Bimbo buys Sara Lee bakery division!

I'm a little late posting this, but last week Bimbo, Mexico's largest food company, acquired the bakery unit of Sara Lee.  This is huge news.  Bimbo has been buying up smaller bakeries for awhile now, but the purchase of Sara Lee's bakery division makes Bimbo a force to reckon with globally. 

Some details of the deal:

• Grupo Bimbo will pay Sara Lee $959 million USD for its bakery division
• All of Sara Lee bakery units 13,000 employees will be transferred over to Bimbo and it is reported that no domestic employees will lose their jobs.
• The deal includes 41 US plants and the rights to the Sara Lee brand in fresh baked goods globally, excluding Western Europe, Australia and New Zealand.
• Bimbo's 2009 revenue was $8.6 billion USD
• The deal is expected to finalize in the first part of 2011

Mexico's Trade Agreements: Is Brazil Next??

As Mexico has started talking to Brazil about a possible trade agreement once again, I thought I would round up some interesting articles about Mexico trade that I've read recently.

Israel, Austria...Mexico? from The Economist

Mexico, Brazil Start Trade Negotiations from BusinessWeek

Texas Reaches a Milestone in Trade with Mexico from The Houston Chronicle

Cuba and Mexico Sign an Agreement to Boost Bilateral Trade from the Cuba News Agency

It's a very encouraging sign to see Mexico in talks with Brazil and Cuba for trade agreements.  Mexico is one of the countries with the most trade agreements in the world.  As Mexico becomes a bigger player in the international markets with its exports, it will certainly help to boost the Mexican economy and hopefully lead to more job creation. 

New Border Crossing Opens in Mexico

The new border crossing is a 4 lane, $70 million dollar project, which was built to help alleviate congestion. 

The crossing is officially called "San Luis Rio Colorado II" and is located in San Luis Rio (the Mexican State of Sonora) and will connect to Yuma, Arizona. 

It is estimated that 220,000 vehicles will use the new border crossing on a daily basis.

The new port is approximately 5 miles to the east of the original "San Luis Rio Colorado" border crossing. 

Guess who's coming to Mexico? Payless Shoes!

Payless Shoes announced this week that it will begin expansion into Mexico late next year by partnering with Grupo Axo, based out of Mexico City. 

Payless is looking to expand its international footprint and fill a need for low cost, fashionable shoes.  In addition to opening stores in Mexico, the company also plans to open in Indonesia, Malaysia and Singapore.

The partnership will open 41 stores in the next 3 years, hoping to open around 300 over the long term. Grupo Axo is a good choice for Payless as they currently represent some very popular brands in Mexico:   Benetton, Brooks Brothers, Brunelo Cucinelli, Coach, Emporio Armani, Etro, Guess, Marc Jacobs, Rapsodia, Thomas Pink and Tommy Hilfiger.

20 year old student named police chief of Ciudad Juarez

It's an area that has been plagued by drug violence, referred to numerous times as a war zone, and been placed on the US State Department's "do not go" lists...Chihuahua, Mexico (Northern state bordering Texas)

This morning I came across a story that made me do a double take when I read the headline - Student, 20, named police chief of violent Mexican border town Guadalupe.  Marisol Valles is studying criminology and was apparently the only one brave enough to accept this position. 

Read the story here:
http://www.heraldsun.com.au/news/world/student-20-named-police-chief-of-violent-mexican-border-town-guadalupe/story-e6frf7lf-1225941311416 

Banorte looking to buy Banco Ixe

It seems that the last fully owned Mexican bank, Banorte, is looking to purchase Banco Ixe.  While nothing is set in stone yet, the purchase would make Banorte the third largest bank in Mexico after Citibank/Banamex and BBVA Bancomer.

Banco Ixe is a small "boutique" type bank that has seen tremendous success in Mexico.  It has set itself apart by offering a unique customer service experience, treating each customer with respect and specialized attention.

Banorte has had its share of ups and downs this year, including the credit it lent to failed airline, Mexicana de Aviacion.  Banorte is also considering expansion into the United States. 

Banorte is headquarted in Monterrey, Nuevo Leon.

Update on the Mexicana bankruptcy

Several people have been wondering what the current status of the Mexicana airlines situation is, so I thought I'd give a brief update.

• A judge granted Mexicana bankruptcy protection in early September
• The majority of Mexicana shares were purchased by Tenedora K (95% stake)
• Several other airlines are offering discounts to passengers who had purchased tickets on Mexicana
• Mexicana will resume flying in December, at 50% of its original capacity
• Operations will be centered around other airlines in its group - Click and Link

Latin America article roundup



Picture courtesy of The Economist

 With many countries in Latin America celebrating their independence this month, there have been a number of great articles about the current state of affairs in Latin American business/politics and what the future holds. 

