Marcopolis presents the Mexico Report focused on the investments, doing business, economy and other topics featuring interviews with Mexican leaders. The sectors under review in this issue are industry, oil and gas sector, investments, banking sector, telecom sector and many more.
Edgar Nava García is the President of Gruconsa, a construction company acting in many sectors such as municipal works, educational facilities, drainage systems, treatment plants, roads and bridges. Mr García is also the President of car dealership Puebla Automotriz.
Interview with Edgar Nava García
The private sector in Mexico is the engine that drives the country. It plays a very significant role as the main source of employment and investment. However, over the past years, it could have delivered even more, and we’re still awaiting this somewhat. Since you are one of Puebla’s most distinguished business figures, as well as covering various sectors, what would you say Mexico’s private sector needs, in order to play a more active role in development and achieve real growth over the coming year?
Firstly, I would like to stress that Mexico is going through an important moment, as are most emerging economies, in my opinion. Allowing for the fact that Mexico is a country which depends heavily on oil, and with the fall in world prices for this commodity, Mexico is fortunately well poised to face it; having prepared well through other measures, such as fiscal reforms, which affected the business community indirectly in some respects, thus ensuring Mexico had a more buttressed economy and enjoyed less dependence on the oil sector. On the other hand, Mexico today has become one of the leading countries worldwide –and if I’m not mistaken, it’s up there in second or third place– when it comes to manufacturing vehicles for the world market. Not in terms of consumption, but certainly in terms of their manufacture. This has provided us with an important boost, because when Asian markets, and particularly China, exponentially reduced the cost of labor, Mexico lost the strength it long had in the textile market, but it’s reclaiming it today. That’s the third important point I wanted to make: our reclaiming of the textile sector. Finally, Mexico enjoys great biodiversity and a variety of climates. We have wonderful tourist destinations, especially our beaches on the Mayan Riviera, which have benefited from significant growth; as well as the Lower California capes region. I believe we are undoubtedly going through some difficult challenges, as are many other countries, but we have a variety of tools at our disposal, such as our advantageous tourist position, our low labor costs and the automotive sector.
Since being announced last year, all preliminary studies, projects and preparatory phases are now practically complete, which will lead to a historic investment in Mexico for the building of our new airport in 2016.
The head of the Mexican Chamber of the Construction Industry, Mr. Luis Zarate Rocha, mentioned that the country’s construction and infrastructure sectors remain among the most dynamic sectors of the Mexican economy, both in terms of their economic output, as well as the large levels of employment they generate. What is your point of view concerning the country’s construction and real estate sectors, and what’s your outlook for the start of this year and the start of the next?
When we talk about our current year, 2015, which is about to end, we have certainly enjoyed significant growth, given the establishment of new assembly plants in my state, in the region of San José Chiapa. Namely, the arrival of Audi in Mexico, headquartered in Puebla. On the other hand, it’s also coming to the state of Nuevo León. Similarly, Mazda has established itself in Guanajuato state. All of this has helped trigger the construction sector, in its private branch. On the public side, as many of us are aware, we are awaiting Mexico City’s new international airport, known as the NAIM. Since being announced last year, all preliminary studies, projects and preparatory phases are now practically complete, which will lead to a historic investment in Mexico for the building of our new airport in 2016. We can therefore say that we, in the construction sector, feel encouraged and hopeful that we have a great deal of work ahead. Moreover, in the road-building sector, many roads have been built and rebuilt over the past few years. I look forward to 2016 as a key year for investment, in spite of the budget cuts Mexico has had to endure over the past year.
You are a self-made entrepreneur, who has made it to the top from the bottom, something which must make you very proud. You have achieved a great deal, you have grown in many sectors and in different ways. Please tell us a little about your story: how you got started, who inspired you and gave you the necessary passion to have attained what you are today, having made your own name in business, and what are the most relevant sectors or processes you have in mind in the short to medium term?
