Forecast growth by Mexicos steel industry could be at
risk if the nations new administration does not adopt a
more aggressive response to the swelling flood of low-priced
imports, industry executives say.
"If Mexico is to grow, Mexico is
going to have to grow through the industrial sector, and the
industrial sector needs a policy for promoting local industry
to the detriment of exports from China or (South) Korea,"
Ternium México SA de CV chief executive officer
Máximo Vedoya said at AMMs 18th annual
Mexican Steel Forum in Monterrey, Mexico.
"We need to see the Mexican
steel industry not lose its competitiveness, but rather be more
competitive every day," said Teodoro González Garza,
chief executive officer of Mexican tubemaker Tubacero SA de CV.
"We dont want protection. What we want is an equal
Mexicos trade deficit with
China has been growing rapidly in recent years, Vedoya said,
with Mexico importing goods valued at $52 billion from China in
2011 vs. exports of $6 billion to the Asian nation. And Mexico
exported just $1 billion worth of goods to Korea in 2011, a
fraction of the $14 billion worth of Korean products that hit
Mexican shores. Metal products and finished goods account for a
major part of the trade deficit, Vedoya said.
"That is very bad, but its
even worse when you break it down to see what Mexico imports
from China. Mexico exports to China raw materialsiron
ore, copper and other mineralsand imports manufactured,
value-added goods (that require) employment, innovation,"
Vedoya said. "I think the new administration is aware of this,
and I think the new government knows this is a problem."
Mexican president Enrique
Peña Nieto took office in late 2012, and most industry
participants say its too early to tell what kind of
policies the new administration will support. However, early
indications suggest that Peña Nietos government
could be more aggressive when it comes to combating low-priced
steel imports, executives said, giving some hope that relief
could be in sight.
"Its still very recent,
but what we see is a receptiveness and an openness for dialogue
(from the new government). We feel this is very positive,"
Guillermo Rey, chief marketing manager for ArcelorMittal
Mexico, said during a panel discussion at the AMM
González Garza agreed.
"We have met with the Ministry of the Economy ... and
theyre open, theyre listening. We are going to
follow up and we expect ... that this administration will have
a much better openness on commercial terms," he said.
More robust trade
lawsincluding ones that would allow a faster response to
low-priced importsis one key policy item on most Mexican
steelmakers agendas under the new administration.
"I would say that we need not
only as a government, but as steel (associations), to be much
faster, more agile on researching unfair practices on certain
imports. Were very slow; we generally begin to react when
were already in the graveyard. We must be much faster,"
González Garza said.
But stronger, more-proactive
trade laws arent the only possible solution to low-priced
imports. Other possibilities include easing credit facilities
for Mexican companies and implementing some kind of "Buy
Mexican" provision for infrastructure projects, executives
"Why not include domestic
content in infrastructure, much like Buy America
(and) as is done in many countries?" González Garza
Implementing a competitive
energy policy in Mexico also would help the domestic steel
sector better compete on a global scale, industry leaders
"Mexico has to be more
competitive. Today, electrical power in Mexico is 50 percent
more expensive than it is in the U.S., let alone China," Vedoya
said. "We cant be competitive if the cost of energy is 50
percent higher than our neighbor to the north."
Mexican steel executives were
quick to point out that theres no one-size-fits-all
approach to maintaining competitiveness, and what worked in
China or Japan to grow global market share wont
necessarily be the best plan for Mexico. Nonetheless, most
agreed thatespecially with a new administration at the
helmthe time for change is now.
"Growth is going to occur with a
strong industry in Mexico; otherwise, growth is going to be
much slower for Mexico," Vedoya said.
"Surely under these conditions,
well have a much stronger industry," González