Mexican construction sector sees “boom”
By Hal Lundgren29 November 2022
Ken Goddard can gauge Mexico’s car-making pace by the loudness of his phone. “Right now, it’s ringing off the hook,” said Goddard, who oversees Mexico operations for International Industrial Contracting Corp. (IICC).
“I’ve been with my company 15-plus years, and I’ve never seen [a year] like we’ve had,” Goddard said. “We’re finishing up a strong 2022. The horizon looks good for the next two to three years.”
The Michigan company’s Mexico branch is in Monterrey, which Goddard described as Mexico’s “most industrial city, per capita.” IICC’s big catalyst is electric car manufacturing, which provides autos for Mexico and South America.
Electric car boom
Among its clients, the company serves a General Motors plant south of Monterrey and a Ford facility near Mexico City. IICC has also entered into a multi-million dollar agreement to turn out another electric vehicle, the Cadillac Lyriq, in Ramos Arizpe.
Car and light truck manufacturing in Mexico was a $47 billion business in 2020. It is projected to produce nearly $64 billion in revenue for 2022.
“We’ve always been in cars,” Goddard said. “And this is certainly a good time to be in cars.
“We have also nurtured good relationships in Mexico. When I go down there on business, I don’t stay in hotels. I stay in homes because the friendly Mexican culture is unique in that way. Some children of our customers even call me ‘Tio’ (uncle). We get along well.”
At least one dilemma pops up for 2023. Will the government slow post-Covid growth with tax increases? This would trim revenue flow from U.S., Canada and other foreign companies doing business or wanting to do business in Mexico. David Gonzalez, president of Queretaro-based International Relocations of Mexico (IRM), echoed the sentiment of that potential dilemma.
“Business is improving after the pandemic,” which slowed or brought to a halt much of Mexico’s business activity,” Gonzalez said. “Right now, it’s great. We have 75 employees. We also have 30 of our people working in the U.S. That’s a first for our company. We are gaining momentum after the pandemic. Businesspeople look at that positive development and say, ‘Let’s keep it going.’ I agree.”
Momentum building across Mexico
But Mexico’s government might look at it differently, Gonzalez said.
“Our president, Andres Manuel Lopez Obrador, could see business moving along well and say, ‘Let’s increase taxes.’ That would sound like fighting businesses rather than helping them,” he said.
Gonzalez balances that possibility with a more positive consideration.
“Looking ahead, our company sees a strong 2023,” he said. “Higher taxes could change our outlook, but right now, business looks very good. Automotive companies. Paper companies. Beverage companies. IRM is busy, and we want to stay busy.”
IRM specialties include heavy rigging, engineering, electromechanical installation/services and packing/packaging.
Alvaro Rodriguez is president of MPE Group, which sells and rents gantries that lift up to 1,400 tons as well as mobile pick-and-carry units that lift up to 110 tons. He shares concerns about the Mexico government’s possible intrusion into growth.
“Even if companies from other countries see favorable developments for investment in Mexico, there’s no certainty how our government will respond to those opportunities,” Rodriguez said.
Solving problems in the nation’s economy
Rodriguez believes Mexico’s government should take a strong role in the nation’s economy, one that reaches beyond the U.S. and Canada. But, he said, that role should not include higher taxes.
“Our government should show potential investors around the world that Mexico is a good country for investment,” he said. “Those potential investors need to know that Mexico is a stable place to put their money. We also need to make sure all important government decisions are made openly. Then people will be sure that more than one person is making those decisions.”
Today, Rodriguez said, the government is considering a tourist train.
“We already have plenty of trains in Mexico,” he said. “We don’t need a new one. We face medical and health problems as well as other problems in Mexico. Our government can be leading the way in trying to solve those problems.”
Throughout Mexico, there seems to be uncertainty over government decision-making. It has existed at least since 2018, when government cancelled the enormous Mexico City Airport project shortly before its completion. The incomplete airport still sits, not usable. Its early termination cost Mexico’s government an estimated $9 billion in U.S. dollars.
Tradelossa is a 40-year-old specialist in ultra-heavy and oversize cargoes and assemblies. Its engineering and operations departments have been especially effective in supporting maintenance and repairs at Mexico’s power generators.
Tradelossa, which has won three SC&RA Job of the Year awards, has endured a three-year span with few major projects. But that is soon to change, said Tradelossa’s Carlos M. de los Santos.
“I think we’re looking at a time of high demand on heavy equipment from Mexican companies,” said de los Santos. “There will be major energy projects in 2023, maybe starting in September or October. Most will be in the center of Mexico, but also in the north, south and Pacific coast.”
Tradelossa and other Mexico companies anticipate rising demand following a Federal Electric Commission (FEC) commitment to build six new combined-cycle power plants. These plants will rely on both gas and steam turbines, a combination that significantly outperforms simple-cycle plants.
Power generation activity
FEC is Mexico’s second largest state-owned enterprise after Pemex. Contracts to build the six new plants could generate as much as $3.4 billion of business activity in Mexico.
There’s also developing activity in SC&RA’s effort to strengthen relationships abroad. A growing organization, Association of Cranes, Equipment and Industrial Development, (AGEDI) is taking shape.
“We see AGEDI as an important link in working towards our shared industry goals,” said SC&RA CEO Joel Dandrea. “Now more than ever, we’re looking for ways in which our members can work together more efficiently to realize economic gains.”
To that end, a delegation from AGEDI visited SC&RA headquarters in August to discuss association business and growth. Representing the organization was Horacio Martinez Vela, director general, and Alvaro Rodriguez, president of MPE Group.
“Exchanging ideas for growth was on the agenda,” Dandrea said. “The next step in continuing the conversation is SC&RA’s director of membership, Jason Bell, traveling to Mexico to share details on membership, engagement opportunities and a review of its Jobs of the Year awards program.”