Mr. Kobayashi. The Marubeni Corporation is a world wide operating business group, trading a wide range of products and commodities. In addition you offer various financing and project-organizing services to business partners. Could you specify your activities in Mexico?
As you say, Marubeni is a leading international trading company in Japan. We are engaged in international trade, financing and investment projects. We are about 5,500 people and we have over 130 offices all over the world. I don't recall the amount of sales annually, it's a huge amount. We have five divisions here in Mexico. One is the metal division, which is engaged in the export and import business of various metal products. We are actually importing coils, steel plates from Japan to the Mexican market and also tin products used for cans. This division has about 100 million dollars sales in the Mexican market. Another division is the general merchandise division. Its main products are off the road tires used in mines for giant vehicles. We market Bridgestone tires here in Mexico. I think it's worth mentioning that we are supplying the metro with rubber tires. It depends on the year but we have from 50% to 70% of this metro tire market. Another division is the chemical products division. We are importing various chemical products from the US market and Japan to the Mexican market. And we have two machinery divisions. One is mainly in charge of the power generation projects and the other one is in charge of energy related projects with Pémex and we are also involved in some steel projects.
Besides the activities you mentioned already, you are also involved in the natural resources development and the promotion of social infrastructure projects according to the Marubeni Vision2000 program. Within this program, Central America is classified as a priority market. How important is Mexico within those considerations and what is Marubeni's?
Well, we see Mexico as a very important country for Marubeni. We are actually doing two very important projects for Pémex related with the Cantarell oil field project. One is the nitrogen Cantarell project which is around a 1 billion dollars project. We associated with Canadian and British companies. We have one third of the share of this project. The other one is also related with Cantarell oil development. We are now constructing a 250 million-dollar gas compression platform also associated with the Canadian Company, Westcoast Energy. Those are two major investment projects for Marubeni and Mexico right now and we are very much interested in pursuing other energy-related projects.
In fact, yesterday we had a meeting with Mr. Marcos Rodríguez, the General Director for Pémex Gas and he told us that the main opportunities for investment in the gas field is in gas compression areas. Would you also be interested in investing in new projects?
We are definitely interested in investing in other projects. Those two projects that I mentioned are with PEP, Pémex Exploración y Producción. Pémex Gas has also various projects for gas transportation and gas distribution. In that area, we are not very active until now but it's definitely an area that we may be interested in the future. I understand that Mexico is concentrating in gas development and I think there is something we can do in that area.
Marubeni won in 1997 the public bidding called by Pemex for the Cantarell Project, as part of a consortium, built by the BOC Group, Westcoast Energy, Linde and ICA Flour Daniel. What is Marubeni's contribution regarding the services you provide for this project, which was concluded this month?
Our contributions to those two projects are mainly financing projects. We are providing around 1/3 of the 1 billion equity in both projects. One billion dollars consisting of 40% equity and 60% bank loans. Forty percent of 1 billion is 400 million dollars of equity, a 1/3 of that money comes from Marubeni. I think we played an important role in this project arranging the financing from Japanese Banks. They took a major share of the bank loan. Bank loans are consisting of Japanese trade bank loans and commercial bank loans. Commercial bank loans consist of various commercial banks, one of them is Citibank. Other partners, British Oxygen and Westcoast Energy will provide the expertise in the construction and operation as well as their financial contribution.
As a matter of fact, it is supposed to be the biggest natural gas plant in the world. Could you please give us your projections of the economic benefits Mexico will draw from this Cantarell project?
Yes it is supposed to be the biggest. The purpose of this project is to inject nitrogen in the Cantaroil oil field. By doing so, they can increase the pressure inside the oil field so that they can increase their crude oil production because the Cantaroil field is producing about 50 or 60% of Mexico's crude oil. It has developed 20 or 30 XXX and gradually, the pressure inside the oil field has decreased. Definitely, in that way, they can prolong the life of the field increasing the annual production.
You started explaining about the technical issues that have to be considered within this project. Could you tell us about the direct economical benefits within the next 5 to 10 years for Mexico concerning this project?
It's difficult to calculate the numbers. Maybe you can obtain some numbers from Pémex because they have done the studies and investigation about the alternatives: nitrogen injection, gas or water injection. There were several alternatives to achieve the same goal but the Pémex conclusion was that the nitrogen project was the most profitable and suitable for the company.
Mr. Kobayashi, you also mentioned that your machinery division is involved in power generation projects.
Before that, I could clearly mention the benefit of another project we are involved in which is a gas generation platform we are constructing in the Gulf of Mexico. Right now, Pémex is not using the associated gas, they are just burning it, and you can see the flair in the Cantarell field. That means that they are losing 600 thousand dollars a day. And we gather all those associated gas and treat and send it to land through undersea pipelines. So, this gas can be utilized in the power generation or for other industries.
Which divisions are involved in this project?
The machinery division. The so-called Veracruz project division. For that service Pémex is paying us a little bit more than 200 thousand dollars per day for five years. They can save 400 thousand dollars a day.
A General Manager of CFE stated that within 3 years this country is going to have serious energy supply problems unless they invest in new power generation plants. What would you advice Mexican authorities in this respect in order to keep up with the country's industry development?
