JULY 2000

CORPORATE OFFICE (MIAMI)

Tel 305-569-9133

MEXICO CITY OFFICE
Tel +52-5-545-4325

SAO PAULO OFFICE
Tel +55-11-3168-9767

INDUSTRY ANALYSIS

Almost every country in Latin America faces a serious shortfall of adequate housing, which represents huge pent-up demand, constrained only by the lack of affordable financing. This creates enormous potential for companies with sophisticated systems for mass producing low-end homes. Industrial and commercial construction is also growing as private enterprises rationalize and modernize to adapt to ongoing globalization and increased competition. Public and privatized infrastructure projects are the icing on the cake for an industry poised for sustained growth.

Import penetration for building materials ranges from less than 2% to nearly 30% across the region. There are many opportunities for companies with efficient and cost-effective technologies. Latin American construction methods are often poorly chosen. Workers are rarely properly trained in the use of modern materials and construction methods, and on-site supervision and project management are generally lax. The result is material waste and cost overruns.

The biggest need is for value-added materials that minimize waste, are easily installed by semi-skilled labor, and integrate well with traditional building designs. The companies most likely to succeed in this market are those that are ready and willing to transfer technology and work with local partners to introduce new building concepts.

This article explores the specific market conditions for construction materials in Mexico, Brazil and Argentina.

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GUEST ARTICLE
Distance Education: Technical Considerations

There is a consensus in the world of international business, particularly among Human Resources specialists, that executive education must be an ongoing, career-long process. In non-English speaking countries around the world, language education in English is an essential tool for career advancement.

Even with this strong motivation, integrating language training with other daily priorities is a major hassle for most executives. They have no time for traveling between home or office and a training center on a regular basis. The most practical, tested and proven solution to this vexing problem is distance education. Emerging IT technologies have rapidly advanced this technique of delivering education directly to the learner, at home or at the office.

Executives in the importing and exporting industries are prime candidates for distance education as they struggle to remain globally competitive. But this type of training also benefits a broader range of learners with less exotic objectives. Distance education gives all adults an unprecedented opportunity to pursue studies related to either their professional or personal lives.

The advantages of distance education are fairly well understood in a practical sense. This article explains some of the technical considerations involved in designing course material and delivery methods. 

MARKET RESEARCH
market profile benchmarking
market entry viability
market trend analysis
new product testing
customer satisfaction studies

MARKET INTELLIGENCE
competitive intelligence
project intelligence

MARKET ENTRY
partnering and due diligence
strategy formulation

customized market
intelligence on-line

REGIONAL TRENDS
The Infamous Black Market

Latin American governments and their trading partners are locked in a collective state of denial over a dirty secret. A complex array of illegal trade arrangements, untaxed transactions, and patent violating industries combine to form a substantial black market. This underground activity represents anywhere from 15% to 50% of GDP, depending on the country involved.

Private industry is frustrated by the apparent paralysis of many Latin American governments in cracking down on black markets. Local manufacturers are not protected against competition from foreign products that escape import tariffs and value-added taxes. Local retailers, paying top dollar for premium real estate, find themselves losing business to street vendors.

Foreign suppliers of intellectual property, ranging from music to software and designer apparel, see their brands ripped off by pirate products selling in street markets managed by the local government. In several markets, stolen products re-enter the economy through well-known distribution channels, gouging the resale margins of legitimate competitive products.

This article looks at the efforts of various governments to clean up the black market, if only to broaden the tax base of their economies. It explains the magnitude of the current problem and explores the most probable remedies.

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ECONOMIC OUTLOOK

Mexico's steaming political environment reached full boil with the victory of Vicente Fox in the July 2, 2000 presidential election. His clear 6.4% win over Francisco Labastida, candidate for the Institutional Revolutionary Party (PRI), shattered 71 years of PRI monopoly at the executive level. Fox's conservative National Action Party (PAN) had previously won several state elections, setting the stage for this historic change at the federal level. Expectations for a continued and sweeping democratic transition are running high. But the reforms may not be as exhaustive as voters or even business would hope.

The ability of the Fox government to achieve its bold growth objectives is dependent on several prerequisites:

• Continued US consumption increases.
• Recovery of the banking sector and restoration of credit.
• Comprehensive tax reforms.
• Broad market deregulation.
• Privatization of electricity generation.
• Increased foreign investment.
• Average domestic oil prices above $18 USD per barrel.

These are daunting challenges. In Fox's words, it was easier to win the elections than it will be to govern.

There is intense speculation about where Fox will lead the country. Fox has a pro-business reputation, partly because he once directed Coca-Cola's Mexican operations. He is known to advocate efficient corporate style governance. On the other hand, he also recognizes that Mexico's middle and lower classes have lost half of their purchasing power after 20 years of neo-liberal PRI policies. And in the past, Fox's political philosophy has been considerably more left-of-center than that of PAN, which he now represents.

This article reviews Fox's record on the major political issues and makes some predictions about the impact of Mexico's new government on economic performance over the next few years. 

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AMEX
Avery Dennison
BBDO 
Booz, Allen & Hamilton 
Citicorp International 
Computer Sciences Corp.
Conagra

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