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Stepping Up and Standing Out

By AICC Staff

March 12, 2020

If you own an independent corrugated or folding carton manufacturer in Mexico, your TV is probably tuned in to FOROtv, a popular cable news channel. But you also are likely carefully watching international channels, such as CNN, Fox News, and maybe the BBC. Because whatever’s going on globally will probably affect your business.

Of course, that’s the way of the world. We’re all interconnected more than ever.

There’s a lot in the news that is affecting boxmakers around the world. E-commerce continues to explode and pay off for the corrugated packaging market. Any time there’s a story in the news about climate change, that’s another argument for corrugated protective packages instead of polymer-based alternatives. And of course, for years, the highly anticipated United States-Mexico-Canada Agreement (USMCA) was debated and discussed in Washington, D.C., and finally signed, making occasional headlines throughout that process.

So, how is it going for boxmakers in Mexico, particularly, where AICC continues to grow its member presence?

Washington Box

Humberto Treviño is the commercial director of Washington Box. The company is located in Monterrey, the industrial capital of Mexico, in the state of Nuevo León.

The Early Days

Treviño started his company in 1998. It was originally called Super Cajas y Empaques Industriales and had modest beginnings—rudimentary equipment and a couple of wooden tables. Treviño figures his company started off with about US$700 worth of startup capital.

But Treviño persevered, and as he kept getting orders and began doing more and more business in the United States, often traveling to various cities around the country to meet clients, he decided to change his company’s name to the more Americanized moniker of Washington Box, though people often refer to it as Wabox. Today, the company is thriving and has 70 employees.

In 2017, after seven years working at fast-moving transnational consumer goods companies, Treviño’s son, Patricio, joined the company to strengthen the organization and, as the second generation joins the business, to lead it into the next steps in the growth plan that soon will be announced publicly. Patricio started off running the company’s finances and is now Wabox’s operations manager.

width=269AICC Playing a Role

A couple of years after starting his company, Treviño learned about AICC and started attending meetings, seminars, and classes. It was, according to Treviño, the jet fuel his company needed, helping him network and get access to information that only a corrugated company president could love.

“They asked me to be a part of a task force to help form an association with Mexico,” Treviño says.

Treviño started recruiting other people in the industry to see if they’d want to come to an AICC México conference. “People thought it was a crazy idea,” he says. “In those days, the old guys always told us it wasn’t possible to sit at the same table in the same room with Mexican competitors. They were thinking that these people weren’t competitors but enemies. That was the advice we were hearing.”

So Treviño didn’t expect much from that first meeting—and was stunned when twice as many people as expected arrived. “It was nice to have more people,” Treviño says. “But it forced us to quickly find another factory to visit and to find a bigger place for the meeting, more food, more notebooks, another bus—double everything.”

Still, he made it work, and people kept coming to conferences and meetings. Treviño hopes AICC has helped his fellow boxmakers, and he says he knows it helped him. “If I weren’t part of AICC, my company may have not survived the very first three or four years,” he says. “Most of the knowledge I have came from AICC, through friends, visiting factories, and of course, the meetings, seminars, everything. All the knowledge we share among box plant owners.”

In fact, Treviño says of his chosen industry, “The boxmaking industry is like one big family. There’s always somebody open to helping you. If you want to find a solution to a problem you’ve never encountered, you can usually find somebody who has been in that situation before. Boxmakers are very open in the exchange of ideas.”

That’s helped Treviño’s company and the industry immeasurably, he says.

On the Horizon

Treviño feels good about his company’s future—and the Mexican box industry in northern Mexico. He says that the perception in southern Mexico is often another story.

“In 2019, Mexico’s GDP contracted for the first time since 2009’s world recession; there’s this perception that in the southern states the economy is stagnant or contracting,” he says. In northern Mexico, where there are more factories and companies like his, “business is booming. Unlike the country’s, the state’s GDP grew, and the labor demand perspective is to double next year.”

Treviño feels that the newly signed USMCA will help the Mexican box industry, mostly because, as he puts it, “the ‘new NAFTA’ is going to give peace of mind to big investors.”

But whatever happens, Treviño feels that the Mexican box industry is healthy, even if the economy in Mexico is not. “I see things going well for the region, even with the political squalls that we have had.” And as for Washington Box, he says, “We’re pretty busy, and at the end of the day, our growth is showing that we’re going in the right direction.”

Eko Empaques de Cartón, S.A. de C.V

Sergio Menchaca Flores is the general director of Eko Empaques de Cartón, S.A. de C.V. In English, that translates to Eko Packaging.

The company is located in the city of Cortazar, in the state of Guanajuato. Menchaca is the CEO. His brother, Andrés, is his partner, the CFO.

Beginnings

Menchaca’s father, Sergio Menchaca Garcialonso, founded Eko Packaging in 1994. The company did quite well from the start, although it was battered a bit by the Great Recession, which officially lasted from 2007 to 2009. Once the economy began to rebound, in 2013, Sergio Sr., a serial entrepreneur, decided, now that his children were older, to see whether his sons were interested in taking over one of his businesses. Sergio Sr., in the meantime, would focus on running Poliempaques Flexibles with his daughter, Monica.

