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Recent and upcoming investment in Mexico

Information collected from media reports over the last month:

  • Vegetable oil: U.S. agricultural commodities trader Cargill expanded its grain processing plant in the central state of Hidalgo to include an additional production and bottling line. The US$16 million upgrade will produce vegetable oil principally to supply Walmart stores, the company reported. (Expansión, March 28, 2019)
  • Railroad: Mexico’s Grupo México corporate group reported investment plans totaling approximately US$555 million to support its railroad subsidiaries Ferromex and Ferrosur. Areas targeted for upgrades include locomotive maintenance, track materials and rehabilitation, new rolling stock and related equipment and land purchases. (Reforma, March 27, 2019)
  • Ports: Major new infrastructure under construction at the Port of Veracruz on Mexico’s Gulf coast will begin entering operation later this year, the Veracruz Port Customs Agents Association reported. The US$3.7 billion upgrade includes four new specialized terminals for fluids, bulk agricultural products, bulk mineral products and containerized and loose cargo. (Reforma, March 25, 2019)
  • Oil refining: The Mexican government invited international companies to bid on the construction of a new oil refinery in the southeastern Gulf coast state of Tabasco. The project, estimated to require investment of US$6 – 8 billion, will include 17 processing plants, 19 storage tanks, a rail line and ship docking facilities. (Reuters, March 18, 2019)
  • Manufacturing: Mexican construction finishings manufacturer Lamosa announced a US$100 million investment plan that includes US$23.3 million to support Mexico operations. The company produces ceramic tile, adhesives and flooring materials at 13 production plants in Mexico. (Reforma, March 14, 2019) Continue reading Recent and upcoming investment in Mexico

Guarded outlook for Mexican retail in 2019

The Mexican retail sector registered a sluggish year in 2018, posting same-store sales growth of just 0.1% and all-stores growth of 3.5% for the year, according to the National Retailers Association (ANTAD).  Retail performance showed deceleration at year-end, posting the slowest fourth quarter expansion since 2014.  On the plus side, sales during Mexico’s four-day “Buen Fin “ (Black Friday) promotion in 2018 grew 8% with respect to the previous year, the national chambers of commerce, services and tourism (Concanaco Servytur) reported.  On-line sales during the promotion jumped 50% for the same period, demonstrating ongoing advances in consumers’ shift to shopping on line.

ANTAD is adopting a cautious outlook for 2019, projecting a 2.2% increase in all-stores sales but a contraction of 1% in same-store sales for the current year.  The growth of electronic commerce remains a leading trend for the industry, with Mexico striving to exceed US$20 billion in on-line sales for the year with the hope of surpassing Brazil as Latin America’s top e-commerce market.  Industry analysts project that policies proposed by the new Mexican administration could provide a boost to retail.   These include monthly stipend programs for qualifying members of segments such as youth, elderly and the disabled, as well as a 16% increase in the minimum wage.  Bodega Aurrerá is expected to benefit in particular from these measures across its formats.  Also, the new government reduced the VAT tax in the northern zone along the U.S. border to 8% from 16%, which is expected to provide a sales bump to store chains well established in the area such as Soriana, Walmart, Casa Ley, HEB and Super Norte.

Roma and Colonia Roma

Yesterday we received multiple emails from friends and colleagues outside of Mexico raving about the new Alfonso Cuarón film Roma and asking if we had seen it.  We have not seen the film, but we watched the trailer on YouTube and were duly impressed by the beautiful black and white photography.  This is not a movie review though; the flicks are not our forte but we noticed that the write-ups all mention that the film depicts Mr. Cuarón’s childhood memories of growing up in Mexico City’s Roma neighborhood, or Colonia Roma as it is called officially.  We did not spend our childhood in Colonia Roma as Mr. Cuarón did but from our late teenage years on the neighborhood has served as the closest thing to a hometown as we have had.  Our early memories of Mexico City streets as they were 40 years ago are now packed away in the recesses of the mind, which is why the depictions of the Roma of Cuarón’s youth trigger such a stunning and unexpected flood of recognition. Continue reading Roma and Colonia Roma