Mexico’s National Guard. Photo: Google

By KELIN DILLON

Over 2,000 micro- to medium-sized construction companies in Mexico are at risk of closure following the Mexican government’s repeated decisions to entask the country’s military with construction projects.

The Mexican army has been given jurisdiction over the building of the Santa Lucía Airport and the Tren Maya, the construction of Bienestar Bank branches and the remodeling of hospitals countrywide, just to name a few.

“We estimate it is affecting many companies,” Francisco Solares Alemán, national president of the Mexican Chamber of the Construction Industry (CMIC), told El Financiero. “The effect is for the industry could have a general impact for all construction companies.”

A report from BBVA on the country’s real estate status said there were giant losses at the beginning of 2021 in the areas of transport, energy and hydraulic works, by a margin of 40, 30 and 2 percent, respectively.

“The infrastructure will remain behind,” read the report. “We estimate that this trend will continue during 2021, since the heavy investment required will hardly come due to the lack of certainty and the inhibition of private sector participation, especially in the energy sector.”

“In Mexico, private participation in financing infrastructure is about 20 or 25 percent, when in other countries it is more or less 45 percent,” said Eduardo de la Peña, associate of Infrastructure and Capital Projects at Deloitte, highlighting Mexico’s lag behind in private investment.

And of the 49.2 billion pesos spent on Mexico’s infrastructure projects in 2020, only 4 percent of that was allotted to the aforementioned small construction companies, though many small businesses also shuttered their doors last year due to effects from the covid-19 pandemic.

As the nation’s military continues to expand under current Mexican President Andrés Manuel López Obrador (AMLO), it remains to be seen what the ultimate effects of delegating construction projects to the army will be on what remains of Mexico’s small construction companies.

…April 13, 2021

 

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