Poliempaques Flexibles is a polyethylene-

manufacturing company that produces mainly bags for fresh produce, such as lettuce, carrots, broccoli, and onions. It was founded around 1970, started by Sergio Sr.’s father, Ignacio Menchaca.

According to Sergio Jr., his grandfather started the business around 1970 with a small machine in his house, with a loan from the machine manufacturer. “My father as a kid, along with my grandmother Martha, made and sold small bags for the local markets,” he says. “They started small, and they grew their business over the years, becoming an important manufacturing business in the region.

So entrepreneurship runs in the family. (In fact, before 2013, Poliempaques Flexibles was being run by Sergio’s Aunt Carmen.) But back to Eko Packaging.

“In the beginning,” Sergio Jr. says, “my father wasn’t confident that I would get good results. He was making all of the decisions in the company—despite the fact that I was in charge.”

Sergio Sr. had good reason to be somewhat concerned. Sergio Jr. was only 26. Andrés was only 23. Sergio Jr., nevertheless, asked his father to start stepping back. “I will listen to your advice, but the decisions are going to be on me,” he told his father.

Sergio Sr. respected that request—and Sergio Jr. and his brother started making a lot of changes to the company.

Many of the changes came from listening more carefully to the customer, according to Sergio Jr.

“We were just a company that sold corrugated boxes, so we wanted to be different. We wanted to create something new for our customers, something that was outstanding in the market,” Sergio Jr. says. He began asking his customers and prospects what their main were with the industry—with the hope that Eko could solve them.

“That became a very important moment in the company,” Sergio Jr. says.

Eko Packaging slowly but surely began attracting more customers, and while it began hiring more people, it let go of some of the employees who weren’t interested in the new firm’s new corporate culture.

Seeing Success Today

But Sergio Jr. and Andrés knew what they were doing. In 2013, when they took over the company, it was making US$200,000 a year in annual revenue and employed 12 people. In 2019, the company’s annual revenue was US$3.8 million, and projections for 2020 are US$5.7 million. Eko Packaging now employs 100 people.

During that time, Sergio Jr. says, Eko Packaging wasn’t the only thing improving—the entire boxmaking industry in Mexico was upping its game. “Our competition started to professionalize,” he says. “They started to deliver a better service to their customers.”

So Sergio Jr. made sure that Eko Packaging wasn’t just improving and professionalizing but also training its employees and getting certifications. He says that the company also started to recognize that with some innovation and adjusting how they had been manufacturing, Eko could save their customers money, not only in cardboard savings but also in logistics. For instance, Eko found a way for one of their automotive customers to fit almost double the amount of parts into the same box, putting in 30 parts instead of 16. When they were able to do that, Sergio Jr. says, “we saved the client US$200,000 a year in cardboard but US$2 million in logistics.”

After all, if you have fewer cardboard boxes to transport, you have fewer trucks and man-hours that go into moving those cardboard boxes.

The AICC Experience

As Sergio Jr. and Andrés have taken their company to the next level, AICC has been a helpful tool in the arsenal, according to Sergio Jr. “We’ve been members for about five years,” he says. “It has been a great experience to create connections and network.”

Many of his competitors, Sergio Jr. says, he now considers friends. That hasn’t made any company weaker, he adds. His company and competitors are all benefiting from sharing their industry knowledge.

And Sergio Jr. says that he has picked up a lot of industry knowledge through AICC. “The content that we see at the annual meetings, the conference, the seminars—those events create a lot of value for us,” he says.

Looking Ahead

As for the future, Sergio Jr. thinks it looks potentially bright, even with Mexico’s economic problems. The Mexican economy stagnated in 2019, and the International Monetary Fund cut its growth forecasts for 2020 and 2021. It believes that Mexico’s GDP will grow only 1% this year instead of a recent 1.3% prediction, and that instead of 1.9% growth in 2021, it’ll likely be 1.6%.

“We are not worried,” Sergio Jr. says, adding that Eko is busy trying to strengthen the company, so it can be resistant to any downturns in the economy. “We are looking for a possible recession in the country. So the economic overview is not the best. But I like to think in a worst-case scenario, because if we do that, we can create strategies to avoid the impact on us.”

And so, Sergio Jr. says, he is growing his sales department and making sure they’re getting good training. In other areas of the company, however, he is reducing costs and spending, where it makes sense. “If we do that, I believe we’ll be even more competitive in any possible recession and that we’ll be one of the leaders in our part of the industry,” he says.

And how does Sergio Jr. feel about the USMCA? He seems, well, sort of enthusiastic. He doesn’t appear to think it will bring untold riches to the Mexican boxmaking industry, but he doesn’t think the USMCA will hurt it.

“Some processes that were made 100% here in Mexico will have to be passed to the United States or Canada to be finished,” Sergio Jr. says, sounding slightly concerned or frustrated. And then he brightens: “But on the other hand, that process having to be made somewhere else might mean that they have to use more cardboard because they have to do more shipping. So it might be a good thing for the cardboard industry.”


GeoffGeoff Williams is a journalist and writer based in Loveland, Ohio. He can be reached at boxscore@theYGSgroup.com.