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Mexico Water Report Summer 2011
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Mexico Water Reports
Mexico Water Report issue 6 Winter 2011
Editor: Vince Lencioni, General Manager
Contributors: Claire Carranza, Alejandro Vega, and Heber Vega
This edition of the Mexico Water Report continues our series of articles on water issues in other Latin American markets as well as covering Mexico's water segments. In light of its highly developed market, Chile is profiled in this edition, following the review of Brazil's market in the last issue. The Chile article is a collaborative effort with our Chilean colleagues at Trade Chile, a consulting firm with a growing water segment focus that has helped foreign companies enter Chile and other Spanish-speaking South American markets since 1995. The LGA/Trade Chile alliance together with the Brazilian TVZ/LGA alliance allows us to offer comprehensive Latin America-wide market entry and market expansion services for companies with water-related products, as well as other industrial/B2B and retail products.
Contributors: Claire Carranza, Alejandro Vega, and Heber Vega
This edition of the Mexico Water Report continues our series of articles on water issues in other Latin American markets as well as covering Mexico's water segments. In light of its highly developed market, Chile is profiled in this edition, following the review of Brazil's market in the last issue. The Chile article is a collaborative effort with our Chilean colleagues at Trade Chile, a consulting firm with a growing water segment focus that has helped foreign companies enter Chile and other Spanish-speaking South American markets since 1995. The LGA/Trade Chile alliance together with the Brazilian TVZ/LGA alliance allows us to offer comprehensive Latin America-wide market entry and market expansion services for companies with water-related products, as well as other industrial/B2B and retail products.
- Chilean Water Segment Overview
Water supply and sanitation in Chile is characterized by high levels of access and good service quality. Compared to most other countries, Chile's water and sanitation sector distinguishes itself by the fact that all urban water companies are privately owned or operated. The sector also prides itself on having a modern and effective regulatory framework.
- Analysis of the Municipal Wastewater Projects for 2011
According to a list provided by the Mexican National Water Commission (Conagua), in 2011 there were 204 proposed projects with at least 65% federal funding from one of three principal funding sources (APAZU, PROTAR, FONADIN) for the construction or rehabilitation of municipal wastewater treatment plants. To find out how many of these projects were really bid and/or carried out in 2011, LGA Consulting reviewed and analyzed the information on each in two different ways.
- Mexico Market Size Estimate Explanation for the 4 Major Water Sub Segments
In past presentations at WWEMA and WEFTEC events, the LGA Consulting General Manager provided extensive water sub segment market size estimates for municipal and industrial wastewater and municipal and industrial potable/clean water markets. In this article we explain the methodology behind the different sub sector scenarios and the data that applies to these areas.
- 2030 Mexico Water Agenda and 2011 Modifications
The water sector in Mexico has gone through positive and negative changes in the last few years. Despite the efforts made so far, the water sector faces various challenges that require strong measures. The 2030 Water Agenda was proposed to achieve water sustainability in Mexico during the next 20 years. The four main objectives are: clean rivers, universal coverage (potable and sewerage services), all waters treated, and habitable areas protected from catastrophic floods. The program has 14 actions directly related to these main objectives.
- Water Reuse in Mexico
In terms of wastewater reuse in agriculture, Mexico ranks second in the world – but this is hardly an accolade since much of that wastewater is untreated. Of the wastewater that is reused in Mexican agriculture, 80% is not treated and its use is highly unregulated. While rain water reclamation projects at government levels are at infant stages here, Mexico is making some strides with strategies and efforts to reuse treated water. Two reasons for this change are related first and foremost to the scarcity and the cost of potable water. While residential potable water prices remain extremely low in Mexico, the prices that businesses have to pay is increasing significantly, supposedly increasing faster than general inflation for the first time in Mexico's history. Also, while the southern states in Mexico have over 15,000 m3 of water per capita, the northern and central states per capita water is only 500 and 1700 m3 respectively. Water stress severity is greatest where 75% of the population lives and where 87% of the Mexican economy is located.
