Volume 11 | Issue 5 | Year 2008

As the construction industry in Mexico flourishes with state investments serving to jumpstart a faltering economy, and miners around the country reap the fruits of the extravagant prices of precious metals, the one company that benefits from it all has its hopes set on these generally portentous trends continuing. Founded in 1946, MADISA has always hinged its success on the success of its clients. After all, without industry players in need of equipment and machinery, there is no niche for the company to carve, and that is a worst-case scenario for a company that loves carving niches. So much so, in fact, that today MADISA serves everyone from miners to oilers to manufacturers, providing the same hands-on service and proven product quality across the board.

Some see MADISA as a jack of all trades, but commercial director Marcos Gerardo begs to differ. He simply qualifies the company as one with solid fundamentals, a knack for sustainable growth, and the virtue of knowing where it fits within the realm of business. “We are not manufacturers and don’t pretend to be,” he notes. “We are distributors of machinery and as such we focus on doing what we do best, which is client service and making sure our equipment – since it represents high-value assets for our patrons – is always working properly and remaining productive.”

Nearly a half century following its inception, MADISA was acquired by the Delta Group, a conglomerate which at the time held controlling interests in some of Mexico’s most influential companies. The acquisition was the first of many that aimed to solidify MADISA as the number one provider of machinery in the country. Subsequent transactions included the purchase in 1996 of Tracto Partes y Equipos S.A. of C.V., which similarly to MADISA possessed a long track record dating back to the 1950s, as well as that of Mextrac S.A. of C.V. in 2000, an 80-year-old franchise that focused on the distribution of Caterpillar equipment. Lastly, in 2003 MADISA took over the reins of Sistemas Automotrices y de Potencia S.A. of C.V., which also had tackled the distribution of Caterpillar-branded motors and generators.

MADISA’s acquisition binge catapulted the company to revenues in excess of $480 million for the 2007 fiscal year, rendering it the leading machinery provider in a handful of industries. And though Gerardo admits he cannot always boast of the lowest prices in the market, clients have chosen MADISA for the quality of its products and its commitment to client service. He notes, “We don’t differentiate ourselves for being the cheapest; we differentiate ourselves for selling and renting out the most productive equipment. Simply put, our machinery will get our clients the lowest operation costs in the market.” Naturally, post-sale service, entailing maintenance and servicing of equipment, is an important part of this competitive advantage.

As Gerardo sees it, MADISA has worked diligently on building a team of players that complement one another, but ultimately the most essential relationship is that of the company with its clients. “Teamwork is important and we have developed an internal system that works seamlessly, but the secret to our success throughout these 60 years has always been our ability to reach out to our clients.”

MADISA is a private corporation funded fully by Mexican capital. It comprises over 2000 employees, including 700 specialized technicians and 250 field representatives and equipment assessors.

To take on the Herculean task of catering to a wide spectrum of industry segments such as construction, manufacturing, mining, and energy, MADISA has built over the years an impressive repertoire of products and services. MADISA develops the most attractive plans for heavy machinery, industrial engines, forklifts, hydraulic cranes, and industrial tires. Although the company’s top brand is still Caterpillar, other highly selective producers are represented, such as Atlas Copco in the area of generator sets and drilling equipment; Mitsubishi; Terex-Cranes; Telsmith crushing and screening equipment, and Monarch. These manufacturers represent plants in the U.S., Brazil, Germany, France, England, and Australia and provide the bulk of the equipment currently sold in Mexico.

At the post-sale level, services have similarly specialized. MADISA clients range from those who seek very little assistance, often requiring only delivery of the goods, to those who expect the whole nine yards in terms of equipment oversight and maintenance. “Our portfolio of products and services is so ample,” notes Gerardo, “that we have sort of become a one-stop shop for the various industries we cater to.”

Furthermore, MADISA has gradually augmented the amount of inventory it keeps in order to more rapidly respond to its clients’ growing demands. Currently it holds over $40 million worth of spare parts in its inventory, $80 million in new equipment, and the same value in terms of rental machinery.

Coupled with the development of 30 service centers tactically located throughout Mexico, MADISA’s growth strategy has already paid enormous dividends for the 60-year-old company. Not only did it generate a staggering revenue stream in 2007, the enterprise has also enjoyed a 20 percent annual growth rate during each of the past five years. Taking into account the current boom in the mining and construction industries, Gerardo opines that the sky is the limit. “Construction and mining have been particularly strong these past few years. Precious metals and commodities have reached record prices due to the high demand, and the recession our neighbor up north is suffering has forced our government to invest heavily in local infrastructure to make up for the decline in exports.”

These two trends, which are invariably bad news for the majority of consumers, are fueling MADISA’s meteoric growth. “Our projection for the next five years is that we’ll be surpassing $750 million in annual revenues. We are talking about organic growth, obviously, yet we also see many niches in the market where we can increase our participation.”

Growing pains will be an inevitable part of MADISA’s rise, but Gerardo is confident that the measures the company has taken in terms of quality control will curtail negative effects on its products and services. Corporate values, after all, dictate sustainable growth, not backbreaking growth. This is why MADISA has invested heavily in its personnel and the certification of its service centers. Testament to this commitment to quality control is the employment of one “Master Black Belt” and five “Black Belt” workers certified under the Six Sigma method, a proven disciplined approach for improving measurable results. This group has spearheaded various projects to guarantee the highest cost efficiency within the company walls. Similarly, MADISA has labored arduously to ensure that many of its service centers qualify for the Caterpillar Five Star certification, which gives customers peace of mind that the machinery and equipment handled in these centers receive the highest-quality care.

“The goal of our investment is to maintain and develop our service centers and offices,” notes Gerardo. “Ultimately, what we want is to be as close as possible to our clients. This is a critical factor in our line of business, as we aim to reduce the lag time in our response to market demands.”

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