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Grupo Imsa Streamlines its Organizational Structure

Grupo Imsa announced changes in its organizational structure that are intended to help the organization increase the leverage of existing synergies between its steel-related businesses, enhance the efficiency of its operations and reduce administrative expenses.

Grupo Imsa's Board of Directors has decided to consolidate its businesses into two core segments, instead of the current three. In the future, all businesses with activities related to the manufacturing and processing of steel will be part of Imsa Acero, while businesses related to aluminum and plastic products will be part of ImsaTec. Imsalum will disappear as an independent business segment, and will be absorbed into ImsaTec. The reorganization follows Imsa’s sale of the automotive battery business in 2004, and is seen as an opportunity to align its operations and capitalize more effectively on operating and commercial synergies.

ImsaTec businesses that will become part of Imsa Acero are: Multypanel, Metl-Span, VP Buildings, Varco Pruden Mexico, Formet, Valmont-Formet, ASC Profiles, Imsa Chile and Medabil VP. All these businesses use steel as the main raw material in the manufacture of their products, which include insulated steel panels; pre-engineered metal buildings; steel building products for roofing, siding and deck; pre-painted steel; culverts, highway signs and guardrails; and electricity and telecommunications towers and poles. These companies operate in Mexico, the United States, Chile and Brazil.

Imsalum subsidiaries involved in the manufacture of aluminum profiles, ladders and windows, together with Stabilit, Imsa ITW and their respective subsidiaries, will become part of Imsatec. Stabilit, Bayer Imsa, Glasteel and Stabilit Europa mainly produce fiberglass reinforced plastic and polycarbonate panel in Mexico, the United States and the European Union. Imsa ITW manufactures plastic and steel packaging and strapping products in Mexico. Consequently, Imsatec will be able to capitalize on market and distribution similarities between the aluminum and plastic products manufactured by its subsidiaries.

In order to eliminate duplicity of administrative functions, Grupo Imsa's different corporate areas will be integrated into the new business units, thereby increasing productivity and efficiency. These changes will allow Grupo Imsa to eliminate 85 job positions, which the company says will generate annual savings in excess of ten million dollars. Implementation of these initiatives will be gradual and should be concluded by the second quarter of 2006.

Mr. Eugenio Clariond, Grupo Imsa's Chairman of the Board and CEO, explained, "After the sale of the automotive battery business last year, we made an in-depth analysis of our organization and concluded that it was no longer necessary to operate with the structure of a traditional industrial group, with centralized corporate offices. Restructuring Grupo Imsa's activities into two business units allows us to eliminate duplicated functions which until now existed both in our corporate offices and in the business units; the new organization will be much leaner, and more flexible and efficient. We estimate that these changes will result in a considerable increase in operating efficiency and enable us to capitalize on synergies in the different stages of our operating processes as we operate all our steel-related businesses in one business unit. In addition, we expect significant savings in administrative costs, office rents and other indirect expenses."

Mr. Santiago Clariond, CEO of Imsa Acero, added, "Consolidating our steel-processing businesses into one business unit will allow us to capitalize better on technology, supply and customer service synergies, and to develop new and better products. This will translate into enhanced control of the steel manufacturing process through the value chain, thereby enabling us to maximize the potential of our assets. For example, managing the flow of steel from slab to the steel used in a metal building in the same business unit will allow us to define the best way to add value to our products. We will also be able to take advantage of commercial relations to channel different products to similar clients."

Mr. Felipe Muzquiz, President of Imsatec, pointed out, "Even though the companies that as of today will be part of this business unit manufacture different products with distinct technologies, they have enough similarities and correspondences in certain markets to capitalize on synergies that will strengthen our operations and, in many cases, increase the value offered to our customers. Moving forward, we expect the reduction in fixed costs related to the operation and maintenance of corporate offices will enhance the profitability of our businesses."

Mr. Marcelo Canales, Grupo Imsa's Chief Financial Officer, stated, "This decision demonstrates the commitment of Grupo Imsa's management to the creation of value for its shareholders. The new organizational structure will allow us to focus better on expanding the businesses where we have the greatest competitive advantages." Mr. Canales continued, "Grupo Imsa will post results for the third quarter in the usual way, broken down into Imsa Acero, Imsatec and Imsalum. However, for the close of calendar 2005 and for the fourth quarter of the year, the company will report its results under the new organizational structure of two core business segments."


Grupo Imsa is a holding company that dates back to 1936 and is today one of Mexico's leading diversified industrial companies. With manufacturing and distribution facilities in Mexico, the United States, Europe and throughout Central and South America, Grupo Imsa currently exports to all continents. In 2004, the company's sales reached 3.3 billion dollars, of which close to 50% was generated outside Mexico.