- Water Quality Problems and Challenges in Mexico
The lack of confidence in Mexican potable water supply and in general superficial water sources has caused the country to position itself as one of the major consumers of bottled water in the world utilizing 234 liters per capita, one of the highest consumption rates in the world. Over 80% of Mexicans are not satisfied with the water quality coming into their homes and do not drink it, fearful of contracting diseases because of the lack of treatment and aquifer pollution. Water quality is also affected by water pollution problems from somewhat uncontrolled municipal and industrial discharges and the insufficient monitoring and low compliance with related regulations. Furthermore, it is important to mention that in 2010, according to the United Nations Development Program, Mexico was 106 out of 122 countries in water quality.
Editor: Vince Lencioni, General Manager
Contributors: Claire Carranza and Alejandro Vega
This edition of the Mexico Water Report has two new features: coverage of the Mexican potable water segment and our first non-Mexico Latin America water article. Up to now, the Mexico Water Report had a mixture of articles focused on private and public sector wastewater issues. LGA Consulting will continue to include potable water and clean water industrial articles in future editions. In light of Latin America`s booming, sustainable growth, the Mexico Water Report will begin to include in each edition an article on water segment issues and opportunities in other Latin American countries.
Contributors: Claire Carranza and Alejandro Vega
This edition of the Mexico Water Report has two new features: coverage of the Mexican potable water segment and our first non-Mexico Latin America water article. Up to now, the Mexico Water Report had a mixture of articles focused on private and public sector wastewater issues. LGA Consulting will continue to include potable water and clean water industrial articles in future editions. In light of Latin America`s booming, sustainable growth, the Mexico Water Report will begin to include in each edition an article on water segment issues and opportunities in other Latin American countries.
- The Dynamic Brazilian Water Segment
The first country profiled beyond Mexico that will be profiled in the Mexico Water Report is Brazil. The article included is a collaborative effort with the TVZ International, a Brazilian based consulting firm that works with LGA on Latin America-wide projects. These two trade offices, in the two dominant markets in the region, have been expanding their reach and capabilities for water-related products as well as other industrial/B2B and retail products to create region-wide coverage. If you are looking to start-up or expand in other growing Latin American markets beyond Mexico and Brazil, these two offices and their collaborators can help your company reach these markets and create more comprehensive, region-wide coverage.
- Compranet 5.0 – Is It Better than the Old System?
The Mexican government’s system of announcing public tenders, opening and closing timeframes, and identifying winning bidders has had historical problems. A new and improved system was intended to correct those issues, but problems remain.
- Channel Market Strategies in the Mexican Water Segment (Part II)
This article is a continuation of the analysis of channel realities for selling to the water sector in Mexico begun in the last issue. In this edition, we will look at selling water segment products through integrators, strategic alliance partners and the pros and cons of establishing a Mexican subsidiary.
- Uses and Sources of Water in Mexico
Mexico is bipolar when it comes to water resources with all the water it needs and more in the southern part of the country and extremely dry conditions and water shortages in the northern and central regions. This is an overview of water use and source issues in Mexico, including detailed information about surface and subterranean volumes and needs as well as dam and aqueduct infrastructure and flow information.
- Potable Water Treatment and Plants in Mexico
Every foreigner has heard the advice: "When you go to Mexico, don't drink the water." Most Mexicans don't hesitate in uttering this same generalization. There are obvious needs for more potable water filtration and purification in Mexico. This article describes current potable water plant infrastucture, treatment details and funding, technology, and societal challenges.
A Message from Vince Lencioni, Director of Wisconsin's Trade Office in Mexico
This edition of the Mexico Water Report has a mixture of private and public sector articles. The first article deals with the problems that foreign companies are facing when trying to participate in water government procurement bids and the reality that many government bids are no longer viable for US companies under newly published rules and despite the existence of NAFTA – and how we can do something to change these regulations.
The second article deals with channel realities for selling to the water sector in Mexico. Our next edition will have an article that completes our analysis on this all important theme. The next two articles deal with private sector analysis.
The third article continues our analysis of economic segments that require water equipment - their current dynamic and water problems and opportunities – reviewing the dairy, textile/clothing and metal working/automotive sectors.
The fourth article provides an overview of water in agriculture in Mexico – where almost 80% of national waters are destine (4th highest in the world) but where less than 2% of water revenue is based. The final article describes the water infrastructure and opportunities that exist in the all important Mexican Federal District/Mexico City area.