My grandfather on my mother’s side, Don Paulino Garcia, was a peasant, who without any prior education, based simply on his physical work initially, and gradually with his developing knowledge, was able to acquire machinery as a contractor for sugarcane processing plants. And during summer vacation, instead of going to a beach or anywhere else, I used to go and earn some money with my grandfather, which allowed me to learn that constancy and perseverance really pays off. He taught me to love machines, and from that background –which had nothing to do with construction to begin with, but with sugarcane processing–, I was able to understand how machines can give you a push. So after completing my undergraduate degree in Law, at Puebla’s Free Law School, I started by renting out two machines I inherited from my grandfather, which in 1998 eventually led me to establish Gruconsa and build everything from curbs, sidewalks and other municipal works. With the passing of time, I began taking on larger projects, at the state level, such as educational facilities, drainage systems, treatment plants; which eventually led me to embark on what I hold most dear, which is the building of roads and bridges. We are now able to build these jointly with the federal government, through the Secretariat for Communications and Transport and CAPUFE. Gruconsa has been around for 17 years, and with Gruconsa as a launch pad, we have been able to expand to the automotive sector, through Fiat Chrysler car dealers. We are about to open a new dealership, due for mid-2016. We also plan to enter the hotel market. Puebla badly needs more rooms, in view of the great quality of services we have in here, also in terms of the city’s cultural vibrancy. Its historic core, as you know, is very rich, and we’re about to open a Hilton hotel and a Hampton Inn & Suites.
Let’s talk a little about what is known as sustainability and social responsibility, which are very much in fashion nowadays. How important it is for you to be a sustainable and socially responsible company?
We need to give something back to people –meaning to our new generations– in terms of environmental sustainability. By ensuring that what we build pollutes as little as possible. It would be a lie to suggest that there is no pollution involved in the building of roads, which –as is well known– are built with asphalts derived from crude oil. However, we can try to bring about the least damage and keep pollution to a minimum in the works we undertake. On the other hand, we wish to open the building of our new car dealership to competition, in order to build a structure that makes use of solar energy, with all the new green and sustainable technologies, in keeping with Low Impact Development (LID). Moving on to the issue of poverty, as faced by Mexico and the world more broadly, we strive to save and waste as little as possible when it comes to our companies’ use of raw materials. We have also created a Civil Association, with the involvement of my mother and sisters, where the aim is to give back some of the benefits our companies have blessed us with.
Life favors us with many achievements and you certainly have your share, but invariably we also face challenges. What are the key challenges you face today as a business owner and what’s your vision for your company over the next five years?
Well, I face challenges today across all my companies, but particularly in construction, given the very competitive nature of tenders. Mexico has a great number of quality civil engineers, so being competitive is our main challenge. This involves having good technology and great machines, in order to deliver great quality and remain competitive in terms of prices. On the automotive side, fortunately we are distributors of a leading brand, namely Fiat Chrysler Automobiles, which is the world’s seventh largest car maker and has enjoyed a 23% growth in Mexico, thus outstripping all rivals. The challenge now, having attained this level of growth as suppliers of this brand, is to sustain the same rhythm over the next five years.
How would you like to keep growing? Are you looking to absorb or acquire a greater number of dealerships? What would you say is your growth strategy?
The corporate strategy of Fiat Chrysler as a brand, and ours as their distributor, is to achieve the same market share we’ve attained at a national level. In the case of our group specifically, we certainly do wish to grow by securing a greater number of dealerships in the next five years.
What are your final comments on Mexico and its great potential? What do you have to say to large US investors and anyone around the world wishing to come to Mexico, as to why they should invest in Mexico, and in Puebla more particularly?
I’d like to start with Mexico, my homeland. Why invest? Mexico’s economy today fortunately does not suffer from inflation, which has been successfully overcome. This offers certainty to us Mexicans, and particularly to foreign investors, thus allowing them to turn to Mexico and come and invest in our country. As a token of this, as I mentioned to you earlier, we have the establishment of KIA, representing the Asian market, as well as Audi, representing the German market. There is also legal confidence, since we have a good legal framework for business. Moreover, public safety has undoubtedly improved in our country. On the other hand, I would like to talk about Puebla, which is the state and city where I was born. Let me invite foreign investors to see in Puebla, first and foremost, the proximity we enjoy vis-à-vis Mexico City, as the heart of our country. Secondly, the infrastructure already in place here is clearly an advantage, with Volkswagen Mexico, Audi and various other assembly plants having an important market presence here, through companies which depend on the car assembly plants I just mentioned. I wish to invite potential foreign investors and US businesses to establish petrol stations, given the new energy reforms and our greater levels of openness, as well as opening more hotels. There are good times in store for Puebla.