We’re the company that sells homes on a high-volume scale for the lowest price,” says Jaime Alvaro Lares Rojas, president of CASAFIRME, a leading construction company based in Jalisco, Mexico that focuses on building homes for consumers in the lower middle class bracket in Mexico. “That’s our biggest strength.”
While a low price is appealing to those who want to purchase a home for the first time, Lares is quick to point out that offering an affordable price tag does not mean the product is of poor quality. “We provide quality and customer service,” he says. “On top of these features, we also are the cheapest option. This has given us a strong position in the market.”
In order to make sure that the homes are built in a solid fashion and on a timely basis, CASAFIRME has taken a number of steps. “We operate on a quality-based system,” explains Lares, noting that when the company contracts workers, it sets up a number of requirements that need to be met. “If our workers don’t meet the standards we have established, they know that they will not receive as much work from us in the future.” This method has enabled the company to deliver a high quality product to customers in its region in Mexico.
CASAFIRME is based in the state of Jalisco, which is located in the western portion of the country. The company first began operations in 1996. Over the years, it has created various housing developments in different parts of Jalisco. It has also carried out building projects in the neighboring state of Aguascalientes and in Monterrey, a city in the northern region of Mexico.
While CASAFIRME officially started just a little more than a decade ago, the company actually has many more years of experience in the market. According to Lares, CASAFIRME comes from a familyrun business that started 45 years ago. Today, the company is part of a group known as Grupo GCMEX, a well-known construction firm.
Due to a number of factors, including the company’s strong operating system and a growing market, CASAFIRME has experienced remarkable growth in recent years. According to Lares, it has built 10,500 homes during the last five years. The company has experienced a growth rate of approximately 100 percent during the previous five years. This has allowed it to become the leading low-income home construction company in its area.
The company’s growth has given it an additional competitive edge in the housing industry. “Our size gives us an advantage over smaller competitors,” explains Lares. “They don’t have the financial capacity or the volume to compete with us.”
CASAFIRME currently employs just over 400 workers. The administrative structure of the company is designed, however, to be able to fluctuate along with the changes in the market. “There are times during the year when sales increase and other times when they decrease, and we have a flexible administrative structure to accommodate for these changes,” explains Lares. The company can take on more workers when needed. It can also decrease the number of workers when it is necessary.
A VERTICAL DESIGN
Part of the company’s philosophy is based on a vertically integrated system. When company officials decide to start a project in a new area, they begin by purchasing the land. CASAFIRME is then involved in developing the land and putting in the needed infrastructure. The company oversees the construction of the homes, as well as the sales process. “We really do not have subcontractors,” explains Lares. “The workers that build the homes are contracted by us. We’re involved in the entire process.”
This integrated approach allows the company to keep careful tabs on its work and make sure that quality standards are met. “We can keep everything under our control,” notes Lares. The company recently developed an information system, which makes it possible for workers to view the different costs of each project in real time. This valuable information helps company officials to make better decisions about each project.
Because it produces homes on a large scale, CASAFIRME can often purchase products from its suppliers at a reduced price, due to the high volume involved. “Our vendors know that with us, they come out ahead. They may lower the price, but in the end they sell more, which is to their advantage,” Lares explains.
One of the keys to operating successfully in a lower income market is to focus on pre-selling. “We really don’t carry any inventory that needs to be sold. We only build what has already been sold,” says Lares. The company has followed this plan since it first entered the market.
WORKING WITH THE GOVERNMENT
Mexico’s current government has taken steps to encourage many of its citizens to invest in a home. It offers programs for a number of different sectors, including those that earn minimum wage. For this group, the government offers a subsidy which consists of 26 percent of the price of the home. “This is called a ‘lost fund,’ meaning that the owner of the home does not have to pay back the government,” Lares explains.
Due to the government subsidies, many citizens are becoming homeowners for the first time. Since CASAFIRME caters to the lower income market, the government housing programs have worked to its advantage. Those that qualify for government help are able to apply for credit through a number of different agencies. And the class that needs the credit is one of the largest in Mexico. “About 60 percent of the people that apply for credit from the government are in our market,” says Lares.
Based on current market conditions, the future should hold even more opportunities for the company. And officials are hoping these developments will help the company advance another step. “We want to be a leader on the national level,” explains Lares. To do this, the company plans to continue providing low cost, high quality homes – a great option for first time homeowners. As Lares puts it, “We like what we do, and we look for ways to do it better each and every day.”