This edition of the Mexico Water Report has a mixture of private and public sector articles. The first article deals with the problems that foreign companies are facing when trying to participate in water government procurement bids and the reality that many government bids are no longer viable for US companies under newly published rules and despite the existence of NAFTA – and how we can do something to change these regulations.
The second article deals with channel realities for selling to the water sector in Mexico. Our next edition will have an article that completes our analysis on this all important theme. The next two articles deal with private sector analysis.
The third article continues our analysis of economic segments that require water equipment - their current dynamic and water problems and opportunities – reviewing the dairy, textile/clothing and metal working/automotive sectors.
The fourth article provides an overview of water in agriculture in Mexico – where almost 80% of national waters are destine (4th highest in the world) but where less than 2% of water revenue is based. The final article describes the water infrastructure and opportunities that exist in the all important Mexican Federal District/Mexico City area.
- Bid Concerns for Foreign Companies
When the International economic crisis hit Mexico in late 2008, Conagua (Mexican Water Commission) established that its funding of public sector water projects would continue forward without delays. And, while one can argue that many projects did continue forward, especially in 2009, projects in 2010 were dramatically affected by budget, political/electoral, and typical Mexican bid bureaucracy.
It appears now that many projects delayed in 2010 will likely come back on line in 2011. However, Wisconsin's Trade Office in Mexico warns that for foreign companies, it sees only serious concerns and larger problems and deceptions affecting their participation, or ability to participate, in Mexican public sector projects now and in the foreseeable future. - Channel Market Strategies in the Mexican Water Segment (Part 1)
Channel market strategies are vital in all industries in all countries. However, if you are a foreign company trying to sell products into the Mexican water sector, they are even more important. As the previous article on government procurement mentions, Mexican law requires that all sales to Mexican government entities (federal, state, municipal, parastate) be carried out formally by a Mexican company. So, unless you have an office in Mexico, this means that selling to the Mexican government without a Mexican intermediary or a Mexican Corporation is technically illegal.
If we divide the Mexican water sector into public and private opportunity areas, approximately half of the opportunities (public) cannot be sold direct or via a representative or agent. On the private sector side, no such barriers exist. However, questions of service, regulatory issues, credit, and payment make it so that selling direct in many cases is not optimal or even desired. Therefore, most US companies wanting to sell to the Mexican private sector start by selling indirectly through distributors, reps or agents, and Partners in the market. - Sector Analyses: Dairy, Textile and Metal Works
In our last edition, we described the five most important sectors in terms of discharge concerns, all of which had some kind of special Conagua sectoral program to regulate their discharges, above and beyond standard wastewater discharge regulations.
In this edition, we are analyzing the following three, large and important manufacturing sectors, providing a feel for their size, current dynamic, and details about their environmental problems and related opportunities: A. Dairy Industry, B. Textile and Clothing Industries, and C. Metalworking and Automotive Industries. - Agriculture and Water in Mexico
This article will review, as an introduction of sorts, the characteristics of the Mexican regions, by water and agricultural characteristics, to give the reader a perspective on Mexican water use and related national and regional goals and objectives to make the Mexican agriculture system more productive, efficient, and sustainable by means of better water management. Future editions will deal with each of these issues and other related issues in greater detail.
- Water Projects and Infrastructure in Mexico City
Mexico City, known officially as the Mexican Federal District (DF), is one of the largest cities on the planet with more than 10 million inhabitants although less than half of the size of the Valley of Mexico which includes another 10 million people. Due to these numbers, the major problem which it faces is rooted in the lack of public services and the water sector is no exception.
A Message from Vince Lencioni, Director of Wisconsin's Trade Office in Mexico
Yes, it is October, and we are only now getting the “Summer” edition of the Mexican Water Report finished. Sorry about the delay. Despite the insecurity issues in Mexico, issues that have been at the forefront of virtually all news about Mexico in 2010, the Mexican economy is growing and should be a target for companies looking for international growth markets in Asia and Latin America. And, 2011 should be an even better year for both private and public sector water projects.
Yes, it is October, and we are only now getting the “Summer” edition of the Mexican Water Report finished. Sorry about the delay. Despite the insecurity issues in Mexico, issues that have been at the forefront of virtually all news about Mexico in 2010, the Mexican economy is growing and should be a target for companies looking for international growth markets in Asia and Latin America. And, 2011 should be an even better year for both private and public sector water projects.
