Mexican Company Embraces Globalization While Preserving Cultural And Business Roots

Monday, September 24, 2012 - 09:17

The Editor interviews Alejandro Sanchez-Mujica, Executive Vice President, General Counsel and Secretary of the Board, Vitro S.A.B. de C.V.

Editor: Please give us an overview of Vitro’s 100-plus-year history and describe its core business areas and locations.

Sanchez-Mujica: Founded in 1909, Vitro is one of the largest glass manufacturers in the world and certainly the largest in Mexico, with annual sales of $1.76 billion. We have two major business areas. The first is the flat glass division where we produce, distribute and manufacture glass for the automotive and construction industries, and the second is the container division, which produces bottles for soda and beer companies and for pharmaceuticals.

The company has more than 17,000 employees in Mexico and is headquartered in Monterrey, where we have several plants. We also have operations in Guadalajara, Queretaro and Toluca, which is outside of Mexico City. Beyond Mexico, we have a joint venture in Central America with Guatemala, Panama and Costa Rica, with plants in each of those countries, and we have additional operations in Colombia and Bolivia.

Our main U.S. clients in the flat glass industry are the big auto manufacturers, such as GM, Volkswagen and Ford, and we certainly serve the beverage industry, with partners like Coca-Cola and client relationships throughout the California wine industry. As you can see, we’re a global company, with multinational operations, a substantial U.S. presence and an even greater reach with exports to many additional countries.

Editor: Tell us about Vitro’s management team.

Sanchez-Mujica: I am extremely proud of Vitro’s corporate governance structure. More than 25 percent of our board members are independent directors, including the former governor of the Bank of Mexico, Guillermo Ortiz Martinez, and the former secretary of trade and industry and the secretary of finance of the Mexican government, Jaime Serra Puche. In addition, we have on our board entrepreneurs in Mexico like Ricardo Martin Bringas, chief executive officer of one of the largest supermarket chains in Mexico, as well as Joaquín Vargas Guajardo, who heads one of the largest media companies in Mexico.

The caliber of individuals serving on Vitro’s board lends gravity to the organization and assures stakeholders that we are serious about pursuing the goal of company growth. The company’s governance practices have been recognized by independent associations, and our corporate governance committee – composed only of independent directors – has been very active during the last four or five years. The committee has focused, for example, on ensuring that the company’s hiring and promoting practices are purely merit-based and that we strictly adhere to the law regarding transparency in our books and policies.

Editor: For the second year in a row, Expansion magazine has acknowledged Vitro as one of the “Super Companies 2012.” What specific characteristics and values within Vitro were considered in the decision to bestow this honor?

Sanchez-Mujica: We are proud of this recognition, which reflects the fact that we are an esteemed and admired company.

The recognition also acknowledges our ability to achieve business goals in spite of one of the worst financial crises in company history.

We consider the nod from Expansion to be an acknowledgement as much of the company’s accomplishments as of what we were able to achieve during difficult times.

Editor: Can you describe Vitro’s initiatives in the area of corporate social responsibility?

Sanchez-Mujica: Vitro is well recognized in Mexico as a socially responsible company, and we have won several awards in that respect. Since its inception, Vitro has been heavily involved in the communities where we operate: in health services, sports facilities, schools and local arts initiatives. We have a glass museum at the company’s original location, which is a source of pride for all employees. While the company was involved in these projects for many years, we only recently publicized them at the insistence of our customers and suppliers.

We release an annual report on all of our social activities, which include efforts to use recycled glass as widely as possible. Unlike plastic products, glass can be recycled as many times as you want, and the main natural resource used to manufacture new glass is sand. Vitro has been recognized by Mexico’s Ministry of Environment and Natural Resources; thus, environmental responsibility is also a key part of our philosophy.

Editor: We understand that, among numerous professional honors, you recently received the “Dr. Ignacio Burgoa Orihuela” Award by the Monterrey Bar Association, A.C. for being the “Most Distinguished Corporate Lawyer of the Year." Tell us about your background and current role at Vitro.

Sanchez-Mujica: I was born in Mexico and studied law in Mexico City at the Escuela Libre de Derecho, recognized as one of the most prestigious law schools in Mexico.

I started to work in the legal field very early in my professional life, serving as a public defender at the age of 22 for workers without the resources to defend themselves, then as an advisor in the legal department of the Mexico City government. Later, I obtained a master’s in comparative jurisprudence at the University of Texas School of Law in Austin and then another master’s degree in economics and administration from UT, where I now serve as a member of the Advisory Council for the Lady Bird Johnson Wildflower Center.

Having worked for the Mexican government and with leading companies in Mexico, as well as with the well-known entrepreneur Alfonso Romo in ventures and acquisitions that led to the largest insurance company in Mexico and a public company in the U.S. that was the largest seed producer in the world, I then joined the U.S. law firm of Thompson & Knight in Monterrey where I worked for two years. This was my only time at a law firm, having spent most of my legal career as in-house counsel.

