Concrete Can't Weigh Cemex Down
Mexican cement company, third-world's largest multinational, operates in 22 nations
TEPEACA, MEXICO — WHAT from across a dry plain in central Mexico looks like a new high-rise hotel is actually the largest cement plant in the Western Hemisphere.
The year-old plant, which can produce 3.2 million tons of cement annually while creating almost none of the dust and other pollution associated with cementmaking, is the jewel in the crown of Cemex S.A. de C.V. Headquartered in Monterrey, Mexico, the company is the world's fourth-largest cement producer and the largest multinational corporation based in a developing nation (ranked by foreign assets as of 1993).
Conventional wisdom said a Mexican company wasn't supposed to become what many industry analysts agree is probably the world's most efficient cement producer.
''There was no rule written that multinationals from developed countries would be the only ones to reap the advantages of apertura,'' the opening of previously closed economies to foreign investment and international competition, says Roberto Salinas-Leon, an economist at the Center for Free Market Studies in Mexico City. ''Cemex knew how to combine a potential for market expansion with a drive for production efficiency.''
Cemex has made a reputation for itself by buying troubled plants around the world and turning them into efficient facilities with much higher environmental standards than they previously had.
Developed-world skepticism about Cemex's ambitions, which company executives from chairman Lorenzo Zambrano on down found so irritating, actually played a role in making Cemex what it is today.
''It made us more hungry,'' says Gustavo Caballero, Cemex finance and planning director who in September was named 1995's top chief financial officer by Latin Finance magazine. ''Coming from a developing country we were determined to move faster, to prove we could do things better,'' he says.
Cemex traces its roots to 1906 and one cement plant in Hidalgo, Mexico. Now the company operates in 22 countries and owns plants in Texas, Spain, Venezuela, and Panama. Sales in 1995 fell just shy of 20 billion pesos (about $2.6 billion dollars), a 23 percent jump over the previous year.
In the process of expanding, Cemex has piled up some $4 billion in debt, more than any other Latin American company, says Rod Harada, an analyst at Nomura Research Institute America in New York.
With its lawns, new trees, and only 210 employees to keep it running almost around the clock, the Tepeaca plant here feels more like a small college campus than a factory. The control room, with huge windows looking out over the twin 300-ton-per-hour rock mills and the 260-foot-long kiln, requires only two workers.
Huge pipes - that in older plants would have been stacks spewing rock dust into the air - curve back into the plant, where collectors gather the dust. ''Without those collectors we'd be sending 25 tons of dust each hour off to our neighbors,'' says process engineer Luis Gutierrez Lopez. ''With this technology almost 100 percent of the dust is collected and used.''
Quality control is highly automated: Samples flow automatically into a lab where pastes of the materials are dried into wafers and checked by a laser. In older plants, the samples would have been taken and tested by hand.
Though workers' skills at Tepeaca may match those of workers in any cement plant around the world, wages still reflect Mexico's developing-nation status.
The average worker at Tepeaca makes about $16 a day, says plant General Manager Agustin Gonzalez Seyffert. That salary equals nearly seven times Mexico's minimum wage, but is less than half the minimum wage in the United States.
While Tepeaca is something of a showcase for Cemex, it represents only one facet of the multinational. Besides producing cement, Cemex is now the world's largest cement trader, which means it exports more cement and provides more services such as transporting than any other company. In 1995, Cemex traded about 9 million tons of cement, with only 35 percent of total revenue coming from Mexico.
Last year Cemex responded to Mexico's economic downturn by quickly finding markets for the cement from its home-country plants. Exports from Mexico rose 50 percent over the year, says Javier Prieto, vice president for trading, which means two Mexican plants that would have had to shut down kept running.
The cement trading is important in meeting Cemex's goal of smoothing out the bumpy ride of cyclical cement markets, but it serves another purpose: It allows Cemex to go into a country, learn the ropes of doing business there, and keep its nose to the ground for further business opportunities nearby.
''It's like testing the waters,'' Mr. Prieto says. ''This way we're already working in the country so if a good opportunity comes along to, say, buy a local company, we're ready to jump in.''
And when Cemex buys a cement plant, it does something else that isn't always associated with a business based in a developing nation - it places a primary emphasis on making the plant environmentally sound. ''That usually means a lot of investment, but we do it right away,'' Mr. Caballero says. Pollution-control systems made up about 10 percent of Tepeaca's $413 million cost. Typically, 20 percent of a plant's mechanical equipment is now for pollution control and waste reduction.
Cemex researches the environmental impact of the full range of its activities. The company patented the design for a new pallet (on which 100-pound cement bags are stacked) that uses 80 percent less wood and other materials than traditional pallets. Cemex is also developing alternative fuel sources for its plants, such as worn-out tires and waste fuels.
''These activities are part of our drive for efficiency,'' Caballero says, ''but they're also a big part of being a good neighbor, and a citizen of the world.''