Latin-American Markets Supplement: Breeding Success in Monterrey

Just as New York and Cleveland had the Rockefellers and Pittsburgh the Carnegies, the city of Monterrey has the Garza-Sada family. The family has left its imprint on industry, education and city life. Today, Monterrey, the capital city of the state of Nuevo Leon, is considered the industrial epicenter of Mexico.

This is due in part to the presence of approximately ten thousand industries of different specialties that operate in the state: steel, chemical products, equipment and machinery, food production, beer, tobacco, glass, cement and other categories.

During the 20th century, Monterrey was known internationally as one of the world’s top beer producers. In fact, many of Monterrey’s early and current industries are spin-offs of the beer business founded by the Garza-Sadas. For instance, glass bottles, steel and board manufacturing were and still are associated with beer.

The industrial destiny of Monterrey emerged more than 100 years ago. Infrastructure projects have been a steady effort to respond to new opportunities in manufacturing. Recently, the United Nations Economic Development Conference was proudly and successfully hosted by the city of Monterrey. The city’s efficient transportation, modern highways, telecommunications, world-class educational institutions such as Monterrey Institute of Technology (Mexico’s equivalent to MIT), have been steadily developed for more than a century as part of the city’s industrial infrastructure.

As a result of NAFTA, economic integration has increased at a fast rate. Monterrey has much to gain from it. According to the Fortune magazine ranking of best foreign cities in which to conduct business, Monterrey is the leading Latin Americancity. The 3.5 million people in its metropolitan area are just 125 miles from the Texas border. Texas is Mexico’s largest state trading partner, with more than $50 billion dollars in business activity being transacted across the border.

Hylsamex. One of the most important steel companies in Mexico, Hylsamex produces several types of steel and operates a steel service center. In 2001, Hylsamex generated revenue of U.S. $1.2 billion and employed nearly 6,000 workers.

Nemak S.A. A joint venture between Grupo Alfa and Ford Motor Co., Nemak operates the largest cylinder head and engine block casting facility in the Americas. Recently, Nemak and Irving, Texas-based IMCO Recycling partnered to build a new processing plant. The joint venture is planning to equip the Monterrey plant with molten metal delivery capability. The new facility is projected to be completed before year’s end. IMCO is one of the world’s largest recyclers of scrap aluminum and zinc. Current Nemak production stands at 12.4 million cylinders heads and 1.5 million engine blocks.

As is the case with many Mexican cities, Monterrey has been confronted with the challenges of managing urban refuse and solid waste. It is estimated that close to 4,000 metric tons of solid waste are generated daily in the Monterrey metropolitan area. The per capita generation of urban refuse is greater than 2 pounds per person per day, with an average organic content of about 45 percent. Of all the solid waste generated, approximately 82 percent is collected and less than 20 percent is disposed of under sanitary conditions.

During the June 1998 U.S.-Mexico Border State Governors’ Summit, an initiative was developed to enhance and support the recycling industry. Later the same year, the State of Nuevo Leon Recycling Coalition came into existence. The coalition is made up of more than 300 companies and institutions.

The membership is comprised mainly of companies such as Vitro, Nemak, Copamex, Simeprodeso, Cepasel, Propasa, Smurfit, Titan, Grupo Simplex, Reciclajes de Monterrey, plus government agencies and collectors and processors of recycled materials. According to the Recycling Coalition, all combined imported and domestic scrap consumed in Monterrey in 2001 amounted to more than 1.6 million metric tons.