GTM is the second largest distributor in Latin America. How did it reach this position?

The company started in the 1980s in Central America and mostly grew organically. This changed dramatically in 2014, when Advent International, one of the largest private equity funds in the world, took a majority position in the company. Immediately after this we looked for acquisitions. In 2016, we bought High Chem Specialties México which, as well as giving us a position in Mexico, provided us our first portfolio in specialties. A week later, we purchased Peruquimicos, the main chemical distributor in Peru. We then acquired Brazilian company quantiQ in April 2017, which was a transformational move. From 2016 to 2017 we almost tripled our sales due to these acquisitions.

What is the extent of GTM’s Mexico presence and how confident are you in the country’s future?

Before we acquired High Chem, our GTM legacy business was highly focused on oil and gas and also some industrial chemicals such as caustic soda and chlorine derivatives. We still have this focus and have combined it with the specialty capabilities of High Chem. We are present in all the main industries including coatings, adhesives, construction, personal care and general industry. Regionally, we have warehousing capabilities in Tijuana, Monterrey, Guadalajara, Villahermosa and Mexico City. We have application labs for all the industries we cover. In addition, we have five labs in Brazil and we are moving from the concept of having labs in different countries to having technical competence centers which solve not just particular problems in their country but serve the whole region.

There have been some dark clouds forming around NAFTA but this is unlikely to affect the chemicals industry greatly. The American and Mexican industries are closely entwined. Mexico imports more chemicals from the United States than it exports and this will continue. In the long term, we firmly believe in Mexico because the fundamentals are right: talented people, a lot of raw materials and proximity to the largest chemicals market globally.

Does GTM serve the mining and oil and gas industries in Mexico?

We serve both. The mining industry is extremely interesting and we are putting a lot of focus on it. Recently, we secured a strategic partnership with Chemours for the distribution of sodium cyanide for gold and silver extraction all over the region. Chemours will open a plant for sodium cyanide at the end of 2018, and this will be a major focus for GTM. Unfortunately, sales for oil and gas have suffered over the last few years, but we see signs of recovery now.

Do you see consolidation among Latin American distributors continuing?

The top three in the United States have 40% market share but the top 20 in Latin America do not hold more than 10%. Also, there are 2,500 distributors in Brazil, so there is definitely room for consolidation, including in Mexico, where acquisitions will continue.

What are GTM’s key differentiators?

Our regional coverage and customer intimacy are key differentiators. Most of our client relationships in Mexico have been going for over ten years, so we have developed a reputation as a reliable partner that can supply its customers in good and bad times. For example, we were the only suppliers to continue serving our customers without any major interruptions during Hurricane Harvey. Due to our strong supplier relationships and buying in bulk we are able to obtain good rates. We also have a much better logistics system than most of our competitors and even some producers.

Is part of GTM’s strategy to move more into specialty chemicals?

We firmly believe in the need to have a balanced portfolio. We want more pronounced growth in specialties but we will never move away from the industrials business. Customers always use a combination of both and this is exactly what we want to provide. The participation rate in distribution is increasing as producers find it harder to serve the needs of all customers. Also, customers realize they cannot get the same level of service from producers on application advice, logistics, credit terms and packaging. GTM will outgrow the industry, expand its position in specialties, be stronger in oil and gas and increase its sales by 50% in three years.