ESTADOS UNIDOS MEXICANOS INVESTMENT OPPORTUNITIES IN MEXICO

Transcription

1 ESTADOS UNIDOS MEXICANOS INVESTMENT OPPORTUNITIES IN MEXICO A Press Tribune report to be published within The Los Angeles Times Transcription of the interview with ARQ. MANUEL G MUÑOZCANO CASTRO DIRECTOR GENERAL GRUPO INDI April, 2009 Disclaimer This is a transcription of the recorded interview and may be edited to concur with written norms and style. It is NOT the final article; however it is the text from which quotations shall be selected for the final article to be published. We would kindly ask you to review the following transcript in order to confirm that all contents fulfill your approval. Please feel free to make any changes you deem necessary. You could also point out any specific quotes that you feel are relevant so that we are able to portray your views in the best light possible. Please return the approved transcription in a period of no more than 10 working days. If we do not receive any comments within this period of time, we will assume that the information in this document is of your liking.

2 PRESS TRIBUNE: How is the construction sector at this point in the crisis? Manuel G Muñozcano Castro: This is a moment of enormous opportunity for the whole construction sector because the first investment the state will make will be in infrastructure for the country. For this reason, in these difficult moments, we should look to be at the forefront of the fight against the economic crisis. Of course, this must go hand in hand with access to financing; it must ease the process of obtaining credit. The banks mustn t close their doors; there are many interesting projects out there, but us businesses lack the capital to be able to confront the big challenges. For this reason, alliances must be made with banks and investors to be able to attain the credit needed to finance these projects. PRESS TRIBUNE: Mexican banks haven t been as affected as the North American banks. Manuel G Muñozcano Castro: Indeed, the banks have not been overly affected, but they are nevertheless cautious in granting credits. Now there are many requirements and strict proceedings, which complicates access to finance. For example, if they grant us a large project, we desperately need finance on the part of the bank or investor to be able to finish the development. We all need each other, that s why we should work as a team with all the sectors, as much with the state as with the Chamber of Commerce, the banks and the industrial sector. Only thus will we be able to resolve this crisis. PRESS TRIBUNE: We understand that the Mexican Government is injecting a lot of capital into the sector through the National Infrastructure Plan. Is this increased financing being seen? Manuel G Muñozcano Castro: There has indeed been an increase in public spending; we have also seen that they are making investments before, during the first two trimesters of the year, instead of afterwards in the last two. There also exists a series of funds destined exclusively to the construction sector which will benefit us. At this point in the second trimester, us constructors are beginning to see this injection of capital; the public sector is beginning to spend more, there have been some project concessions, and they are notably open to support companies like ours. PRESS TRIBUNE: Do you think that with this increase in public spending the Government will be able to stimulate the Mexican economy so the crisis doesn t worsen?

3 Manuel G Muñozcano Castro: Certainly the construction industry is the spearhead in improving the economy. It creates jobs directly and indirectly in many other sectors, as construction requires many things: machinery, materials and other consumables. PRESS TRIBUNE: You have a division focused on the construction of machinery (MaqIndi.) Do you use this machinery in your own projects? Manuel G Muñozcano Castro: That s right. In cases of surpluses, we try to commercialize it. MaqIndi also specializes in renting machinery for a specific branch called deep foundations. When we re not using this deep foundation infrastructure we offer it to developers. PRESS TRIBUNE: Could you tell us about the history of the company? Manuel G Muñozcano Castro: The company was founded in 1977 and little by little we began to find contracts for public works. From 1977 to 1990, it was a company focused only on Mexico City. From 1991 it started to push into the private sector building hotels on the Maya Riviera, which was a great aid in helping us grow to a national level. This opening brought great business opportunities, where they offered us construction work but couldn t pay 100% with money. We started to accept exchanges: we received various terrains, which gave us the opportunity to build private developments with other businessmen, and in this way we built hotels on the Mexican Caribbean. We are currently shareholders in these hotels. After this, we took advantage of the opportunities which came from the infrastructure sector: in 99 came the boom in this sector in Mexico, where we ve been up until now. PRESS TRIBUNE: What was the key to growth for the company? Manuel G Muñozcano Castro: I see it clearly: it s the service and our commitment to the clients. In all these years, there hasn t been a single contract we ve failed to fulfill or failed to finish. There have been cases where we ve even lost money, but despite this we ve continued giving our services and keeping our promises to the clients. When you keep your promises and provide a quality service on time, people begin to recommend you to others, mouth to mouth between professionals and individuals and in this way we began to grow.

4 Another important part of our success is a very austere spending policy, in which all capital is used to be able to invest. PRESS TRIBUNE: I would like to talk about the different divisions of the company, beginning precisely with the Construction Division which has undertaken important projects. Could you tell us about this? Manuel G Muñozcano Castro: We ve had great achievements at each different stage in the development of the company. In the 90 s building the hotels on the Maya Riviera was something very important for us. After the boom in infrastructure, we had the privilege of participating in the construction of the second floor of periferico (Mexico City s periphery road,) 16 stages in all, of which Grupo Indi participated in every one, while many of our competitors didn t achieve half as much. This achievement is owed, as I ve already mentioned, to our continuing eagerness to fulfill our promises. In its moment this great work was our emblem. Afterwards came the opportunity to build the Container Port Terminal in Lázaro Cárdenas, Michoacán, which receives the biggest ships in Mexico. Now we re building the new Legislative Enclosure for the Chambers of Senators, which will become our symbol, until we overcome an even bigger challenge which forces us to improve and grow as a company and will becomes our next emblem. Another area in which we re developing is that of concessions and PPS: this is an area which requires investment: if Mexicans don t begin to invest in this type of infrastructure we won t be competitive in the future. We believe that this will be a key area for us, and so from 2006 we began to enter in this market and today have one of the first PPS highways in the state of Michoacán, and also permission for work with Mexibus, which will connect the state of Mexico and Mexico City. We are currently presenting various proposals to extend ourselves further in this market, but it s not easy, because as I ve already commented the finance is difficult to attain, and so we re looking to establish strategic alliances, even with foreign companies. We have links with a Spanish company already established in Mexico, and with a Portuguese company that wishes to invest in the country. They have healthy finances which allow them to attain very good credit. A synergy with them would allow us to undertake bigger, more important projects.

