more than 1,300 employees. Besides the new “Empresas por el Bienestar” initiative, we offer many social programs to our people, including courses to finish their high school, medical exams and nutrition counseling, as well as a hotline where we offer advice on legal matters, health and other issues – all for free. We are also committed to respecting and promoting diversity in the workplace. We want to extend opportunities to everyone regardless of gender, religious beliefs, disabilities or sexual orientation.

How do you view the market for distribution services in the region and do you see opportunities for M&A activity?

Latin America continues to have a very fragmented chemical distribution industry, with hundreds of small regional players. The challenging economic environment, open borders, government regulations, economy of scale requirements in order to be competitive, ecommerce and digitization and low commodity prices will certainly result in more mergers and acquisitions in our region. As we have always done, we will evaluate any attractive growth opportunity that we come across.

How important is the APLA meeting for Pochteca, and do you have any feedback for the organizers?

APLA is a venue where Pochteca meets with current and potential suppliers, customers and friends. We connect with firms to do business. We have found new suppliers that help us expand our product portfolio in order to offer additional value to our customers. During the APLA meeting we have the opportunity to exchange information, market data, learn how different countries are doing and get updates on what is going on in the industry. This is why we participate in APLA every year.

APLA will celebrate its 40-year anniversary in 2020. What have been the main changes you have seen in APLA and the wider chemical industry over the last decades?

APLA continues to improve its programs every year, offering insightful and informative panels and presentations that help us make better business decisions. Incorporating attendees from Asia and other regions as well as having the meeting in different countries has also made it a richer experience. The chemical industry continues to be very dynamic, and APLA is keeping the pace for the benefit of all of us that participate.