News Column

Eating up Profits

June 2005, HISPANIC BUSINESS Magazine

Keith Rosenblum

Divisional VP of Operations Rich Garofolo, left, Chairman John C. Lopez, and CEO Ed Sanchez of Lopez Foods, Inc.
Divisional VP of Operations Rich Garofolo, left, Chairman John C. Lopez, and CEO Ed Sanchez of Lopez Foods, Inc.

Manufacturers on the Hispanic Business 500 face the same ups-and-downs as other producers, with one major exception: People still want to eat. Quite simply, consumers are eating more Mexican food. They also are eating more frozen food.

In keeping with the trend, Ruiz Food Products, number 18 on the Hispanic Business 500, increased sales 20.7 percent. "Our key has been continually investing in our business, keeping costs low, and maintaining a flow of new products," says CEO Fred Ruiz.

Among the recent inventions to emerge from Ruiz's test kitchen: a flauta sold by 7-Eleven convenience stores. "When 7-Eleven purchased their roller grills, they intended to sell other products to go along with the hot dogs," Mr. Ruiz says. "That's where we came in."

Since its founding in 1964, the company has grown at an average rate of 20 percent annually. Ruiz opened a second plant in California last year that increased production by a third and is about to announce acquisition of a 250,000-square-foot plant and distribution center in Dennison, Texas.

At Oklahoma-based Lopez Foods, number 12 on the Hispanic Business 500, high materials costs have clouded the outlook a major concern for the high-volume supplier of ground beef and sausages to McDonald's, Sonic, and Wal-Mart. "The industry has flattened out a bit because of higher beef costs," says CEO Eduardo Sanchez.

In the massive auto-supply segment, companies struggle to trim costs in an effort to counter foreign competition. CEO Gerald Diez Sr. of The Diez Group, number 13 on the Hispanic Business 500, says "legacy costs" such as pension and health care obligations are rising rapidly. "Even though auto sales are about the same," he notes, "profits are going to be flat or there will be losses incurred because of pricing pressures." The U.S. automotive industry is going to see productivity diminished or lose jobs unless it confronts the legacy issue, he says.

But at HUSCO International, maker of hydraulic parts for heavy machinery, sales jumped 31.3 percent last year to rank the company number 25 on the Hispanic Business 500. For 2005, CEO Agustin "Gus" Ramirez hopes profits will increase by 12 to 15 percent, with sales increasing about 10 percent. "Our first quarter was strong and right on the profit plan," he says, "but we're starting to see a slowdown. Energy costs are starting to effect us."


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