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Luis Berrondo

MEXICO - Industry

Keep it Cool

Chairman & CEO, Mabe

Bio

Luis Berrondo is currently Chairman and CEO of Mabe. He is also an active Board Member of HSBC Bank and its Executive Committee and a member of the Mexican Businessmen’s Council (CMHN). He graduated as an Industrial Engineer from Universidad Iberoamericana in 1973 and obtained an MBA at IPADE Business School in 1975.

What role has Mabe played in contributing to the development of the industry? We are very proud in saying that Mabe has become one of the most important companies in […]

What role has Mabe played in contributing to the development of the industry?

We are very proud in saying that Mabe has become one of the most important companies in the world for household appliances. We operate throughout the entire continent. Mexico plays a fundamental role in our strategic plans, but we have been growing significantly in other countries in Latin America. Mabe has factories and commercial operations from Canada to Argentina. Mexico is a major powerhouse in manufacturing. We have been pioneers in the development of technological solutions for appliances since our beginnings, and we demonstrated it when we began to use plastic coatings for the interiors of our refrigerators.

What factors have led to Mabe becoming a large and successful company?

In the 1980s, the world was changing and we decided to start exporting Mexico’s business. We did it in the late 1980s, and nobody thought Mexico would export household appliances or cars. Also, we started exporting appliances to the US in the early 1990s, and now that is a market where today many of the key players operate. Our electric appliances bound for the US are different from those we sell on the domestic market. For example, the oven in Latin America is generally smaller and electric, while in the US it is larger and uses gas. We have adapted our factories for the needs of these different markets. Additionally, a large part of our success has been due to our joint venture with GE, which has lasted for 25 years. There is no doubt that this has been a very important key for our business.

What trends have you witnessed in terms of consumer demand and purchasing patterns?

In Mexico and other countries in Latin America, the middle class is growing. There has been important growth in the middle class over the last 10 to 15 years. Therefore, industry is becoming much more active, and we are growing all around the continent. At the same time, the prices of appliances are increasing.

“We have been pioneers in the development of technological solutions for appliances since our beginnings.”

What challenges do you face while operating in this market?

Generally, the regulatory climate is fine. If the energy reform goes through it will make Mexico much more competitive and reduce costs. For example, the US is taking advantage of shale gas, and this has helped the market. There is a good chance for Mexico to become a more efficient country in terms of energy. Even though Mexico is full of resources, it is not competitive in terms of price because of the structure of the market. If you have competitive prices in energy you can be a manufacturing country, because this is a key element. If you ask someone to produce copper or steel, energy is a must. Gas, oil, and other resources from energy are basic industries. These sources of energy have the potential to make your business more competitive.

What is your outlook for 2013?

There are several people saying Mexico will succeed in 2013. Not only next year, but I think for the next 10 years the outlook is great. At the moment, China is no longer a competitor. They affected the whole world in the first decade of this century and all the manufacturers were there because of lower costs. For example, if you look graphs about the percentage of exports to the West, 70%-80% were coming from China. I think China will not be able to compete with Mexico because of the increase in salaries there. China is trying to double its income every five years. At the same time, there is a huge potential for Mexico to grow based on its domestic market, which is 110 million strong. There is a growing middle class and higher-paid jobs because of manufacturing here. Also, if the energy reform goes through, a lot of money could enter the Mexican market, which would provide extra jobs and increase the average incomes of the population.

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