EconomyFinancialHelvex holds the key to survival

Helvex holds the key to survival

Almost silently, the Helvex name has crept into the bathrooms and kitchens of homes across the country. It resonates in people’s minds for having read it, almost by accident, on the faucets in shopping malls, schools or hospitals and, more consciously, when choosing products to build or remodel their home. It is the result of the work carried out by the Mexican company throughout its 72 years of life, in which it has also suffered difficult streaks.

Manufacturing in Mexico and maintaining 95% of its supply chain on the continent has been key to overcoming the critical moments that the business has gone through as a result of the crises and economic measures such as the commercial opening of the country with the former NAFTA, ‘the December error’, and of course, the covid-19 pandemic, the distortion in supply chains and the increase in the price of certain components, a situation that has worsened after the war between Russia and Ukraine.

“We have managed to secure a large part of the raw materials that we use in the manufacture of our products. 80% of our components is copper and Mexico produces enough. (…) Fortunately, we are only two manufacturers of our products in Mexico, the rest are marketers. They have experienced first-hand what is most critical in terms of their chains, which gives us an enormous competitive advantage”, comments Jorge Barbará, general director and president of Helvex.

For the National Association of Domestic Appliance Manufacturers (ANFAD), created in 1955, stability in the local supply chain has been the key to guaranteeing the continuity of the sector’s operations and having a faster recovery, by also supplying the market international.

“It is a competitive industry with a high national content, and thanks to the supply and supply chain that our associates in Mexico have developed, it has not only allowed them to supply the needs of the national market, unlike importing companies dependent on manufacturing and logistics with the usual costs”, mentions José Luis Alba, general director of the organization that puts the value of exports of bathroom items and furniture at 15,000 million pesos in 2021, according to data from the Internet Tariff Information System.

Helvex’s net sales, meanwhile, grew 19.8% from 2020 to 2021 in Mexico, in contrast to the 6.8% drop in the previous year. In 2020, the company experienced a 40% contraction in the volume of its operations; however, it maintained a rapid recovery the following year by betting on contact less and antibacterial products, which were in massive demand by the market.

“We had a very busy pandemic starting in June… People began to intervene in their houses, since they saw details and decided to give ‘a little cat’s hand,'” said José Cardoso, operational director of Helvex, in May 2021.

The bet represented a 15% increase in sales in dispensers, sinks and flushometers, a streak that they have maintained until 2022, a year that has been faltering due to world inflation.

Silver bullet?

Having almost total control of its production – from the receipt of the raw material to the sale of the final product – has been key for Helvex to react to the increased demand for home improvement solutions, a phenomenon that arose in the second half of first year of the pandemic, and that allowed him to balance the effects of instability in the construction sector. That year, the industry recorded a decrease of -17.4%, according to the Center for Economic Studies of the Construction Sector (Ceesco) of the Mexican Chamber of the Construction Industry (CMIC).

Going forward, the panorama of the sector does not seem to be the best. Ricardo Trejo, CEO of the Forecastim consultancy, explains that housing production has begun to slow down. The first quarter of the year fell 5% and is expected to continue to decline due to the high prices of materials, which consequently have a low demand for components.

Trejo adds that although the companies in the sector have posted good numbers regarding revenue, this is due to price adjustments in their rates and not to volume, “but their strength must be consolidated in the medium term, because the risks are still latent. Construction picked up in the second half of 2020 and in 2021, but activities are relaxing.”

The forecasts for this year are for a weak first half and with a recovery at the end of 2022, but, in net terms, the 12-month view will show a stagnation with levels similar to those of 2021.

Jorge Barbará remains optimistic that the business will yield good results, in part because the quality of his products keeps them in the minds of the consumer. Remember that when competition intensified, due to the entry of Mexico into NAFTA, “there were customers who said that our days were numbered because the prices of some products were lower and with reasonably good designs, but we did not give up and we were right. The market is wise, it discriminates and it knows what it buys”.

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