Business is Business.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
True to his word, President Donald Trump has launched his plan to build a “big, beautiful, powerful” wall to separate the U.S. from its third biggest trading partner, Mexico. And he has determined that it will be Mexico that will end up paying the lion’s share of the construction costs, which could range from $12 billion (Trump’s latest estimate) to $31 billion (industry estimates).
Naturally, Mexico has other ideas. The problem for President Enrique Peña Nieto is that his scandal-tarnished administration currently enjoys a public approval rating of just 9%. The more he dithers and procrastinates in his standoff with Trump, the faster it plummets.
But on Thursday, Trump gave him a rare helping hand. By insisting that next week’s scheduled meeting on NAFTA renegotiation should only go ahead if Peña Nieto agrees beforehand to stump up cash for the wall, Trump gifted him the perfect justification for withdrawing from the meeting, as Mexican politicians and pundits have been urging him to for days, without losing too much face.
Souring Relations
Bilateral relations between the U.S. and Mexico have curdled to their worst point in decades. With Canada siding with the U.S. in defense of its own national interests, Mexico is all of a sudden out on a limb. NAFTA, which helped transform Mexico into a liberalized, low-cost industrial powerhouse while shackling its economic fate to its northern neighbors, is in tatters.
Now Mexico finds itself in an unenviable (but not quite impossible) negotiating position, since roughly 80% of its exports go to the US, (representing around 13% of US imports, or amounting to $295 billion in 2015).
And the new U.S. government seems determined to plow ahead with plans to transform the border into one of the longest man-made walls in history. Trump’s dream of an unbroken barrier — man made and natural — stretching from the Pacific to the Gulf Coast will probably emulate the design of Israel’s much smaller partition wall, which nonetheless took two years to build. For most companies and communities on either side of the US-Mexican border, it will inevitably mean lots of disruption and less business.
The Right Place at the Right Time
But not all Mexican companies are necessarily opposed. One of the biggest potential beneficiaries of the wall project is Mexico’s Cemex. The largest cement maker in the Americas and the world’s second-largest cement and building materials producer, Cemex would be strongly positioned to profit from such a large construction project, according to a report published before the elections by Sanford C. Bernstein & Co, which called the wall “a huge opportunity for those companies involved in its construction.”
“Despite arguments concerning which government will pay for construction, the large quantities of materials required may necessitate procurement from both sides of the border,” the report said.
In other words, the prospects for pork are likely to be outstanding.
Richard Steer, the chairman of global construction consultants Gleeds, warns that the wall would be one of the most difficult and expensive construction projects ever undertaken due to the difficulty of bringing so many heavy materials to remote regions. It will require roads to be built just to get access to areas in which the international boundary crosses desert or mountain terrain.
Cemex has cement operations on both sides of the border. And a lot of cement will be needed. According to Bloomberg, building the wall would require about 7 million cubic meters of concrete, which could cost more than $700 million at current prices. That’s based on the assumption that the structure would extend 1,000 miles, rise 40 feet and reach seven feet underground, and have a thickness of 10 inches.
Business Is Business
For Cemex, the U.S. is a big market, accounting for 20% of its revenues in the last quarter. Over the past 12 months the company has seen its shares rise 130%, dovetailing almost perfectly with the rise of candidate Trump. In the last week alone its stock has surged 17% on speculation, as yet unconfirmed, that it will participate in the construction of the wall.
Cemix is also expected to benefit handsomely from Trump’s plans to lavish up to half a trillion dollars on roads, bridges, tunnels and airports. It’s a dramatic turn of events for a company that came perilously close to bankruptcy in the wake of the global financial crisis.
Ironically, its fortunes may now rest with a U.S. administration that is determined to rebalance its relations with Mexico, to Mexico’s detriment. As such, agreeing to participate in Trump’s wall project is not without risks, especially given the strength of opposition to the project at home.
“It would be shameful for Mexican companies to participate,” says Manuel Bartlett, a senator with Mexico’s Worker’s Party. “They would be putting money before national interest.”
But business is business, and for multinational corporations with operations and investors spanning the globe, self-interest invariably trumps national loyalty — unless, of course, they’re given little choice in the matter. By Don Quijones, Raging Bull-Shit.
