As CFO of the industrial and construction products maker Orbia Advance, Jim Kelly holds the finance reins of a company that is in the thick of a cost-cutting initiative aimed at navigating a market downturn. 

The road to a turnaround hasn’t been an easy one for the Mexico-based company that provides conduit and accessories for data networks, fluorine based products used in refrigeration, medical products like asthma inhalers, and pvc resin used to make pipes, along with irrigation and water management-related products. 

When Orbia announced its cost cutting initiative in October, the Mexico-based company’s CEO Sameer Bharadwaj detailed a $250 million per year cost reduction program designed to bring $165 million per year in savings by 2027, according to a transcript of the company’s earnings call. But the work got underway even earlier than that: Kelly recently told CFO Dive the company has been working on the initiatives since early last year when it recognized the markets would be weak. 

Formerly known as Mexichem, the company has begun to see some improvement: late last month, Orbia reported Q4 EBITDA rose 10% to $33 million, with executives on the earnings call noting also that it has already realized $104 million in cost reductions last year, well above the $85 million it had anticipated for the period. “The plan is going well,” Kelly said in an interview last week. “We’re on track for what we’ve communicated that the external markets should expect from us, which is important.” 

Challenges remain, however: the Mexico-based company’s net revenue fell 9% to $7.5 billion year-over year as the company faced headwinds from lower pricing and volume, with 2024 EBITDA falling 25% YOY to $1.1 billion.  And it’s unclear when the recovery in the building and construction sectors it depends on will take hold, with Bahradjwaj asserting last month that China and U.S. pvc export prices are at “rock bottom” and noting that the company sees demand recovery tied to the end of the wars in Europe and lower interest rates. 

Kelly declined to reveal the percentage or number of people whose jobs have been cut in the restructuring, noting only that the number is not “material” for Orbia, which currently has about 23,000 employees. With the Trump administration’s blunt approach to massive federal worker layoffs sparking questions about how corporations approach such difficult matters as workforce reductions, Kelly shared some lessons learned and rules of thumb that have guided his strategy and decisions. They include: 

1. Be fair. Whether people are coming in or leaving the company, Kelly’s CEO always says that it is important to treat people fairly. Kelly characterized the dramatic way the job cuts are being handled right now in the federal government is potentially leaving a lot of federal workers anxious. “I would say that something we try to avoid is having people on edge and losing focus on what we want them to do to serve our markets and do what’s best for our customers and for Orbia in the long term.”
2. How you communicate the tough news matters. “The last thing you want is for a company to find out about cost-cutting because they hear it on an earnings call,” Kelly told CFO Dive. “You want to make sure people are hearing it from the source: from the CFO or CEO and the business presidents and that they understand why it’s happening.” At Orbia, Kelly said the company has sought to be very clear about the fact that the markets are very tough and that it’s going to be a while before there’s a meaningful turnaround. 
3. Free yourself up to plan long-term. “One thing I’ve tried to do is to be very careful to not just be tactical and just talk about these short-term things that you need to do because it’s easy to get stuck in the day-to-day,” Kelly said. “Yes, we have to be very tough on costs now but we haven’t lost sight of making investments in growth opportunities for the long term.” Orbia has several initiatives related to the growth of the electrical vehicle market as EVs are one use for its materials. In addition, Kelly said it has launched a custom electrolyte offering which are used in lithium-ion batteries.