Market Overview

Construction

Mexico’s current administration goal is to position the country in the 20th place of the best countries evaluated by 2030 according to the infrastructure index prepared by the World Economic Forum. In order to achieve such goal Mexico needs to become one of the leaders in Latin America by 2012. Mexico must increase its investment, coverage and quality of its infrastructure. 

Mexico's construction industry is feeling the effects of the global recession, but the impact is not as great as past economic downturns. While many large commercial projects have been postponed and turned into medium size malls; large industrial and infrastructure projects are going forward as the government steps up public works spending and private financiers take advantage of lower material and labor costs to press on with some large commercial and hotel projects in Mexico City, Puerto Vallarta, Baja California, Monterrey, San Miguel de Allende, Guadalajara and the Riviera Maya.

Housing

The housing construction industry in Mexico has experienced a constant growth over the last 5 years, increasing at an average of 4.5% yearly.  The housing and general construction sectors have been important for the current government due to its side effects of employment generation and stimulating the economy. 

The government has implemented federal, state and municipal housing projects and assigned funds to government institutions that support the development of mainly low-income, and some mid and high-income housing. The government has also supported the efforts of private companies (local and foreign) involved in this industry. All housing agencies, both government and private, are promoting projects and seeking private investment in order to counter the country’s housing deficit.

Cement

With the National Infrastructure Program (NIP) that President Calderon launched in July 2007. 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 existent), will consume large quantities of cement and concrete. In order to contribute to the NIP, cement-manufacturing firms in Mexico announced an investment of over 2 billion dollars on new plants or improvement of existing ones over the next four years. Currently the local cement industry is working at 80% of its installed capacity, generating 22,000 direct jobs and 120,000 indirect jobs. 

Consumption of cement in Mexico decreased during the last six months of 2008; however local manufacturing firms consider 2009 as a transition period into a growing period starting in year 2010. 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.

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:

http://www.canadevi.org.mx

Mexican Chamber for the Construction Industry:

http://www.cmic.org

National Chamber for Consulting Firms:

http://www.cnec.org.mx

Construction and Housing Development Center:

http://www.cihac.com.mx

National Institute for Geography and Statistics:

http://www.inegi.gob.mx

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:

http://www.fovissste.gob.mx/

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.  

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.