The Economist - Nobody's Backyard

Latin Trade - Google Strikes Gold in Latin America

Financial Times - Want a job?  Emerging markets are hiring

FAA Downgrades Mexico's Air Safety Rating

With the recent bankruptcy of Mexicana, Mexico and it's airlines have been in the news quite a bit recently.  A story that flew more under the radar is the fact that the Federal Aviation Administration (or FAA) recently downgraded Mexico's Air Safety rating. 

What does that mean for airlines and passengers flying in and out of Mexico?

• US carriers have suspended code sharing with Mexican partners (for example, if you were flying on Aeromexico and had frequent flyer status with Delta, you used to get miles for your Aeromexico flight.  Not anymore.)

• Additional routes to Mexico will not be added by US carriers.

• Travel between the two countries will be even more limited due to the Mexicana problem and the decreased routes.

It's important to note that the regulations are based on international air safety standards and not US based standards.

Mexico is currently taking steps to regain its air safety rating, so hopefully this will a temporary setback.

Gourmet Show - Mexico City - September 2- 4

For all of you gourmet food lovers in Mexico City, this weekend's Gourmet Show is the event for you!

The Gourmet Show will be held at the World Trade Center in Colonia del Valle, September 2-4 from 11am to 8pm.  Tickets are available for $150 MXN each day (or send me a message for an invite).

Some of the conferences available:
-"Coffee in the Kitchen"
-"Truffles Laurent Trouble Style"
-"Get to know the difference between regular and organic food"
-"Salads and Dressings: A fresh alternative"
-"Fine European Pastry Making"
-"Mexican Cheeses"

This show is ideal for chefs, wine enthusiasts, foodies, sommeliers, coffee lovers, bartenders, restaurant owners, and everyone passionate about food!

I will be exhibiting at the show (booth 610) the following brands:

Robert Rothschild Farms
Rain Republic Chocolate
Sonoma Gourmet
Biscotea
Kiwa chips
De Rossetti Olive Oils
...and more

Tell your friends, neighbors, anyone who might be interested.  It is going to be a great event!

Pink Women Only Taxis in Mexico City

A few years ago, women and children cars in the metro were introduced.  If you've ever been on the metro in Mexico City in rush hour, you'll know why they did this.  Women were constantly being harrassed, touched, and ogled in the mixed metro cars, so the government provided the women and children only cars as a way to make women feel safer.

They also implemented what are called "Athena" buses.  The buses look like normal city buses except they have pink writing on the side that say "Women and Children".

In September, Mexico City will roll out a fleet of pink taxis for women.  The taxis will charge the same fares as regular taxis, and a number of women taxistas are currently undergoing training to prepare for the launch. 

This is not a totally new concept, as pink taxis have been running in the state of Puebla for some time.  It will be interesting to see if this catches on and becomes the most popular transportation choice for women in Mexico City. 

Mexico Proposes Tougher Limits On Cash Transactions

In an effort to curb money laundering, President Felipe Calderon is proposing tough new laws that prohibit cash transactions for items exceding $100,000 MXN (equivalent $7,700 USD). 

It is not uncommon for drug lords to spend large amounts of cash when purchasing homes, cars, and other luxury items.  In fact, around 75% of transactions in Mexico are cash transactions.

One possible problem seen is that the limit on dollar and cash transactions will hurt legitimate businesses, especially near the border where transactions are conducted in both currencies. 

The Association of Bankers in Mexico has also proposed a "black list" of suspected criminals that will allow them to verify identities before opening up a bank accounts.  While this seems like a great idea, how will they account for the fact that many criminals use several aliases (and have "official ID" to back it up)???

Mexico's trade deficit reaches $1.04 Billion USD

Interesting article in the WSJ regarding Mexico's trade deficit...

WSJ article - Mexico trade deficit

Mexico City going green: Law prohibiting plastic bags in effect

As of today, Mexico City supermarkets will no longer be allowed to give away plastic bags. 

The law, proposed in 2009, took effect last night at midnight.  The Mexican plastics industry had been lobbying for ammendments to the law since last March, but none of them were passed.

Penalities for giving away non-biodegradable bags include jail time and heavy fines (up to $118,000 USD).  It remains to be seen how strictly this new law will be enforced. 

Mexico to impose tariffs on 99 US products

In retaliation over the trucking dispute, Mexico has decided to impose tariffs on 99 goods from the US.  The US was supposed to have proposed a solution to the trucking issue, which has banned Mexican trucks from crossing the border to deliver goods in the US.  According to the rules established by NAFTA in 1994, Mexico should be allowed to cross the border to deliver goods, but the US claims that Mexican trucks did not meet safety standards.  The pilot program that was to let Mexican trucks in the US, was cancelled by a provision in a bill passed by US Congress last year.