- Signs of Strong Economic Recovery in Mexico
As the name implies, The Quarterly Mexico Water Report is focused on water-related topics and products in the Mexican market. However, in this issue we would like to highlight some macroeconomic data that shows just how vibrant the overall Mexican economy is. Some commentators may cite security issues as a reason to avoid Mexico and perhaps revisit it in the second half of 2011 (or perhaps 2012). We feel that it is important, if not vital, to provide you with some information about just how dynamic Mexico's import sector has been so far this year, how it has improved since 2008, and how that growth will continue and expand further in 2011. Mexico is not a market to be avoided or ignored.
- Top Five Targeted Sectors for Industrial Discharge Enforcement
In an attempt to provide a better understanding of the private sector industrial opportunities in the Mexican water sector, here is an analysis of the five sectors that Mexican water officials have been targeting for priority enforcement of existing water regulations. The next edition of The Quarterly Mexico Water Report will analyze additional sectors that deserve attention, including the construction and agriculture sectors.
- Potable Water Plants & Mid Year Treatment Plant Update
The previous edition of The Quarterly Mexico Water Report included an extensive analysis of wastewater treatment plant infrastructure and growth plans through the end of 2009. This edition will cover new information from the Conagua National Treatment Plant Inventory (December 2009) for both potable water and wastewater plants as well as the expectations and realities for the first half of 2010 through 2011.
- Mexican Industrial Discharge Regulations & Enforcement
For years, business executives in the environmental sector have recognized the need and potential for products and services presented by 500,000 Mexican companies discharging waste into water systems. In 1996, the Mexican Secretary of the Environment (SEMARNAT) passed the first two comprehensive wastewater discharge regulations to meet these needs: NOM 001 for wastewater discharges into federal bodies of water and NOM 002 for wastewater discharges into municipal sewer systems that eventually pass into federal water bodies.
- Analysis of the 2007-2012 Water Plan & the 2030 Water Agenda
This spring, the Mexican National Water Commission (Conagua) presented additional details about its 2030 Water Agenda, a program that establishes the water-related objectives for the next 20 years in order to create a sustainable water strategy and to ensure that future administrations recognize the water sector as a strategic priority. This agenda will have for pillars: rivers free from trash, universal potable water coverage, 100% treated wastewater, and adequate protection and long term plans for all populations vulnerable to flooding.
Theme of the Quarter - Focus on Private Water Sector Analysis
In the last issue of the Quarterly Mexico Water Report, LGA Consulting focused almost exclusively on public sector water opportunities and analysis. In this edition, we will present a better private-public balance that more accurately reflects the nature of the services and experience of LGA Consulting within the water sector. Also, we would like to briefly mention three important issues for your comments and benefit:
In the last issue of the Quarterly Mexico Water Report, LGA Consulting focused almost exclusively on public sector water opportunities and analysis. In this edition, we will present a better private-public balance that more accurately reflects the nature of the services and experience of LGA Consulting within the water sector. Also, we would like to briefly mention three important issues for your comments and benefit:
- Public & Private Water Treatment Plants in Mexico
Like many developing countries, Mexico faces the problem of water shortages and inadequate water treatment technology and infrastructure. Mexico currently treats only 40% of its municipal wastewater. Of even greater concern is the fact that only 10% of the municipal wastewater is treated currently in the Greater Mexico City Area and none of the municipal wastewater in Mexico's second most important city, Guadalajara, is currently treated.
- Industrial Wastewater: Private Treatment Plants in Mexico
As of 2008, there were 2,082 industrial wastewater plants in operation throughout Mexico. Not all plants are designed to carry out the same processes of treating industrial wastewater. Mexico has four types of treatment plants:
- Mexican Preferences for Water-Related Products, Equipment, Services
It is of vital importance to be able to understand to what extent the products that are being used in the Mexican market are bought from local companies or imported from abroad. This decision is a function of perceived minimum quality needed, price, availability, and other factors. Below is a cross section of the products that are used in the market, and how we see their buying tendencies.