It’s not all NAFTA’s fault, however. Read… Mauled by Peso Crash & Inflation, Mexico to Cut its Dependence on US Food Producers
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51 comments for “This Mexican Company Could Make a Killing from Trump’s Policies”
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“NAFTA, which helped transform Mexico into a liberalized, low-cost industrial powerhouse…”
“Liberalized” ??
One of the most corrupt, crime-ridden illegal drug, gang dominated regimes on earth.
Isn’t there more to life than business?
Yeah, more business
The Tragic answer to that question…is that for many many Corporations~Corrupt Politicians&People~Financial Entities et al….Life is basically the “Business of Money”…. because it simply generates Enormous POWER..!
“…One of the most corrupt, crime-ridden illegal drug, gang dominated regimes on earth…”
Fits both the U.S. and Mexico (I consider the dark elements in the FBI, CIA, military, SEC, Treasury, etc. as akin to gangs).
Drain the swamp, Donald!
Right, a guy who owned casinos in New Jersey is going to clean up corruption.
Trump ditched the NJ casino, he realized the corruption was too great in spite of NJ being a port city next to gambling free NY and on the beach, the man knows his limitations, NJ is another sanctuary state for like 200 years, time to clean up
Grow up P45 is a third generation connect “Family man”
He built it with and for them.
He sees corruption, as a normal, perfectly acceptable, part of life. He has never been caught at it, as he was taught how to do it, from the time he was toilet trained.
Dont like what, I say research the family history
Brothel owner, NYC construction, 2 generation’s. You don’t survive, and make big money in those industry’s, in those places, without the wright “Family” connection’s.
He’s not the first “Family” connected president.
Maybe he will end up like the last one.
“One of the most corrupt, crime-ridden illegal drug, gang dominated regimes on earth.”
It appears to me, that’s a valid definition for liberalized. There might be a better word though.
Exactly my thinking. That pretty much fits in the definition of “liberalized”.
Trump is sticking to his promises. Gotta give him that one. I suppose Obama did too. He just never specifically promised much instead letting it all ride on nebulous concepts like “hope” and “change”.
Obama economy, full employment, huge stock market returns, strong dollar, recovered housing; 8 years of unparalleled prosperity; can’t complain.
Growth under 3%, not many times has that happened? Might consider that’s off a huge collapse too, so a weak recovery could be one conclusion.
Oh, and debt has doubled, for the price of admission.
Not that going into the ME in the 1st place was a bright idea b/c it wasn’t, but knowing now about the value of fake news that’s hindsight. My guess is fake news sells globalism as well as many other concepts, so it’s a handy tool.
As Chicken said, YYYUUuuugge stock market returns based on doubling the USA Debt in 8 short years, that debt will be “paid back” with a huger stock market crash. All in good time . . . .
Recovered housing ? Just who bought all of the foreclosed houses and is renting them back to prior owners at huge rent increase rates ?
EIGHT YEARS OF UNPARALLED PROSPERITY ? Bunkum, total bunkum. GOOD PAYING FULL-TIME JOBS HAVE BEEN LOST and replaced with low-skill low-wage part-time jobs. That’s a fact, Jack.
Heck, truth be told, the job “gains” under the Big O just barely kept up with population growth over the same eight years. NOT GROWTH AT ALL ! !
http://ijr.com/2014/09/175800-obamas-economic-performance-outshining-reagans/
And lest we forget, the amount of income gains claimed by the top 5% skyrocketed under the Big O, after doing almost as well under the Baby Bush.
http://www.oftwominds.com/blogjan17/neocon-neolib1-17.html
As for eight years of “unparalleled prosperity” you must not see the same economic history as the rest of us see : Any good decade since WWII was better than the last eight years under the Big O. Any Good Decade ! !
Prosperity ? 95 million workers out of the job force, and 47 million on food stamps ? Me thinks not. Unparalleled ? Even if your claim for prosperity is true ( and it is not true ) any prosperous decade since WWII was better by half than the fake Obama prosperity.
Obama supporters live in a propaganda world that would make the Donald envious.
LATE EDIT : The huge stock market gains did not accrue — none of them — to the lower 50% who own no stocks at all. The Big O really cared about wage workers like any good Democrat would. LOL !
SnowieGeorgie
Your out of your mind – seek help
“Full Employment” on what measure?