Some of the items that will be subject to tariff:

US Pork

Grapefruit

Pistachios

Cheese

Chewing Gum

Ketchup

The official list of goods will be posted in the next few days.  This is a huge blow to US manufacturers who export these items and the total financial impact could reach over $2.5 billion USD. 

Mexico News in English

While it is always preferable to learn the language of the country you are doing business in or living in, not everyone has the desire or the time.  Below is a popular list of English language publications in Mexico:

The Baja Times

The Gringo Gazette

The Guadalajara Reporter

The Mexico City News

Focus on Mexico News

Playa Maya News

Check 'em out!

General Motors to invest big bucks in Mexico plant

By Paul Kiernan Of DOW JONES NEWSWIRES MEXICO CITY
(Dow Jones)--U.S. automobile giant General Motors Co. said Tuesday it plans to invest close to $500 million in its Ramos Arizpe plant in northern Mexico to produce a new line of engines as well as a new vehicle.




Of that amount, the company is investing $284 million to manufacture eight-cylinder engines with spark-ignition direct-injection technology, known as SIDI, Grace Lieblein, chief executive of GM de Mexico, said at an event.



"We estimate that these technologies allow for a 9% improvement in fuel efficiency from current engines," Lieblein said, adding that the investment will directly create 390 jobs in Coahuila state, where Ramos Arizpe is located.



Another $215 million will go toward upgrading the factory's production lines to build a new vehicle for the domestic and international markets, she said, noting that the investment will be key to maintaining 400 jobs.



Assembly of the vehicle, which wasn't named, is set to begin in the last quarter of 2011. GM plans for it to "give long-term viability to this plant by gradually substituting some production volumes."



Lieblein said General Motors has invested $4.1 billion in Mexico over the last four years.

Mexicana Airlines Files for Bankruptcy

The biggest news this week in the Mexican business world is Mexicana airlines filing for bankruptcy.   Mexicana has stated that this should not affect currently scheduled flights, but Several flights to the US have already been cancelled including 4 daily flights between Mexico City and Los Angeles. 

The decision to file for bankruptcy comes after the unions failed to agree to the new cost-saving measures that Mexicana had proposed.  Mexicana also had debts which exceeded $1 billion USD, due in part to the drop in tourism last year caused by the swine flu. 

According to Mexicana's president the average salary of a Mexicana pilot is around $220,000 USD/year.  The average salary for a flight attendant is around $53,000 USD/year.  These are considered very, very good salaries in Mexico.  Just to give you an idea, the average minimum wage per day in Mexico is around $4.50 USD/day!!!

Mexicana has two affiliate carriers which will not be affected by the bankruptcy - MexicanaLink and MexicanaClick. 

It will be interesting to see how other carriers step in and handle the passengers who use to travel exclusively on Mexicana.

Televisa sells off stake in Volaris

Article courtesy of Poder360

Inbursa and Televisa Sell Off Volaris

The Slim family bank and the television company sell their shares of airline, but Interjet remains out

Inbursa and Televisa, which up until last Fri. owned 50% of Volaris airline stocks, sold their shares to a new group of Mexican investors. Grupo Televisa said it received $80.6 million for its 25% of shares, while Inbursa has made no statement. Interjet and its offer of $360 million for the entire airline remained outside the purchase and sale of the stocks. Among Volaris's owners are Maria Cristina Kriete Avila (a relative of Roberto Kriete of TACA, with 25% of Volaris), Emilio Diez Barrozo Azcarraga and Ignacio Guerra. These investors joined private capital fund Indigo Partners LCC, which specialize in transportation and aviation, to make the purchase.

----

Note: Volaris is a low cost airline (similiar to Southwest) in Mexico.  Interjet is Volaris's main competitor.  Inbursa is a bank owned by Carlos Slim.







Read more: http://www.poder360.com/dailynews_detail.php?blurbid=8206#ixzz0uzU8eBW8

Mexico and South Korea to restart Free Trade Agreement talks

Mexico and South Korea had initiated free trade agreement talks back in 2007, but the talks were put on hold in 2008 because Mexico was worried about a possible trade imbalance.  Felipe Calderon and

South Korean President Lee Myung-bak visited Mexico earlier this month to discuss a number of issues, trade being one of them.

A free trade agreement between South Korea and Mexico would be a huge boost for trade between the two countries.  Many people are unaware that South Korea is actually Mexico's 6th largest trading partner.  Trade between Mexico and Korea has tripled since 2001, and reached $11.4 billion in 2009.

Many Mexican business owners opose a free trade agreement with South Korea because they say more analysis needs to be done to examine how the agreement will negatively impact Mexican businesses.
South Korea hopes to have some kind of agreement by the end of the year, but it remains to be seen whether both countries will make a decision by then.