With operations in over 30 countries, 120 facilities worldwide and more than 18,000 employees, Mexichem is a global leader in plastic piping and one of the world’s largest chemical and petrochemical companies. Last year the company posted annual revenues of US$5.35bn and has been traded on the Mexican Stock Exchange for over than 30 years.
Miguel Trinidad, Corporate Treasurer at Mexichem, believes that treasury is about much more than the management of cash. According to Trinidad, treasury is an increasingly important function that needs to be intimately involved in all corners of the business to help manage risks and facilitate growth. This, Trinidad says, is the core objective of the strategic treasurer.
Yet elevating treasury to this level is not straightforward. To be a strategic treasury professional, Trinidad believes that you need to watch the bigger picture while keeping an eye on the details; take a global outlook while building local understanding and be technically skilled while holding management level soft skills. He also believes that the strategic treasurer should be knowledgeable while retaining a desire to keep on learning.
It is these attributes that Trinidad has looked to acquire throughout a career that has spanned multiple roles, companies and countries. Since arriving at the helm of one of Mexico’s largest corporations, Trinidad has applied these skills to build a treasury that can truly call itself a value-adding function.
Charting a course
To arrive at his current position, Trinidad has followed a well-defined career path. Indeed, Trinidad’s CV looks like a careers coach curated it, with each step enabling him to build on the experience gained in the previous role and take on more responsibility. Nevertheless he notes that while some degree of planning was involved, often the right role just came calling at the right time.
His first job was with a bank after graduating from the Monterrey Institute of Technology (Tecnológico de Monterrey) with a degree in economics and a specific focus on corporate finance. This was only a short stint though as he soon joined the treasury department at CEMEX to work on various projects including, client financing schemes, credit risk management, and asset financing and lease portfolio management.
In 2005, Trinidad moved to Latvia and then London to work on a post-merger integration (PMI) project after CEMEX acquired RMC Group. Trinidad’s performance in the PMI made him visible to the company’s top management who offered him an expat position in London to help build the European treasury centre – specifically managing the company’s financial liabilities and financing in Europe (in more than ten countries). Trinidad’s big break came in 2007 when CEMEX promoted him to Treasury Director for Northern Europe and the UK. In this role, he led a team of 12 across the full gamut of treasury activity.
After a successful seven years at CEMEX, Trinidad decided that he wanted to test himself in a different environment and jumped at the chance to take on the Group Treasurer role at NATRA, a mid-cap headquartered in Madrid. Trinidad was later promoted to CFO of NATRA in 2012, reporting directly to the CEO.
A phone call from a head hunter from Mexico in late 2014 piqued his interest in returning to his home country. “At the time, I was open to the idea, but I was enjoying my time in Europe so it was not something I was desperate to do,” explains Trinidad. But the overall project (role, challenge, company, industry) he was offered – Corporate Treasurer at Mexichem – was too good to turn down.
“The chance to lead the treasury for a truly global multinational in expansion mode was an opportunity I had prepared for during my career,” he says. “What also excited me was that I would be given the mandate to take the treasury department to the next level and re-build its overall operating model to create a truly strategic global function.”
A department for all
Trinidad would call upon his previous experiences at CEMEX and NATRA to re-shape the department and ensure that it was able to match the needs of the business – and add value. This was not an easy task, notes Trinidad, as Mexichem is a complex organisation which operates numerous business lines in over 30 countries. A one-size-fits-all approach would therefore not work.
“At CEMEX, the treasury was highly centralised at the time” recalls Trinidad. “There are lots of benefits to this structure, especially the coordinated global approach, consistency and control that it provides. Yet very quickly I realised that this model would not suit Mexichem, due to the make-up of the business and the operational autonomy granted to the local business units.”
On the other hand, at NATRA Trinidad had experienced working in a highly decentralised treasury and had found that empowering the local business units offered certain advantages – most notably ensuring that experts in local markets are empowered to make judgement calls that would benefit the business. But Trinidad realised that, as Mexichem was working to be a fully-fledged multinational, compliance matters and central control on selected strategic treasury and risk matters was fundamental.
Trinidad therefore decided to call on the best of both approaches and establish a hybrid treasury structure. This model sees Trinidad lead the central treasury, which maintains the global treasury policy, directs key banking relationships, drives enterprise-wide projects, manages the debt and hedging programme and acts as an advisor to the business. Empowered regional and in-country treasury teams then support the central treasury and business at local level.
With a treasury structure in place, Trinidad’s next job was making sure that the voice of treasury was heard across the business. Trinidad had experienced the complexity of doing this at his previous roles where treasury had been a well-established function. He knew he would have his work cut out at Mexichem.
Adopting a methodical approach, Trinidad and his team start with the basics, explaining and showing the purpose and value of the treasury function to the business units. Once this elementary education is complete, the next stage is to demonstrate how the treasury can add value.