Record # of folks out of the workforce and who have quit looking for jobs.
Full-time jobs replaced by the “waitress and bartender” recovery.
“Record stock market returns” due to ZIRP and QE.
“Unparalleled prosperity” for the top 0.1% (who own all the financial assets) OR the bottom 10% (who got a lot more free sh*t).
Based on Nicko’s analysis, if we can just get a few million more people to get discouraged and quit looking for work, we’ll have negative unemployment.
Hooray!!
Well, not exactly. First he said Mexico was going to pay for the wall and now he says he’ll just send them to a collection agency- have fun with that. But there is another solution hiding in existing law. Anyone standing in line at the post office has seen the cheery draft registration cards prominently displayed: “Men- It’s Easy, It’s Fast- It’s the Law!”- and if you read the fine print, there is a $250,000 fine , five years in the slammer- or BOTH for not registering- and get this: it applies to ALL persons living here, legal or otherwise. So just round them up, fine them $250,000 apiece, and have them work on the wall for 5 years while they are at it. It’s easy, fast- and it’s the law
Its a uniquely interesting time to just be waking up in america.
Its the look on their faces after they buy the entire package just to get the best picture?
WALL ? ? ? ?
Even though Mr. Trump says “wall” incessantly, I have always assumed — on his behalf — that a sensible fence would be built.
Here’s an example :
http://gizmodo.com/saudi-arabia-is-building-a-600-mile-wall-along-the-iraq-1685196732
http://www.haaretz.com/middle-east-news/1.614446
Israel has done equally well with its barrier, as I fully expect the USA and Texas to do. Forty foot ladder against a 30 foot wall ?
Nonsense, who expects the wall ( or fence, whatever ) to not be monitored, electronically and by humans as well.
SnowieGeorgie
The thing is we already got a “fence” along parts of the border.
Yes, I knew that, and I assumed that the fence technology used ( not the greatest ) would be improved — at the cost of more steel and some electronics, and not at the cost of millions and millions of cubic yards of concrete.
And lots of jobs ( a la Keystone ) — both construction jobs, plus additional border staff to monitor the fence.
If you put a fence around your property with large gaps in it ( like the USA has done ) dogs will still intrude to litter your lawn, teenagers will still use the wooded part of your property for weekend drinking ( my problem ) and burglars will still be able to come and go through the gaps as well. I have alarmed our condo for that eventuality.
I am not perfectly secure, but relatively so.
A fence with gaps is no fence at all . . .
SnowieGeorgie
now we know , Snowie owns so much territory, it can’t be patrolled…
You can’t impress Trump supporters with a fence only. It will be a yuuuuge disappointment.
@doug
No, it’s actually quite small. But I cannot see all four corners of it, at night, from my only 40 foot guard tower.
I have a bit of gloom & doomer in me, and also just a small portion of prepper as well.
You buy auto and home insurance before the car crash and before the house fire.
Not after.
( Well – – – you can buy ObamaCare after you get some expensive disease. Which must mean it is not insurance. )
Hard times are coming my friend. Be prepared.
Georgie
Snowie….simply send all the Dogs that have so brazenly Littered your lawn,after all those misunderstood drunk Teens applying Uric acid to help promote growth in your wooded areas…..
5 or 10 miles of fence here and there with miles of open spaces in between; mostly where towns are located on each side of the border.
Just find the end of it and c’mon in! Wolf, I live in AZ near the border
Couple of things:
– my comment was in response to SnowieGeorge saying we need a “sensible fence”
– I said we already got a fence … about 700 miles of fence so far … and it’s not doing a great job.
– People do as you say … and quite a few die in the desert (a brutal natural barrier).
Desperate people do stupid thing’s.
Would a fence across the desert, not save some of those lives, so be a humane thing to do????????
People should NOT just be able to walk across land borders.
It has to be concrete: a fence would need to be imported from China. :)
I predict that pole vaulting will soon become increasingly popular sport in Mexico
Border walls/fences tend to develop security zones behind them over time including, other fences, Land mines, Nasty dogs, various electronic detection and deterrent system’s.
Most walls fences now also contain monitoring than tells you when it is being interfered with or potential intruders are near.
The completion of the long overdue barrier will not resolve all issues.
It will however control them and funnel them to other areas that are easier to control.
