Market Overview
Construction
In 2007 Mexico’s government pledged to stimulate the construction sector as a way to spur the country’s economic growth. Mexico’s infrastructure sector has benefited most from the government’s pledge, with an estimated investment in 2007 of $250 billion dollars. This investment is not only to spur the economy, but also to address the lack of infrastructure investment projects in the past, and the importance of works to support the competitiveness of the country.
The total value of the construction sector in 2007, according to the Mexican government, totaled $18,864 million dollars. The major portion (52.8%) was allocated to the building of houses and multi-use buildings, and secondly to highways (18.3%). The Mexican states that received the major investment were Mexico City (27.8%); Nuevo Leon (13%); Jalisco (6.0%) and Campeche (4.7%).
Housing
Under the Administration of President Calderon, all housing initiatives and projects throughout Mexico’s 32 states are considered priorities. Federal, state and municipal governments are working closely to strengthen the housing industry in order to solve Mexico’s housing deficit of over the 5 million units countrywide. All housing agencies, both government and private, are promoting projects and seeking private investment in order to counter the country’s housing deficit.
For U.S. firms interested in entering Mexico’s construction industry, one of the best options is to sign a joint venture agreement with a Mexican housing developer or construction firm that is active in the housing industry. Mexican companies’ knowledge of the market, labor and legal aspects involved in this industry is invaluable to U.S. firms.
Inflation affected construction costs by nearly 8% in 2008, according to the Index of Prices to the Builders from the Banco de Mexico. An inflation rate of 6% is expected in 2009.
Best Products/Services
Mexico offers good sales opportunities for U.S. manufacturers of housing building materials. Materials having the best sales potential are as follows: Aluminum doors and windows, Bathroom and kitchen fixtures, Windows and their frames of wood, Doors and their frames of wood, Electrical fixtures, Electric insulating tubes, Steel and iron doors and windows, Parquet panels of wood, Plumbing fixtures, Plastic doors and windows
Mexican firms are searching for new and rapid construction techniques and new materials (high quality, low prices, easy to use and install). U.S. products and/or services are well accepted in Mexico and U.S. firms have the additional benefit of selling most products duty free under NAFTA.
Market Opportunities
The distribution of this housing shortage and proposed housing projects during the next two years will be concentrated in 100 cities each with over 50,000 inhabitants. Major housing will be in Mexico City, Estado de Mexico, Guadalajara, Monterrey, Queretaro, Pachuca and Toluca. Estado de Mexico, Toluca and Monterrey will receive additional support from the Mexican Federal Government. Companies based in those states are expected to participate actively during 2008 and 2009 in the remodeling and construction of new, low cost, middle and upper income homes.
Construction projects for 2008 include housing, high-rise office buildings, shopping centers, industrial plants, hospitals, theaters, hotels, golf courses and museums, with a total investment of over 64 billion dollars. (Data gathered from CANADEVI, CONAVI, CMIC, CNEC, CIHAC, private developers and construction companies).
Major construction companies working with housing agencies will increase their demand for building materials compared with the last five years. There are ambitious targets for new homes at the three different social levels. The segments of the market that will demand the most building materials are the lower income, rapid construction and middle income levels. They are expected to grow at an average of 14 percent during the next two years.
Resources
National Chamber for Housing:
National Housing Council:
Mexican Chamber for the Construction Industry:
National Chamber for Consulting Firms:
Construction and Housing Development Center:
National Institute for Geography and Statistics:
Institute of National Housing Fund for Workers:
http://www.fovissste.gob.mx/http://www.fovissste.gob.mx/
Government Housing Fund for Federal and State workers:
Market Research
Cement Industry Overview ‘08
The use of cement in Mexico began in 1902 when gray Portland cement was registered for use in construction. Since then the Mexican construction industry has adopted cement as the key component in construction including: high-rise commercial, apartment and office buildings; hospitals; schools; houses; ports; highways; dams; hydroelectric plants, etc. Mexico was an early adopter of technological advances in cement, Mexican cement and concrete producers, as well as concrete contractors and designers, are always seeking the newest technology and equipment available to perform their jobs.
With the new National Infrastructure Program (NIP) that President Calderon launched in July 2007, many construction initiatives will become a priority for the coming years. The NIP includes several infrastructure projects and upgrades for dams, electricity plants, roads, railroads, airports, ports, low-income housing and commercial development. These projects (100 roadway projects, 13 piers, 3 new airports and expansion of 31 already in existence), will consume large quantities of cement and concrete. In order to contribute the NIP, cement-manufacturing firms in Mexico announced an investment of over 2 billion dollars on new plants or improvement of existing ones during the next four years. Currently the local cement industry is working at 80% of its installed capacity, generating twenty two thousand direct jobs and 120 thousand indirect jobs.
Currently consumption of cement in Mexico has increased over the last three years and is expected to continue to grow in the coming years. This growth is strongly linked to an upward trend in the construction industry that started in 2002. Approximately 17% of cement goes into Ready Mixed Concrete, and the ratio is growing each year. We must consider that housing and infrastructure represent 90% of total consumption in Mexico.
Main concerns of the industry include: promoting cement and concrete development, protecting the environment, and conserving natural resources. Mexico has environmental legislation to prevent pollution and to promote sustainable development. Companies must comply with Federal and State Regulations, Federal Standards – Issuance and Compliance, Government Agencies – Reference Standards, Applicability of International Standards and Local Product Certification. To cover these aspects local manufacturers invest over 750 billion USD to expand its capacity, upgrade facilities and adopt environmental-friendly technologies.
High performance concrete and new equipment and techniques for concrete transporting, placing and curing are now readily available almost everywhere in Mexico. As a result, concrete is found in a wide cross section of building applications. We strongly believe that cement and concrete will remain the main construction material in Mexico into the twenty-first century. Today, the Mexican cement industry is one of the strongest, most efficient and most competitive in the world. Mexico’s major manufacturer, CEMEX, is the third largest producer worldwide. The largest and second largest cement manufacturers in the world (Lafarge and Holcim) also have plants in Mexico.
Testimonials
Conveyors Application Systems Testimonial
"Thank you so much for the successful visits that we had. Your
staff exceeded my expectations. He was excellent, and his hard
work in advance of my visit was very evident. He took it on like
a challenge rather than just a job. He was knowledgeable enough
to take the lead when I was at a loss for words...I was so
pleased with the results, that I am going to repeat the process
all over Europe, finding other dealers in this same
fashion."
Arlen Rexlus,
Conveyors
Application Systems
Meadow Burke Testimonial
“…Once they (our potential partners) returned to Mexico, they placed their initial stock order and sent us a filled credit application. The two sales reps are now working full-time promoting our products. There is a lot of work ahead of us, but we now have a solid local presence in Mexico. We expect to develop this initiative, started through the GK program, to become a significant revenue stream for both companies within the next 4-5 years. Adrian, thank you and your staff for your dedication and help …”
Victor J. Yahin,
Further information, comments or questions
If you wish to write us regarding these reports, please contact Adrián Orta, Trade Specialist on Building and Construction in Mexico Sector of the US Commercial Service Mexico City Office.