Editor: Please provide a brief introduction to SANLUIS Rassini and describe your professional background.
Rosas: SANLUIS Rassini is a Mexican-based corporation composed of two divisions, SANLUIS Rassini Suspensions and SANLUIS Rassini Brakes. SANLUIS Rassini is a lead designer and manufacturer of suspension and brake components for the automotive industry, mainly focused on original equipment manufacturers (OEMs).
SANLUIS Rassini Suspensions is the world’s largest producer of suspension components for light commercial vehicles as well as the largest fully integrated brake disc producer in the Americas, and has seven manufacturing operations strategically located in North America and Brazil.
Suspension products include leaf springs (parabolic and multi-leaf) for light and commercial trucks, coil springs, torsion bars and bushings. The brake business manufactures rotors, drums, brake assemblies, clutch plates and motor balancers.
SANLUIS Rassini Brakes supplies rotors for some of the highest-performance platforms on the road today, such as the Corvette Stingray, the Cadillac, the Dodge Viper and recently for Maserati.
These two divisions are subsidiaries of a Mexican public company that is listed on the Mexican stock exchange and is called SANLUIS Corporación.
Editor: Tell us about your decision to move from a prominent Mexican law firm, Santamarina y Steta SC, to become general counsel of SANLUIS Rassini.
Rosas: I received my law degree, as well as a post-graduate degree in corporate law, from Universidad Anahuac in Mexico City. I worked for 20 years at Santamarina y Steta, which is one of the largest corporate law firms in Mexico. and participated in a foreign internship program at the New York office of Sidley Austin.
Santamarina y Steta served as a wonderful school for me in many ways. In addition to acquiring legal skills, I learned how to develop long-term relationships with clients. Throughout my 20 years there, I took a special interest in learning about the business of our clients. With my then-client SANLUIS Rassini, I had the opportunity to collaborate in a close manner on different legal matters for more than 10 years. This gave me the chance to better understand not only the business but also its history, mission, philosophy and particular challenges – and to get closer to what I consider its unique management team. While serving as outside counsel to SANLUIS Rassini, I saw an opportunity to expand my legal knowledge as well as experience other work environments. I could continue growing in the legal advisory role and expand into other areas of expertise, which I considered immensely valuable, as sometimes in a law firm your work is so specialized that it can become a limitation.
Editor: What insights from your experience as secretary to SANLUIS Rassini’s board of directors have been most useful to you in your current role?
Rosas: Certainly, to have collaborated in a close manner with the board of directors of SANLUIS Rassini for the last eight years gave me a better understanding of the business, the industry and the challenges they face. This enabled me to offer support to the company in a variety of legal matters. By understanding the goals of the board, an in-house counsel can better align his or her work with the company and the management team.
Editor: You described earlier your long relationship with SANLUIS Rassini when you were with Santamarina y Steta. Is this the kind of in-depth collaboration that you currently seek from outside law firms?
Rosas: Absolutely, yes. The legal service industry has shifted towards a focus on specialization, and in-house counsel must take advantage of this fact. SANLUIS Rassini’s policy has been to rely on the best legal services available in the market, not only in Mexico but also in the United States and in Brazil, where we have a strong presence. I’m convinced that the company that entrusts its legal affairs to a law firm does so not only because of the skills required for a particular legal matter, but also for the services, understanding and experience that the firm can bring to the table.
Editor: How do you think the role of general counsel has evolved over the years, especially in Mexico?
Rosas: The role of general counsel has evolved in many ways. My impression is that for many years, companies did not take full advantage of the legal advice available to them the way companies do today.
It’s also clear that the regulation in many industries has increased significantly. Everyday business cannot be done without proper legal advice, and in that sense the role of the general counsel has become more and more important. The challenges and opportunities for general counsel have evolved accordingly: today’s in-house counsel must not only understand the law and the particular industry, but he or she must also acquire non-legal skills in the areas of finance, operations, strategic planning and more.
Editor: Did your experience on the board of directors assist you in acquiring these non-legal skills?
Rosas: Yes, I learned some very effective tools and gained a certain leverage that helped me integrate with the management team; I began to understand their concerns and learned how to communicate with them effectively.
Editor: What are your recommendations for general counsel in developing a strong and productive relationship with the board of directors?
Rosas: Based on my experience as general counsel, my main advice would be to try to understand the vision and concerns of the day-by-day business. That’s key. I would also encourage general counsel to develop a strong, comfortable relationship with the board. I think that anticipating their concerns and communicating in an objective manner on any legal challenges or ongoing business issues are critical in developing a close and collaborative relationship with the board.
The general counsel necessarily needs to be very close with board members to understand what’s going on with the business, especially where it’s headed and the challenges it faces. Having that sensibility and added input gives you additional leverage to perform.
Editor: What is your view on the automotive industry in Mexico?
Rosas: Over the past few years alone, Mexico and particularly the automotive industry in Mexico have changed dramatically. Mexican economic expansion is often linked to that recently seen in Brazil, with approximately 13 percent growth over the last five years, and Mexico could overtake Brazil as Latin America's top economy as early as 2022. The automotive industry is a key component of this growth, accounting for 3 percent of the Mexican total GDP, 14 percent of the manufacturing output and 23 percent of all exports in Mexico.
Since 2007, the competitive landscape for outsourcing has shifted significantly in favor of Mexico over China largely because Mexico delivers products at a lower landed cost than China. At the same time, there is growing pressure to allow the yuan’s exchange rate to fluctuate with the currency market, which will likely increase the cost of labor in China. In addition, the skills of the Mexican labor force are highly recognized worldwide. In particular, the recent growth of the U.S. auto industry has spurred increased outsourcing and automotive manufacturing jobs in Mexico – with many jobs being moved from China – because of Mexico’s lower manufacturing costs overall. Furthermore, Mexico is the second largest country with trade agreements in place. All of these factors continue to encourage foreign direct investment in Mexico.