- Bottled Water in Mexico: Second & Growing
In 2009, Mexican bottled water volumes grew 6% and current sales revenues grew by 8.6%, making the market third highest in the world behind China and the United States. As a result, Mexico produced 26,000 billion liters of bottled water and $140 billion pesos (US$10.7 billion) in revenue. The graph below demonstrates the enormous revenue growth in the sector, with revenue having doubled since 2004 and having increased by 1/3 since 2006.
- 1st Quarter 2010 Current Water Segment Government Bids & Awards
LGA Consulting obtains, analyzes, and provides water bid and award information on the Mexican market on a monthly basis and to our knowledge, we are the only firm or organization that provides this information in English. If your company would like a copy of this analysis, please click here and send an e-mail message to us requesting this information.
A Message from LGA Consulting
LGA Consulting has been extensively researching water opportunities for exporters of products and services for public and private potable and wastewater treatment sectors in Mexico.
With the inauguration of this quarterly newsletter, LGA Consulting, which also represents the State of Wisconsin in Mexico, will disseminate detailed information regarding business opportunities in the Mexican water sector to Wisconsin water products companies and other clients and companies working with LGA Consulting.
We welcome your feedback and hope to assist your firm in Mexico or elsewhere around the globe in this critical industry sector.
For more information about the water sector in Mexico or other export opportunities in Mexico, contact Vince Lencioni at vlencioni@lgaconsulting.com or call us in Mexico City at 011-52-555-378-3840 or 90; or Toll Free from the United States at: 1-888-750-0988.
LGA Consulting has been extensively researching water opportunities for exporters of products and services for public and private potable and wastewater treatment sectors in Mexico.
With the inauguration of this quarterly newsletter, LGA Consulting, which also represents the State of Wisconsin in Mexico, will disseminate detailed information regarding business opportunities in the Mexican water sector to Wisconsin water products companies and other clients and companies working with LGA Consulting.
We welcome your feedback and hope to assist your firm in Mexico or elsewhere around the globe in this critical industry sector.
For more information about the water sector in Mexico or other export opportunities in Mexico, contact Vince Lencioni at vlencioni@lgaconsulting.com or call us in Mexico City at 011-52-555-378-3840 or 90; or Toll Free from the United States at: 1-888-750-0988.
- Quarterly Mexico Water Report: What it is and why you should read it?
For many years Mexico’s water sector has had great potential, but much of that potential was not easy to gauge, understand, or access. LGA Consulting wants to make it easier for foreign companies to learn about projects, submit successful bids, and make money in this growth area. The Quarterly Mexico Water Report was created to disseminate this kind of information. Each issue will contain the following four sections:
- Theme of the Quarter - CONAGUA Budget
The Mexican National Water Commission (CONAGUA) is the primary federal government entity in charge of water sector infrastructure projects. It has central offices in Mexico City, plus regional offices responsible for 13 regional river basin organizations and at least one office in every state to interface with local water authorities. CONAGUA provides significant funding to the 31 Mexican state and hundreds of municipal water commissions/districts to carry out projects. Small states rely extensively on CONAGUA's federal funds for projects, while larger states often use primarily local funds. However, most projects rely on CONAGUA funding and assistance.
- Water in the News
Serious Flooding throughout Mexico, including Mexico City
During the first week of February, Mexico City has experienced the worst flooding problems in decades. Eleven deaths in the Mexico City area were attributed to the washout of a local road/highway between Mexico City and Toluca. Meanwhile, 32 deaths have been attributed to extreme flooding in Tabasco in the south and the central states of Mexico/Federal District, Michoacan, and Guanajuato. While winter is normally the dry season in Mexico, this year has been an exception, and more rain is in the forecast. - Goals & Methodology for Outreach to Mexican Water Officials
Over the last decade Mexico has decentralized its water system and transferred authority to 31 state and municipal water commissions organized around 13 separate major water basin organizations. As a result, if a company does not have contacts in the different river basin areas, states, or major municipalities, it may not understand how decision-making takes place, be aware of pending projects, or have knowledge of intermediaries that are favored by the local water authorities.
- Current Water Segment Government Bids & Awards
Even with Mexico's on-line government bid/award database, COMPRANET, staying abreast of the projects that are going out to bid at the federal, state, and local levels can be challenging for Mexican companies, let alone Wisconsin equipment and service firms.