This should have been done 140 years ago.
US Mexico smuggling/ border breaching, may become what it should have been years ago, the profession, of a few, very professional people.
There is something lacking in Spicers math when he said a 20% tax on the 50 million deficit would give 10 million a year towards the cost of building the wall.
How do you tax a deficit? 20.% tax on imports of 531 million is a little more than 10 million.
And since there is around 40% american content in those imports is that deducted first before tax . Very confusing Sean.
A brutal gross tax on Mexico’s exports to pay for a wall to exclude illegal entry to the U.S. is not well thought out.
Eventually, what will be the legitimate humanitarian concern arising from taking away Mexican jobs and preventing those workers from following the jobs?
Can’t way be found to keep humanity employed? Isn’t there more to this problem than geographical location?
For example: http://wolfstreet.com/2016/10/25/why-jobs-arent-coming-back/
At one time in the USA there was an idea called the rule of law.
People followed the rule of law and the country grew and prospered.
Then some left wing wing nuts decided that the rule of law didn’t apply anymore and decided not to enforce it.
They also decided that certain laws only applied to certain people in the country and not to others.
Humanity has nothing to do with it.
People who enter any country without the legal basis to do it are illegal aliens. They are breaking the law. It is simple as that.
Economic migrants who enter the USA without valid work visas and work are in the USA illegally.
Those who aid and abet those people are also breaking the law.
Those in elected positions in counties, cities, states, and law enforcement are also breaking the law if the do not enforce the laws on the books.
The USA would never be in the position it is right now if those laws had been enforced. Both parties are (demonrats and repukes) are to blame for the situation.
Demonrats want the votes and the repukes along with all those high and mighty Hollywood types want cheap labor.
As a result of inaction and non-enforcement of the law the wall is a default solution to the problem.
There are lots of ways to pay for the wall without hitting those not involved with Mexico:
1. Slap an exit/entry fee on people crossing the border. Say US$5 per entry/exit.
2. Slap a fee on exchanging US Dollars for Mexican pesos.
3. Slap a fee on anyone sending money to Mexico.
4. Slap a fee on any currency being brought across the border.
Enforce the laws on the books and bring back the rule of law.
Simple.
Cemex had all the cement business in south Florida, I saw their trucks all the time and drove past one of its plants regularly.
I don’t mind you deleting my comments but please don’t edit them, because then they are yours not mine.
Choice was to delete the whole comment or part of it. I deleted part of it because the rest was OK. The remainder was not edited.
Wolf I sympathize with you – not to fault Petunia, or anyone else, for that matter.
Commenters have lost there voices on Reuters and other websites because the commentary simply got out of hand – ad hominem, hostile, and shilling.
I hope to God we don’t lose it here on Wolf Street. For my part, I’ll try not to complain if you take me down (again).
I am going to guess that the vast majority of exports to the USA from Mexico are actually products produced by American companies in Mexico. Ford builds lots of cars in Mexico for the American market.
So American companies are going to pay (at least a significant portion) for the wall through reduced profit margins. Not that I care much about them.
Will Trump put his name on the wall? In bold, gold lettering?
I thought the article was going to be about acetelyne and oxygen suppliers. With my ‘b tanks’, small enough to fit in a backpack or on the back of a motorcycle, I could burn through a wall section in just a few minutes. With my home setup I have cut steel 2″ thick. 1/4 inch mild steel panels is pretty much child’s play.
I am sure any Mexican smuggler can learn a few tips from any welder. It isn’t rocket science. It’s called oxidation….made rapid by the application of heat.
The wall idea is so incredibly stupid and vulnerable it is unbelieveable. What is believeable is that such an idiotic idea was/is being dreamed up by well-fed insiders who know absolutely nothing about practical skills, trades, and human motivation based on desperation.
The Wall will slow people down for a few minutes, and that is all it will do. For it to be effective you would need vast rolls of razor wire, lots of patrols, perhaps a mine field or two, and a ‘shoot on sight’ directive. Is that what it will come to? Is that what the US has evolved into being?
No, build the Wall. Americans will pay for it, and everyone knows it. It will not cost the paltry 12-14 billion dollars, but most likely double those figures. Then, when it is proved over and over that it does not work, it will forever be known as Trump’s Folly. It will be a symbol of small-minded thinking by ignorant leadership.