As you mentioned, Mexico has a very narrow margin between its generating capacity and its demand and within a couple of years if this generating capacity is not increased, Mexico will face serious problems for all kinds of industries so they have do start more projects for power generation. They are actually doing it under the modality of IPP (Independent Power Producers), where many American or European companies are participating. Mitsubishi has won two contests last year. Marubeni also tried to participate in those projects and we participated in the bid for the first two or three projects but we found that the situation is very competitive and we couldn't win. So we are now working to reestablish our strategies in those projects, we are just taking a rest. | In March 31st 1999 the MIB nominated Marubeni as the "Company of the week", pointing out the involvement in the Cantarell project, but mentioning also your plans to invest in the auto parts sector through Unipress Mexicana and in the chemical sector through Selemex. Can you tell us how those plans were realized?
Unipress is a pressing and stamping factory for the auto parts mainly supplying Nissan Mexicana. The car body consists of maybe 300 or 400 pieces of stamped steel products of various forms. Actually, Unipress is supplying about 120 parts for car bodies. That's a joint venture between Unipress Japan and Marubeni. We are actually 40% shareholders of that venture.
Selemex is producing the PVA film to go inside the car windows. They are acquired by Volkswagen and other automotive companies as well as by the secondary market.
Do you have any additional plans to broaden your production capacity or to diversify your product portfolio?
We have another joint venture in Aguascalientes called ATC Mexicana which is supplying automotive parts to Nissan, Honda and other car manufacturers.
It's obvious that Marubeni is very active in Mexico and at the beginning you mentioned some general figures of Marubeni worldwide. Could you give our readers an overview of your figures here in Mexico?
In this D.F. office, 7 Japanese staff members are working and 25 Mexican staff members. We have another Japanese staff working for the nitrogen project and compressor project, and in ATC Mexicana has two Mexican staff members. We have a $350 million dollar annual turnover. I won't say the profit figures.
To work in the field of natural resources development implies a difficult task of environmental preservation. In this regard, how is Marubeni dealing with this problem in general and how do you apply them within the Cantarell project?
Our company policy is to strictly observe any harsh environmental restrictions or regulations all over the world. For the nitrogen project all environmental permits are obtained. Well, at the beginning we had some difficulty in obtaining all those kind of environmental permits because it was Pémex's responsibility to obtain them but they were delayed and delayed so we had to hire an environmental consultant and obtain them ourselves. That was part of the project's incremental cost.
Due to administrative or bureaucratical problems within the Pémex organization?
The size of the project is huge so any delay can cause a large amount of damage or loss to the project. For example, we had some problems caused by the local people that live near the plant site. They came to demand us for something we were not related. They just made a blockade at the entrance of the plant to demand something from the local government or something. And that caused delay of the construction and this is directly tied with the money. We had big amount of claims on the table with Pémex.
What is your general vision of the Mexican market and what difficulties or advantages would you point out if, for example, you had to advice a Japanese businessman who would like to invest here?
Mexico is the second largest economy in Latin America, following Brazil. Mexico is a member of the NAFTA and has free trade agreements with the EU and with various countries. I think that Japanese companies have to look at Mexico not only for its domestic market size but also as a base for the production and the trade of various products, producing in Mexico and exporting to the US, and other countries. Mexico has very good access to those major markets in the world. For Japanese companies the future is more promising to come to Mexico.
We were talking a few days ago to the Dr. Hermann von Bertrab from the Mexican investment board and in his opinion many Japanese companies do not see yet the benefits the global network of FTA's implies for companies, which invest in Mexico. Would you agree with this opinion that Japanese businessmen still don't see the advantages the free trade agreements bring?
Generally speaking, yes, because Japan has the close market of Asia and they tend to look at Asia first and Latin America is still a little bit far from them but since the crisis of the Asian economies they are looking more and more to Latin America for future business possibilities. Mexico is very favorably looked by Japanese people these days. And we are very anxious that the Mexican and Japanese market conclude the free trade agreement in the very near future. I hear that in the Japanese government there is not a concesus yet for pursuing the free trade agreement with some countries but we wish Japan's government seriously negotiates with the Mexican government for that free trade agreement, so that Japanese companies who are already located in Mexico or come in the future will not suffer any disadvantage compared with US or European companies.
You've been running this company for more than two years. Was it difficult to adapt to the Latin Mexican culture and how would you describe your experience both professionally and personally?
Well, I was always involved in business with Latin American countries. Since I joined Marubeni, in 1971, I was working in some of the projects in Venezuela and Brazil. I stayed in Mexico 4 years from 75 to 79 and I also worked in the New York office for 5 ½ years from 85 to 91. So I'm very familiar with Latin American cultures or the way of doing business in this area and I don't have any difficulties not only in Mexico but also in other Latin American countries. The people who are not so familiar may have difficulties in understanding the mentalities and way of doing business here so there are many things they may not understand. In my personal daily life there are some things still difficult for me to understand why they behave in such a way. The important thing is the problem with security we have here in Mexico. I hope the situation improves. That's a serious problem, not only for company activities but also for the personal life of businessmen here in Mexico. I've heard of many examples of the incidents my Japanese colleagues have had here in Mexico. I sincerely hope this situation is changed and improved by the new government of Mr. Fox.
As you mention the new government, in your opinion what will be the most important impact of the change of administration, not only regarding the political situation but also the economical development of Mexico and for the future trade between Japan and Mexico?
I don't see a big difference between Fox's and Zedillo's macro economic or diplomatic policies, so I think the economy will be going well under the new administration and opportunities for the Japanese companies will increase in the new administration. I'm not concerned about the economy policy of the new administration but this change happened because the people wanted the change and I think the people really want to see the change and I wonder how quickly Mr. Fox's administration can make this change, especially in the area of security and the areas of poverty and education. There has to be a change but it may be difficult for the new administration to make it quickly although they are the biggest party in Congress but they don't have the majority, so let's see. |
Marubeni Mexico 