5 PRESS TRIBUNE: If there were North American businessmen interested in investing with you, would you be prepared to reach agreements with them? Manuel G Muñozcano Castro: Well, after all, our principal objective is to establish strategic alliances with investors across the world. PRESS TRIBUNE: I imagine that there are great opportunities with the concessions the government is offering as much in the present as in the coming years. Manuel G Muñozcano Castro: Exactly, this is a key moment that represents a great opportunity; we only need the resources to be able to take advantage of it. PRESS TRIBUNE: We understand you have formed alliances with Mexican companies like Cemex. Could you tell us something about this alliance? Manuel G Muñozcano Castro: I d say we were clients of Cemex rather than allies. They got in contact with us when they realized that we are company that delivers and offers great services. They were interested in investing in construction. So we arrived at a type of moral alliance in which they made concrete and we provided the construction service and machinery. As long as we keep offering them the best service, they ll continue working with us; for this reason our goal is to always offer quality service and to be competitive to be able to keep working as a team with Cemex. PRESS TRIBUNE: The housing and tourism sector are important divisions of Grupo Indi. Can you talk to us about this? Manuel G Muñozcano Castro: Yes, we focus on the housing sector when there is a decline in work in infrastructure: it s in these moments that we take advantage of our funds to invest it in medium, not very large housing projects. In the tourist sector we have a project on the Maya Riviera of a hotel with 400 rooms. The planning process for this hotel took 4 years; we now have all the licenses and plans. With large projects, things are more complicated. Building a 400 room hotel is not the same as building one with 50 rooms. The environmental impacts and return of investment are notably disparate. We are also looking at the possibility of building a smaller, more exclusive hotel. We hope to be able to take up this project in a year at the most. We ve also contemplated the possibility of selling the project to various companies from Spain and the United States which have shown interest in acquiring it.

6 PRESS TRIBUNE: And are you just focused on the southeast or will you also look to expand in other zones of the country? Manuel G Muñozcano Castro: We ve built luxury departments of 400m2 on the beach in Acapulco. A while ago we considered starting a project in Baja California, but this was halted by the crisis. But yes, we re very open to investing in any part of Mexico. PRESS TRIBUNE: What are the priorities of Grupo Indi at this time? Manuel G Muñozcano Castro: We re focusing on the concessions area and PPS, and of course in construction which has always and will always be our business. PRESS TRIBUNE: We have many readers who could be interested in investing in Mexico. What do you think are the best investment opportunities in the Mexican construction sector? Manuel G Muñozcano Castro: I believe the best opportunities are in infrastructure: few companies have access to the necessary resources, so there will be less competition and therefore greater benefits. PRESS TRIBUNE: Many of our readers could be interested in investing and for them it s important to know about the human capital of the company, as well as the technology you employ, and how you keep it up to date Manuel G Muñozcano Castro: Within Grupo Indi we have a division called MaqIndi as I mentioned at the beginning, and this company manages all the machinery of the group, with 100 qualified and highly trained operators. Besides this, we put special attention in renovating all the machinery we use every 5 years: in this way we maintain it always in optimum conditions, and it assures us we re up to date and are using the very highest technology. The Mexican workforce is one of the best in the world, as they are people who from a very young age are trained while working and therefore know their office better than anyone. They are also people with a high sense of responsibility and commitment to their work. In terms of engineering we have our own department of project engineering, with doctorates and masters in engineering who focus themselves in project development and the search for greater project efficiency. We are conscious that human capital is the key factor in this industry.

7 PRESS TRIBUNE: Your long history of efficiency and completion of projects on time has made you famous. Manuel G Muñozcano Castro: That s right, that s our distinctive seal. We think of our projects like factories: factories work 24 hours a day, they never stop working and we try to work the same way (although we might work 20 hours rather than the full 24.) This accelerated work rhythm allows us to finish our projects on time, and occasionally even before our deadlines. PRESS TRIBUNE: What are your goals for the next five years? Manuel G Muñozcano Castro: To consolidate ourselves further in the construction sector, both in the public and private spheres, focusing ourselves on infrastructure concessions as well as providing services like hospitals and prisons, which are attractive lines of business. We also look to develop the market of the public sector, specifically financed work development. For example, we have a product, and we go to some municipality which needs it to offer to them; they give us guarantees and we begin building, be it a bridge, a highway, etc. The advantage that we offer the municipality is that it can begin to pay for them a year later. In this way both sides benefit. To achieve this kind of ambitious project we need great financial strength to support works. PRESS TRIBUNE: Would you like to send a final message to the readers in Los Angeles? Manuel G Muñozcano Castro: I believe that Mexico is a country of opportunities and that he who is prepared to come early to work and conduct business can take advantage of them. Now is a very good time to invest in Mexico because it s a solid country, which in spite of the world crisis finds itself in a moment of great potential growth. END OF INTERVIEW