Editor: Over the years, SANLUIS Rassini has won multiple awards within the industry, and most recently received GM’s Suppler of the Year Award. What specific characteristics of SANLUIS Rassini were considered in the decision to award these accolades?
Rosas: We are very proud of this recognition, which reflects the fact that we are an essential supplier for the automotive industry based on our technology, quality, service and competitiveness. We at SANLUIS Rassini pride ourselves on deeply loyal client relationships, some even spanning 30 years. This recognition also acknowledges our ability to achieve business goals while maintaining a strong relationship with our clients. We have a deep commitment to our customers and shareholders, and we believe that these values are evident in the quality of our products and the success of our clients. We have a forward-looking mindset and a can-do attitude, which we feel are very important within the industry. I should add also that we consider recognitions such as this from our clients and industry peers to be an acknowledgment of the company’s superior quality and services and our important role as a solution provider – able to deliver the best technology and products to our clients, always keeping them one step ahead of their competitors.
Editor: Please describe SANLUIS Rassini’s Culture of Excellence. Tell us about the company’s commitment to corporate social responsibility (CSR) and operational transparency.
Rosas: We have done a lot to promote corporate social responsibility within the company, which we believe is very important. The SANLUIS Rassini Culture of Excellence is characterized by exceptional performance and high quality, which is well-known in the international market. SANLUIS Rassini is known in Mexico as a highly socially responsible company, and we have won several awards in that regard. We employ more than 4,600 people in Mexico, the United States and Brazil, and these professionals are part of a competitive and committed team that is trained with the most cutting-edge technology and best resources available in the industry.
We are committed to collaborating with our clients, employees, suppliers and the communities where we operate to ensure sustainable development and a better quality of life. As a core part of our SANLUIS Rassini corporate social responsibility initiatives, we have a volunteer group of more than 120 people coordinating sporting and cultural events, and employees participating in these events grew from 25 percent to 30 percent last year alone.
We have also implemented a preventative health program in order to keep in close contact with key risk groups, including those with high blood pressure, diabetes and Grade 3 obesity. In addition, the company has developed what we call the 4R Program – Reject, Reduce, Reuse and Recycle – which has become very popular. We now include training for six schools and three local governmental entities, plus programs focused on ecology, civil protection and first aid.
SANLUIS Rassini has also provided more than 230 recycling bins to the different communities in which we operate and has offered support to those affected by flooding in San Martin Texmelucan and also the community in the north where the Piederas Negras facility is situated.
We like to be involved in the communities in which we operate whenever we can provide assistance. Fundamentally, we believe in promoting a strong corporate culture and enhancing quality of life, care for the environment, community development and open communication and transparency in all of our actions.
To date, we have donated computers to more than 25 schools in areas where we operate, which have directly benefited more than 8,000 children. I think the company has done a great job in this area. We also took part in the Environmental Leadership program organized by the Mexican Environmental Protection Agency (PROFEPA), where we were presented with a leading company environmental performance award.
Editor: Please tell us about SANLUIS Rassini’s current status as an equity investment.
Rosas: As you know, we are an engineering-driven company and a leader in innovation and technological advances. Currently, SANLUIS Rassini is home to the only fully integrated brake rotor manufacturing facility in America. We have leveraged the latest technology, design tools and advanced engineering to reduce production time by roughly 25 percent. We are an essential provider to the Detroit Three (Ford, General Motors and Chrysler/Fiat), and we have the ability to increase and decrease production in response to market demands. The strategic geographic location of our facilities also enables us to meet deliveries for our clients in the Americas more quickly and to reduce shipping costs.
In addition, SANLUIS Rassini’s cost structure and financial performance contribute to strong ongoing financial results. In the North America region, our laser focus on cost control has lowered our EBITDA break-even point for the suspension business from 46 to 33 percent of installed capacity in the years from 2008 to 2012. In the brakes division we have accomplished the same range of cost improvements.
In the brakes business we have 12 percent of the market share in North America, and we expect it to grow to 25 percent by 2016 based on our sales backlog. We have an aggressive growth strategy, and we believe that we are very well-equipped to meet the growing automotive demand in the Americas. As a further testament to SANLUIS Rassini’s standing as a solid investment, Standard & Poor’s rating agency recently raised our rating from B to B+ with a stable outlook. We are expected to continue this top-line growth and profitability.
Editor: What is SANLUIS Rassini’s outlook going forward?
Rosas: SANLUIS Rassini has a very positive outlook, and we are looking forward to building on our past and present successes. Our strategy focuses on leveraging opportunities for growth in our business. We expect to expand into new markets, to diversify in terms of our clients and our products, and to bolster our already-exceptional customer relationships. For instance, at Rassini brakes we are increasing capacity to meet demand for newly acquired business in the coming years.
In the coming years, we will be implementing a commercial vehicle strategy in our North American suspension business, which will enable us to leverage our suspension expertise in a new market segment. In addition to natural market growth in 2012, the company started production of 10 leaf and 20 coil springs new platforms in addition to 10 new platforms of brake rotors and one new platform of ductile iron business. We also have a strong sales backlog and long-term agreements in place to continue to add to revenue and EBITDA growth.
Ultimately, we at SANLUIS Rassini are looking forward to the future. Our facilities are vibrant, our business and operation plans are on track, our customer relationships are strong and the company is an industrial leader worldwide.