“A local business head who oversees the P&L usually has little interest in the treasury talking about new automated cash sweeping structure or host-to-host bank connectivity,” says Trinidad. “But they get interested if we can save them money and help them mitigate risks. A key task has therefore been to analyse the local business unit’s operations and approach the business heads with suggestions for how they can improve their performance through various treasury related projects.”
Trinidad notes that many of these projects focus on improving the working capital management of the business units. “We have implemented a number of working capital financing projects around the world and they have been well received,” he says. Another area of focus has been on payments. “We push the business units to minimise the frequency of payments runs,” Trinidad explains. “There is often resistance at first, but once the cash forecast accuracy, cost and efficiency savings are demonstrated they all agree in the tangible value of these principles.”
In taking the effort to spread the treasury message and show how the department can add value, Trinidad has thrust the treasury department into the consciousness of the business units. “They start engaging the treasury team and asking for our support with a variety of projects they are working on,” he says. “They know that we can help them and ultimately drive further value for them. It is a position we have worked hard to achieve and we will continue to work hard in order to maintain this.”
Holistic risk management
As well as supporting the business units, Trinidad spends a lot of time managing risk. He is leading a company-wide project to build up the Enterprise Risk Management culture within his company. The key objective of this is to gain a holistic and deeper understanding of all the risks (not only financial) to which the company is exposed to.
“We produce in over 30 countries and sell in over 60, so we are exposed to a wide array of risks,” he explains. “As a result, we have been working to ensure that we detect, assess and understand all risks, and thus ensure we prevent, mitigate, transfer or optimally manage all existing risks.”
To do this, Trinidad and his team go beyond simply identifying the risk, and dig deeper to find the root cause of it. “We don’t just want to know which direction a currency is moving in, but why it is moving in that direction,” says Trinidad. “By doing this we are becoming better informed and able to make better predictions about future movements – and thus we are using products or solutions that better match the risk.”
Banking on technology
Away from managing risk and regulation, some part of Trinidad’s time is spent surveying the ever-changing treasury technology landscape. “There is a lot happening now,” he says. “The company has put a lot of effort in keeping up with the technological advances so there is now a big enterprise-wide effort to update all our systems and roll out a single instance of our ERP globally.”
From a treasury perspective, Trinidad is about to launch the implementation of a single treasury management system (TMS). “This is vital to help us achieve our objectives,” he says. “We have accounts with many banks around the world and from day one at the company I knew we needed to gain more visibility over our cash. A single platform will go a long way to solving this issue for me and my team.”
“Treasurers need to ensure that the technology they select not only fits the needs of the company today but can also be developed and evolved to meet the needs of the future.”
Trinidad notes that the pace of technological change is quite daunting. “By the time I have finished evaluating a new solution, it seems that more advanced technology is available,” he says. “It is important not to get too caught up in all the changes. That said, treasurers need to ensure that the technology they select not only fits the needs of the company today but can also be developed and evolved to meet the needs of the future.”
Investing in technology is just one aspect of creating a robust treasury for the future. Trinidad places the same emphasis – if not more – on investing in people. “Having a talented team is vital,” he says. “I spend a lot of time ensuring that my staff are given challenging projects and training to help them become well-rounded treasury and finance professionals. It is about giving people the opportunity and tools to harness their skills and strengthen their expertise, to maximise the value that they offer the organisation and to ensure they can constantly improve.”
With a wealth of academic qualifications behind him, Trinidad encourages his staff to seek further education outside the business. “I have spent a good amount of time and money on my continuous education,” says Trinidad. “The combination of industry certificates, executive education and the MBA courses at top universities and institutions in Mexico, USA and the UK has been greatly enriching. In addition to providing me with a valuable technical skillset, continuous advanced education allows me to develop a deeper comprehension of economic, financial and business challenges and how they are managed in different regions, countries and industries around the globe. They also help equip me with the soft skills to cope with myriad complex, though rewarding, business situations.”
Although he learns about these soft skills in the classroom, Trinidad claims that the true development of these skills is the real-life day-to-day situations, including the workplace. “These develop further the more interactions you have with other areas and business units,” he says. “You learn what works and what doesn’t and develop empathy, which is a vital trait for treasurers to have.”
Heading (back) to the C-suite
Just like his curated career path, Trinidad’s investment in education has been geared towards his ultimate ambition: becoming a finance leader in a truly multinational environment. Given his prior experience as CFO at NATRA and now leading the treasury team at Mexichem, Trinidad feels that he is becoming well equipped to do this.
“Most of my career has been focused on creating, transforming, and restructuring the financial situation of a company through the proper development, alignment and empowerment of finance teams,” he says. “This is what I love doing and where I thrive and thus being a finance leader seems a logical goal to strive towards.”