Proeza S.A. de C.V.

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Proeza S.A. de C.V.

Avda Constitucion 405 Pte
Centro Monterrey, Mexico
Telephone: (52) 81 8369 7000
Fax: (52) 81 8342 8691
Web site: http://www.proeza.com.mx

Private Company
Incorporated: 1974 as Proeza (Promotora de Empresas Zano)
Employees: 3,000
Sales: $6.1 billion (2005 est.)
NAIC: 551112 Offices of Other Holding Companies; 111310 Orange Groves; 311411 Frozen Fruit, Juice, and Vegetable Processing; 336370 Motor Vehicle Metal Stamping; 541512 Computer Systems Design Services

Proeza S.A. de C.V.—the name stands for Promotora de Empresas Zano—is a Monterrey, Mexico-based holding company with diversified interest in the production of automotive parts and fruit and fruit juices and the operation of foundries. The company is also active in the information technology (IT) services market.

Proeza's main subsidiary is Metalsa, which also makes up the core of the group's Automotive Division. Metalsa is a major supplier of structural steel components for automobiles and trucks, include side rails, light truck chassis, fuel systems and a number of die-stamped parts. Metalsa produces primarily for the North American automotive market, and operates a plant in Roanoke, Virginia, in addition to its factories in Apodaca and San Luis Potosi in Mexico. Metalsa has also announced plans to add factories in San Antonio, Texas, and in Saltilla, expected to be operational as early as 2006.

Proeza also operates the Ogihara Proeza Mexico (OPM) joint venture, which produces stamped tools for the automotive industry. Proeza also controls fruit juice processor Citrofrut, the centerpiece of its Juice and Fruits Division, and operates its own citrus groves in Veracruz and San Luis Potosi through subsidiary Imdecit, as well as nursery and research facilities thru Procigo. Proeza's Foundries Division consists of the joint-venture Proeza-GREDE, formed with the United States's GREDE, which began production in 2001; the company also produces complex modular iron parts through Teknik.

In the mid-2000s, Proeza beefed up its interest in technology, forming its Proeza IT division. This company provides supply chain management, enterprise solutions and related services in Monterrey, Mexico City, Guadalajara, and also operates an office in Maryland. While Proeza itself remains a private company controlled by the founding Zambrano family, the company has formed a partnership with U.S. auto parts manufacturer Tower Automotive, giving Tower a 40 percent stake in Proeza. Enrique Zambrano Benitez is Proeza's managing director, while founder Guillermo Zambrano acts as company chairman.

METALWORKS IN 1956

Guillermo Zambrano founded a metalworking business in Monterrey in 1956 called in Manufacturas Metalicas Monterrey (Metalsa). Zambrano's originally focused the group's operations on Mexico's construction industry. By the early 1960s, however, Metalsa had shifted its focus to the automotive business. This transition was made possible by the group's alliance with the A. O. Smith company. Smith, which had been manufacturing automotive frames since the late 1890s, assisted Metalsa in developing its own automotive frame capacity. While Metalsa went on to develop a range of automotive products, the company's frames production for both the automotive and light truck markets remained its core product line. The relationship between Metalsa and Smith remained a strong one through the end of the century, and ended only when Smith, which held 40 percent of Metalsa, exited the automotive business altogether in 1997.

Zambrano continued to develop other business interests—as well as becoming a noted breeder of thoroughbred horses. In 1974, Metalsa was regrouped under a new holding company, Promotora de Empresas Zano, or Proeza. Metalsa was then the cornerstone of Proeza's newly created automotive division. In 1982, Manufacturas Metalicas Monterrey formally changed its name to Metalsa. Two years later, Proeza's metals interests expanded with the creation of Teknik, which specialized in the production of cast iron components. Teknik's production targeted various markets, including the agricultural market.

Proeza's automotive division continued to drive the company's growth through the 1980s. The company shifted its production to a new facility in Apodaca in 1985. In 1988, Metalsa acquired automobile components manufacturers Premecna and Kuhlpre. As a result, Metalsa added a new factory in San Luis. Proeza boosted its presence in the North American automotive market the following year through the creation of a tool and die joint venture, Perfek, in partnership with world-leading toolmaker Miyazu Seisakusho and the Sumitomo Corporation. Proeza's partnership with the two Japanese companies lasted into the beginning of the 2000s. In the meantime, the company had developed another partnership, with Belgian plastic fuel tank system producer Solvay. That partnership resulted in the creation of the Prolvay joint venture in 1991, with a factory in Puebla.

Proeza had also begun building a business presence in an entirely different field: the fruit and vegetable juice processing industry. Proeza's interests included Impulsora de Desarrollo Citricola (Imdecit), and Promotoro Citricola del Golfo (Procigo). Both companies were created in 1989, with the former acting as a research and development in order to improvement the quality of the country's citrus stock, and the latter operating nurseries in order to supply trees and consulting services for the country's citrus and fruit growers. In 1994, Proeza acquired Cycosa, which operated a citrus fruit processing facility in San Luis Potosi. Following that acquisition, Cycosa was merged with two other companies: Alver, a citrus fruit processor based in Veracruz, founded in 1969, and Jucosa—originally Jugos Concentrados—which had established fruit juice processing operations in Montemorelos, in 1959. The newly merged operation was then named Citrofrut.