You want to stop illegal immigration? Go after the companies and corporations who hire them. But no, Trumpers and Dems would never do something so obvious. Levy fines on the offending corporations and use the resultant money for education and for augmenting poverty….the drivers of illegal emigration to the US in the first place. But no, that would affect the profits of their friends; the insiders who manipulate, obfuscate, and ultimately control the outcomes for their own benefit.
In Canada we have an institution called Hockey Night in Canada. Between the first and second periods they have a bombastic redneck ex-coach who pontificates and stirs the pot. This is what he says about immigrants and immigrant labour. (You have to imagine him in a loud suit and a bow tie, and yelling at the camera)….
10. On his real thoughts about immigrants to Canada:
“When I come into an airport at 2am, guess who takes my ticket? They work hard, and they’re alright in my book.”
7. On lessons learned in life:
“Never forget a friend. And never forget an enemy.”
Alas, the new US direction/policy seems to be based on forgetting who their friends were, and creating enemies. This will not turn out well!!
regards
The wall is designed to appease scared old people in rural Nebraska, and provide fat contracting opportunities for crony corporations.
It won’t be effective without a massive and labor-intensive ongoing maintenance and monitoring operation. Maybe Putin can hook Trump up with the East Germans for security consulting.
Glad you were never in the physical security business.
Any physical protection barrier is a system made up of varying levels of intrusion detection and denial.
For example, on the east coast of South Korea they had (have??) a nifty system to detect those idiot North Koreans spies/special force types trying to seek into the South.
Yeah, it was really ‘sofysticaated’: simple barbed wire, raked sand, and little piles of stone along the beaches with pillboxes and small outposts.
It worked. Those that tried to get in were more motivated and better equipped than a bunch of people trying to get into the USA.
Are people in the USA so simple and uneducated to think that that the wall, if ever built, would be a ‘dumb’ system…………
Yep.
In harmony with Trump’s executive order on the pipelines, the concrete source will be a US company.
A thousand miles of Banksy. Be still my beating heart.
It’s more traditional for impoverished immigrants to come in from the east in wooden boats anyway.
Cement only in very populated areas. Little left to cover.
For the rest of it, in open spaces :
-Dirt roads to detect footsteps.
-Radar systems, infra & acoustic detectors, to prevent
smugglers from crossing the border.
All behind a very tall barb wire fence (single / double ).
A lot of money for defense contractors. Little for cement
and steel mfg.
The don should know better, and write the truth.
The Wall will, be on the Mexican border.
Because Mexico will not build one, on its southern border.
The Targets of the wall, are not predominantly Mexican’s. They are the people from points south, who transit Mexico. And the smaller Mexican drug smugglers.
Most big drug operations are using, Air, Marine, or tunnels.
The Wall will make it easier to detect the tunnels. As the state can start clearing a security zone in tunneling areas beside the wall.
Wall is just a big gravytrain for cronies. Want to really change relations with Mexico? End the freaking Drug War. No more tax free profits.
I’m completely in favor of the Trump Great Wall. But it should be built around the White House and Trump Tower and consist of 40 foot high mirrors facing inward. With gold frames around them of course.
Wait a minute— such a wall already exists.
Manuel Bartlett is wrong .. I will not be about money, of for the money, the US is hell bent on a wall & what are good neighbors for but to help each other.
The wall needs to be painted .. by street artists .. street artists from all over the world .. when completed it will be worth a fortune in art & story telling. The wall needs to reflect the story of its conception & progress .. of the people it was built for, of the collective yearning for freedom of the may & diverse peoples of the world, through out the ages & much more.
google street art images & see the potential of the Mexican / US wall.
The Mexican-born Community in Australia.
The Census in 2011 recorded 3255 Mexican-born people in Australia, an increase of 80.5% from 2006 Census.
Q:
What exactly is wrong with Australia that migration from Mexico is so abysmal ?
Come to Australia, Australia is a good country, there is a glut of empty housing & we need more Catholics here, Australia is filled with Atheists .. Jews .. Muslims .. some Buddhists .. & a few other stragglers … but the Catholic representation is dwindling .
Come to Australia.
Evangelical Protestant Christians are the fastest growing religion in Mexico.Only old people remain Catholic,the majority don’t give a fuck about religion.