Since 2005, I consider it a privilege to have served as general counsel for Vitro, an iconic corporation in Mexico. In 2007, I was appointed as secretary of the board of directors at Vitro and of the corporate practices committee.

I am very proud of everything we have achieved, and I mean we because we have a great team. It is amazing that people who have been working for Vitro have been here for 15-20 years. It’s quite a unique company.

Editor: What role does your prior experience play in the way you manage Vitro’s legal department?

Sanchez-Mujica: I enjoyed a period of tremendous professional growth when I worked with Alfonso Romo. Acquisitions were made almost every month, and I was often required to travel to Brazil and Europe. This and other experiences taught me the value of maintaining close contact with the company’s operations, which enables a deeper understanding of the elements involved in every important decision. Being able to discuss matters directly with local employees, engineers and accountants broadens my perspective on the entire spectrum of corporate matters before us.

The role of in-house counsel is challenging because you have to remain independent, often in spite of the close connection with business operations that I find so valuable and rewarding. At the end of the day, however, you are hired because of your legal knowledge.  Now, I have been given an expanded role as secretary of the board. My first priority, and that of my department, must be to fulfill our obligation to be independent in rendering opinions.

Editor: To what extent do you use outside law firms?

Sanchez-Mujica: Our legal department is not big, with about six attorneys who do most of the internal work. We use external law firms mainly for litigation and for important national or international transactions. Their professional advice and analysis are very useful in these complex matters, and their relative detachment from company operations helps us maintain the right perspective.

I quite often use the advice of outside firms to back up my opinions, which ties in with the potential conflict of interest I mentioned above. To the extent that my opinion is validated by an objective outside counsel, I can feel more confident about moving forward.

I prefer to maintain a close relationship with outside counsel and one that is not strictly limited to professional interaction. It’s important to go to lunch or to a fútbol match so you can get to know the attorneys. The size of the law firm is not an important consideration; my philosophy is to look at the individual who is in charge of my account because, in any given matter, we are working with people and their support teams.

Editor: What are the benefits and challenges of doing business in Mexico?

Sanchez-Mujica: Without question, Mexico has evolved very much in the past few years. We have become the third-ranked emerging market and recipient of direct foreign investment with the U.S., which is our main partner, and every day we are becoming more dependent on the global scheme. For example, the Mexican civil system and the American common law system are becoming more and more alike, and Mexico’s securities laws are very similar to those of the U.S.

More broadly, we share the same principles. We are both democratic countries that believe in the rule of law. We have our differences and difficulties from time to time, but this is to be expected when dealing with two different cultures. Nevertheless, a global scheme penetrates every aspect of Mexican society and law, including our environmental, securities and commercial laws plus our constitutional principles. This scheme arises from our close proximity to the U.S., and my own background reflects how intertwined our societies are: my mother is Puerto Rican, and my two grandsons are U.S. citizens.

One big challenge of the last year involves the war against cartels, and we must face that problem head on. Without question, the Mexican government has to attack those cartels. But this issue has not stopped the Mexican democratic system from growing stronger and from offering better and better opportunities for business. Presently, about a third of Mexico’s GDP comes from exports, so we certainly are a global player, and our close ties with the U.S. create an imperative for our countries to work together.

Editor: Please tell us about Vitro’s current status as an investment and where you see the company heading in the future.

Sanchez-Mujica: Like everyone else, the company was affected by the 2008 financial crisis, but we’ve come through it and are doing quite well. Ours is a booming industry, and our plants are producing at full capacity thanks to partners like GM, which is one of our largest clients, and the construction industry.

We do, however, face serious challenges with globalization, which means that we have to compete with everybody. Mexico has an open economy, and because of the financial crisis, we put certain investments on hold and went through a period of restructuring.

Presently, our restructuring plan has been approved in Mexico as fully complying with Mexican law, and we have enough resources to preserve our position as a leading company in technology and innovation. Related litigation has been a challenge as certain dissident bondholders in the United States have objected to the terms of the restructuring in an effort to obtain a slightly higher return on their investment. Despite the challenges these dissident bondholders have presented, we are confident in the legal bases of our appeal to enforce Vitro’s restructuring in the U.S., which now sits before the Fifth Circuit Court of Appeals.

In spite of these challenges, our plants remain vibrant, our business plans are on track, our customer relationships are strong and Vitro remains an industry leader worldwide.

Editor: Do you have any final thoughts for our readers?

Sanchez-Mujica: I believe that it is critical for the U.S. and Mexico to embrace our cultural differences and to leverage our common and fundamental values of democracy and respect for the rule of law. We have many shared goals and a strong relationship, and, from a business perspective, there is great opportunity for investment and collaboration among our countries.