Following the creation of Citrofrut, Proeza launched a new restructuring of its operations again. This led to the creation of the strategic business units in 1996: Automotive, which remained Proeza's largest division; Fruits and Juices; and Businesses in Development. The latter division anticipated Proeza's entry into the technology sector at the turn of the century.

HIGH TECH AND CHANGING PARTNERS IN THE NEW CENTURY

By the late 1990s Zambrano was joined by son Enrique Zambrano Benitez, who took up the role of the company's managing director and spearheaded a fresh diversification effort for the new century. In 1998, the company developed a new 10-year strategy, which targeted an expansion of the group's operations at an international level, while also identifying new diversification areas.

COMPANY PERSPECTIVES

Our mission is to create, transform and develop innovative-oriented companies, thereby contributing to the progress of society and the development of our people. We are an international group whose development is supported by creativity and innovation, seeking always to raise our customers, shareholders and employees expectations. Our Group operates globally with automotive, agricultural equipment as well as service businesses and exports to all five continents. We invest in products, processes and services research and development, in order to offer innovative solutions to our customers. We are committed to the communities where we operate, through the creation of new jobs and environmental support, thus contributing to its economical and social development.

The first new directions were identified in 1998, when the company created two new strategic business units, Proeza Foundries and Proeza IT. Proeza began looking for partners for the former, resulting in the creation of a joint venture with the United States' GREDE Foundries, in 1999. The new company, Proeza-Grede, launched construction of a new $65 million iron foundry in 2000, near Monterrey. The first phase of the project called for a production capacity of 70,000 metric tons. At the same time, Proeza announced plans to expand the ProezaGrede site to as much as 200,000 metric tons.

Proeza had also begun developing its operations in the high-technology market. The company operations by then included Servidata, created in 1976 to provide IT services, including systems integrations and supply chain management systems. Into the turn of the century, Proeza began exploring interests in other technology sectors. Proeza established a new operation, called Datasat, which used satellite technology to offer wireless asset tracking services. The company made an attempt to deepen its entry into the telecommunications market, through subsidiary Astrum Comunicaciones. That company was awarded two satellite transmission concessions in 2002. In 2004, Proeza combined its technology operations, including Astrum, DataSat and Servidata, into a new subsidiary, Proeza IT, and targeted the market based in Monterrey.

Citrofrut continued to show strong growth into the 2000s, emerging as a major force in the region's fruit juice market. The company expanded its presence in 2002, with the acquisition of Frutalamo, a citrus fruit processor based in Veracruz. At the same time, Citrofrut expanded beyond citrus fruits, adding a facility for the processing of tropical fruit juices.

Despite the growth of its other operations, Proeza's automotive division remained its driving force into the new century. Following A.O. Smith's decision to exit the automotive industry, Proeza took the opportunity to buy back the 40 percent Smith held in its Mexican partner in 1997, paying $70 million. Proeza then began looking for a new partner, turning to Tower Automotive, which had bought Smith's automotive division. As part of the new partnership, Tower bought a 40 percent stake in Metalsa, paying $120 million outright—and up to $45 million more, depending on the group's earnings.

The partnership with Tower enabled Proeza to put into place the other prong of its long-term strategy, that of establishing an international base. In 2000, Metalsa bought out Tower's heavy-truck rail manufacturing plant based in Roanoke, Virginia, paying $55 million.

That year, Proeza forged a new partnership, merging the Perfek joint venture into a new joint venture with Japan's Ogihara, a major automotive components producer. The new company took on the name of Ogihara Proeza Mexico (OPM) following the completion of the merge in 2000.

KEY DATES

1956:: Guillermo Zambrano founds Manufacturas Metalicas Monterrey (Metalsa) in order to produce metal parts for the construction industry.
1960:: Metalsa forms a partnership with A. O. Smith and transitions to producing automotive frames and other components.
1974:: Zambrano creates Proeza as a holding company for Metalsa and other holdings, including fruit juice processing units Jucosa, founded in 1959, and Alver, founded in 1969.
1982:: Manufacturas Metalicas Monterrey changes its name to Metalsa.
1984:: Proeza expands into cast iron production with Teknik.
1988:: Metalsa acquires the Premecna factory in San Luis and forms the Perfek joint venture with Miyazu Seisakusho.
1991:: The company forms its Prolvay joint venture with Solvay.
1994:: Proeza merges fruit juice and citrus orchard operations into Citrofrut.
1997:: A.O. Smith sells the automotive division to Tower Automotive, which agrees to a new partnership with Metalsa.
1998:: Metalsa buys Tower's plant in Roanoke, Virginia.
2002:: Citrofrut acquires Fruitalamo in Veracruz.
2004:: Metalsa launches a new factory in San Antonio, Texas.
2006:: Metalsa announces plan to build a new factory in Saltilla, Mexico, and a possible new factory in China or India.

Proeza continued to boost its international operations into the mid-2000s. In 2004, the company announced its interest in establishing a new plant in San Antonio, Texas, in support of the new Toyota factory scheduled to begin production there in 2006. Proeza also announced that it would begin construction of a new factory in Saltilla, to transfer part of its frames production from its main Apodaca plant. At the same time, the company indicated that it was considering adding a factory in either China or India, in order to expand its operation to these market. Proeza appeared to have hit on a winning formula with its diversified group of businesses.