The Business Year

Luis Manuel Hernández González

MEXICO - Industry

Luis Manuel Hernández González

President, Index Nacional

Bio

Luis Manuel Hernández González is a public accountant from UABC with an MBA from Tecnológico de Monterrey and a doctor of business from Atlantic International University in the US. He has served as President of Index Zona Costa BC since 2016 and secretary of the National Index from 2017-2020. In the private initiative, he began his career in 1997 in the accounting and finance area. In 2014, he was in charge of the investor relations area in Frisco, Texas. Later, he played the role of controller in a couple of companies in Tijuana. He is currently the CFO of Jacuzzi Mexico. As an academic, since 2005 he has been a teacher for various universities in Mexico and the US. He was recognized as CrossBorder Leader of the Year 2020, a recognition given by the government of California due to his contribution to the governments of Baja California and California for the reactivation of the Calibaja Megaregion.

With the growing importance of sustainability and compliance to expand overseas, Index is focused on helping companies remain competitive amidst new regulations.

Index represents the manufacturing sector in Mexico. What issues have you focused on this year?

We have focused on readjusting certain areas of manufacturing. We have adjusted to comply with different areas of the US-Mexico-Canada Agreement (USMCA). An important issue is the labor reform of the FTA, which establishes industry compliance criteria. Our main focus has been on complying with the USMCA objectives to remain competitive. The other issue has been energy consumption. Mexico’s approach to energy is different from that of the US. Mexico is just starting to support green energy, which is something that investors are giving much importance to. Another consideration has been the vaccine. As an institution, we managed to vaccinate its employees on the border with the US. We started with the vaccination campaign in Baja California. From there, we went to other parts such as Tamaulipas, Nuevo León, Coahuila, Jalisco, and Guanajuato.

How are you helping the sector adapt to new renewable energy trends?

We want to do what developed countries are already doing. Those countries are betting on clean and renewable energies. In Mexico, on the other hand, in order to protect Pemex, we are going backwards. We are not transforming at the same speed as the rest of the world. If you go to California, for example, part of their law is to discontinue selling gasoline cars by 2025. And many of those cars that will be sold in California are produced in Mexico. We would like to see a change in this area. Meanwhile, many private companies are focused on energy transformation. Mexico is aligning itself with the transformation, but we seem to have no long-term plans from the government. When a manufacturing company sets up shop it is looking for multi-year, not six-month plans. The government needs to understand that it is important to move forward in the area of clean energy.
Another issue that we have heard much about is the shortage of suppliers and chips. How have you addressed this issue and its disruption to the logistics chain?
The chips are going to be ready at the pre-pandemic level by March or May 2023. This situation is going to result in natural inflation on the vehicle side. Most of the steel, textile and plastics supply comes from China. It is a difficult situation, because these inputs are more expensive. You are betting that the increase in raw materials will be paid by the end customer.

What are you doing to support Mexico in innovation and technology uptake?

Much of our effort is focused on schools. We want companies to be able to educate teachers to transfer that knowledge to students. We are trying to bring technology to the educators. The manufacturing sector is the most innovative in Mexico because we comply with global standards and hold all requisite certifications. The reactivation after the pandemic has generated some 200,000 new jobs. Manufacturing is generating employment and when competing with international markets, we are asked to meet certain quality standards.

What are your goals for 2022?

The goal is to stabilize, as the big challenge we face concerns the supply chain. The US will continue to ask for products, but we have to stabilize the production chains as soon as possible. In terms of supply, we would like to be able to start using regional suppliers. We know that they can be more expensive, but it is more important for us to have them nearby, rather than having a more remote one that is not going to deliver. We saw it in the pandemic because many of these products had to be brought to China. It is important to have regional suppliers. This may be a little more expensive, but it is better to have suppliers that are close by to avoid disrupting the logistics chain.

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