Viva Mejico

I was recently lucky enough to visit Mexico DF to investigate market conditions on behalf of an EPC.

The Mexican market is curious:

Mexico has a free market economy in the trillion dollar class. It contains a mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector. Recent administrations have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. Exactly the type of conditions that suit the EPC market.  

The Felipe Calderon administration passed an energy reform measure in 2008, and another fiscal reform in 2009.  Despite the fact that Mexico's GDP plunged more than 7% in 2009 as world demand for exports dropped and asset prices tumbled, GDP is expected to post positive growth late in 2010 so here is a country with a government expecting growth, employment, helping the energy industry and investing in infrastructure! I thought I was going to be busy when I arrived there.

I didn’t realize exactly how busy I would be. Every company I spoke to had an optimistic tale to tell. Every person I spoke to said the economy was going to improve and investment was being considered. What a relief and pleasant change it was from my normal Southern European meetings which sometimes feel like they will end in a competition to see who has the tale of most woe.

Lets put things into perspective. In late 2009, when the Mexican economy was at its lowest, unemployment was at 6.2% (est – Theodora), whilst Spain was aiming for 20%. Intrest rates and inflation is high, but hold on, doesn’t that signify a growing demand and people actually wanting to borrow? I must admit, the new economy has me confused, but if Interest is up at 8%, the government must actually be trying to control borrowing and nut trying to pump public sector money into the economy. Also Inflation is at 5%. That is high, but its debt ratio’s are far more healthy than Europe. Yes it is running at a trade deficit, but only at about 5% of its exports, and it is Oil and Gas rich!

I am not an economist, as you can probably tell from my broad brush stroke statements and assumptions, but a country the net exports Electricity, Oil and Gas, is well positioned to exploit its natural resources. It is close to one of the worlds largest consumers (USA) and trade agreements are in place.

The feeling is almost one of waiting for the right moment to boom. As if everyone is just waiting for its major customer to wake up and start spending.In 2008 Mexico was the 7^th Oil producer (above Kuwait, UAE and Venezuela), it was the 18^th gas producer, above Egypt, Kazakhstan and the UAE) and yet it was joint 76^th in Industrial Production Growth Rate. Joint 76^th with the EU and Canada, actually better than the UK.

So, Mexico is ideally placed to grow. Good reserves, good production facilities, the ability to manufacture and certainly room for growth, the only problem is a dependency on one client. Over 80% of exports go to the US. It could be said that either Mexico has to find new clients or wait for the US economy to start growing. Both of which I am sure will happen. Mexico will find new clients. Mexico is a democratic country and proud to demonstrate it. It is avoiding some of the more politically questionable issues of some of its neighbours and concentrating on building an economy that will provide jobs. Mexico has what other countries need. It has Oil, Gas, Food and Minerals. It has a work force that are willing to work. It has well trained engineers, many of whom were trained in the US for major EPC’s or Operators. It has everything ready to see a growth phase that will come in the second half of 2010.It is our job as TRS to make sure that our candidates are able to take advantage of this boom. Mexico’s economy is currently growing at nearly 4% (Reuters) and TRS are positioned to help engineers back into employment. We are working with many international companies in Mexico who are looking for Oil and Gas, Mining and Energy based engineers now. We would like to hear from you if you are either living in Mexico, or would like to work in Mexico. It is a fast growing economy with a solid engineering industry. It is a mature market, a stable country and a great place to be. It is a beautiful place to work.