Focus: Construction

Climbing the Ladder

Climbing the Ladder

Jul. 16, 2013

The construction industry employed 633,606 workers in March 2013, slightly down on the same period the year before (652,316). However, employment in the construction sector is seasonal; while 645,222 were employed in February 2012, this figure rose to 702,023 in August of the same year. It is likely that in the summer of 2013 the number of workers will advance on the March figure.

PROJECTS

One of the largest projects in Mexico at the moment is the Torre Reforma, which is currently under construction in Mexico City. Once completed, it will be tallest building in Latin America. The skyscraper will be 244 meters high, placing it around 180th on the world's tallest buildings list. It will be a 57-story mixed-use building, with 18 floors of apartments, 26 floors of offices, a restaurant, and retail areas. Construction began in 2008 and it is scheduled for completion in 2014. Torre Reforma is in the up-scale neighborhood of Paseo de la Reforma next to the current tallest building in Mexico, Torre Mayor. Torre Reforma also aims to achieve LEED platinum certification, with a hope that this will spur other constructors to follow suit. The project is estimated to cost $130 million and is being financed by Protego, with Fondo Hexa developing the tower.

In the same neighborhood as Torre Reforma will be the Corporative BBVA Bancomer building. This again will be one of the tallest buildings in Mexico, standing at 221 meters tall with 50 floors. The project will cost $466 million and will be funded by BBVA Bancomer. The main function of the tower when it is completed in 2014 will be office space and parking. The project will also be aiming to achieve LEED certification.

Another project that is presently underway is the Reforma 432 Residence in Mexico City. Once finished, it will be 206 meters tall with 52 floors. The tower complex includes luxury residences, retail, offices, dining space, and a hotel. It also has an entire floor devoted to green terraces and open space. The Reforma 432 has an ultra-contemporary design that will make the tower unique not just in Mexico, but also the entire world. It was designed by Rojkind Arquitectos.

CEMENT

In total, the construction materials sector represents 5% of Mexico's GDP. Even with the economic slump a few years ago, the production of cement in Mexico has remained relatively stable. In 2012, the total production of cement was 36.2 million tons. This figure has been rising steadily since the crash in 2008-2009, when it dropped to its lowest point of 34.5 million tons. Just before the global financial crisis in 2007, the country produced the highest amount of the period between 2000 and 2012 at 38.8 million tons. The demand for cement has also remained fairly stable and just slightly lower than supply. In 2012, the country consumed 34.6 million tons of cement compared to 36.6 million tons in 2007 before the crisis. If you compare this in kilograms per capita, then the figures show a decline since 2007. This is largely due to the fact the population has increased faster than production. In 2007, kilograms per capita of cement for Mexico was 347, which dropped to 295 in 2012.

CEMEX is the largest cement producer in Mexico at the moment. “We have direct operations in over 50 countries, and other commercial ties with more than 100 countries. CEMEX currently employs 44,000 people," Juan Romero, President of CEMEX, outlined to TBY about the size of the company. CEMEX has been working to develop and professionalize its distribution network, while also introducing new products to facilitate the construction process. CEMEX is a major player when it comes to infrastructure projects and in 2012 paved 7.8 million sqm of road. The company is also building a new kiln at its cement plan in Puebla. The plan is for the new kiln to produce 10,000 tons of clinker a day as well as increase the production capacity to 7.4 million tons of cement per year. CEMEX is also aiming to reduce its CO2 emissions; “around 25% of CEMEX's energy consumption comes from alternative fuels, and we aim to increase the figure to up to 35% by 2015," Romero told TBY.

STEEL

In regard to steel production, Mexico is one of the world's largest producers coming in at 13th. The country has slightly increased its production over the past five years from 17.6 million tons in 2007 to 18.2 million tons in 2012. There was a drop in 2009 during the crisis but the market recovered well afterward. Mexico has roughly a 28% share in the total steel production in Latin America. However, the country's demand is expected to surpass its supply for at least the next three years according to Carlos Villareal, President of the National Industrial Chamber of Iron and Steel (Canacero). Mexico's GDP is expected to grow by up to 3.5% in 2013 while industry production will increase 3.3%. Over the next three years, economic growth is expected to total 14.8% compared to a 9.6% increase in production. Steel consumption is expected to reach 25.2 million tons in 2013 while production will likely finish the year at around 19 million tons, creating a deficit of around 6.2 million tons. This deficit is expected to further increase to 7.4 million tons in 2014 and 7.5 million tons in 2015. This deficit in production is likely to mean an increase in imports to meet this demand. However, Mexico must look to protect its steel industry from an “economic tsunami" caused by low steel demand elsewhere in the world as a result of stagnation in Europe and slower-than-expected growth in Asia. This has resulted in a global oversupply of steel by 320 million tons. The demand for commercial and industrial space is still on the rise, helping the construction industry to grow steadily and remain healthy.

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