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PP RUEHCD RUEHGD RUEHHO RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHMC #0351/01 2661958
ZNR UUUUU ZZH
P 231958Z SEP 09
FM AMCONSUL MONTERREY
TO RUEHC/SECSTATE WASHDC PRIORITY 3940
INFO RUEHME/AMEMBASSY MEXICO PRIORITY 5015
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHMC/AMCONSUL MONTERREY 9546

UNCLAS SECTION 01 OF 02 MONTERREY 000351 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV ECIN EFIN EINV MX
SUBJECT: NUEVO LEON BUSINESS LEADERS SHARE DIVERSE PERSPECTIVES ON 
THE ECONOMY 
 
REF: A) MONTERREY 219  B) MONTERREY 278  C) MONTERREY 297  D) MONTERREY 292  E) MONTERREY 304 
 
MONTERREY 00000351  001.2 OF 002 
 
 
¶1. (SBU) Summary.  The Ambassador's September 2 - 4 trip to 
Monterrey offered him opportunities to receive varied 
perspectives on the state of the economy in Nuevo Leon, during 
sessions with the Group of Ten (leaders representing some of 
Mexico's largest industrial and financial conglomerates), the 
American Chamber of Commerce's Monterrey branch, and a woman's 
microfinance borrowers support group.  All expressed hope that 
the economy would recover soon, but worried that it would not. 
In general, our interlocutors foresaw modest growth prospects in 
¶2010.  The Ambassador urged contacts to work with the USG to 
promote increased national and hemispheric competitiveness.  End 
Summary. 
 
 
 
Industrial Elite Criticizes Economic Policy 
 
------------------------------------------- 
 
 
 
¶2. (SBU) During a luncheon discussion with the Group of Ten, 
member CEO's took the Calderon administration to task for 
failing to sufficiently promote economic growth and reacting 
slowly to eliminate microeconomic barriers.  The automotive 
industry, both assembly and parts manufacturers, had stagnated, 
we were told, because companies were unable to get credit. 
Meanwhile, one executive complained that Calderon's efforts to 
stimulate the economy were woefully lacking, especially when 
compared with the steps other OECD countries had taken.  A 
number of luncheon participants queried the Ambassador about the 
USG's plans for intensifying NAFTA cooperation and approving 
much needed border infrastructure projects such as the planned 
Laredo Colombia International Railway Bridge.  For his part, the 
Ambassador emphasized the need to heighten competitiveness so 
that the U.S. and Mexico could better compete in the global 
economy. 
 
 
 
Business Leaders Cautiously Optimistic 
 
-------------------------------------- 
 
 
 
¶3. (SBU) On September 4, the Ambassador met with members of 
Monterrey's American Chamber of Commerce (AMCHAM) and other 
leading local business leaders.  Although all admitted to having 
had a very rough year, most predicted a return to modest growth 
of 2-3% in the coming year.  Many voiced reservations about 
increasing taxes at a time when they were already struggling to 
meet expenses.  David Eaton of Kansas City Southern amplified 
that while tax increases are always a challenge, it was the 
uncertainty of Mexico's tax regime that was most problematic, 
particularly for a capital-intensive businesses.  He added that 
the rules regarding concessions in Mexico were also subject to 
unpredictable change, making planning difficult. 
 
 
 
¶5. (SBU) Security continued to be a great concern for all 
present.  Although participants were unanimous in their 
perception that security had continued to deteriorate over the 
past year, none stated that their company had actually curtailed 
operations due to current conditions. 
 
 
 
Opportunities for Increased Demand 
 
---------------------------------- 
 
 
 
¶6. (SBU) Javier Trevino, Vice President of CEMEX and Chairperson 
of the Nuevo Leon Governor-elect's transition team, voiced 
optimism that stabilization in housing start statistics and 
ongoing public housing initiatives would increase demand for his 
firm's products.  Others noted that the US "Clunkers for Cash" 
initiative would likely stimulate demand in the Mexican auto 
sector and that the Mexican government needed to embark upon 
similar stimulus initiatives. 
 
 
 
Skepticism about the Long Run 
 
 
MONTERREY 00000351  002.2 OF 002 
 
 
----------------------------- 
 
 
 
¶7. (SBU) Robert Chandler, Managing Partner of the law firm and 
consultancy Sanchez DeVanny, noted that, while there were 
positive economic signs among current difficult conditions, 
Mexico urgently needed fiscal reform.  Serious structural 
reform, in his view was necessary to broaden the tax base, 
increase education and formal employment, and ensure that Mexico 
remains competitive in the future.  He believed the political 
will to implement such reform was lacking, and this would 
inevitably put Mexico even farther behind on the path to 
development than other Latin American countries, such as Chile 
and Brazil.  Chandler observed that Mexico - the second largest 
economy in Latin America by GDP - was responsible for less than 
15% of the public equity issued over the last year. 
 
 
 
Optimism at the Other End of the Scale 
 
-------------------------------------- 
 
 
 
¶8. (SBU) Compartamos Banco Chairman Alcaro Rodriguez Arregui and 
Executive Vice President Carlos Danel spoke to the Ambassador at 
a weekly Women's Credit Group meeting for borrowers managing 
micro enterprises in a low-income Monterrey neighborhood.  VP 
Danel emphasized that to best understand the business model of 
Compartamos Banco - a microcredit bank with a capitalization of 
approximately $1.563 billion - one had to attend such a meeting 
and witness firsthand the culture of mutual support, timely 
repayment of debt, and responsible savings nurtured among the 
bank's clientele.  He also credited the success of his 
institution to an astute screening process for borrowers, and a 
willingness to write off non-performing loans early.  Bank 
customers told the Ambassador that loans provided by Compartamos 
Banco had helped stabilize their families and given them 
opportunities unavailable in the formal employment sector. 
(Note: Compartamos Banco was founded in 1990 in Mexico City, and 
made its first public offering in 2007.  It currently has 
branches throughout the nation, and has grown to be Latin 
America's largest microcredit lender, serving more than 1.3 
million clients, and employing over 7,000 people.  The bank 
continues to grow, even during the current economic crisis: its 
net income increased by 31.3% from 2Q08 to 2Q09.  End note.) 
 
 
 
¶9. (SBU) Comment:  Common to all conversations was an 
acknowledgement of the real difficulties that Mexicans and 
Mexican enterprises face in today's tough economic environment, 
and their modest hopes for the coming year.  Those representing 
Mexico's largest enterprises emphasized most strongly the need 
for stimulus, while others focused more on the need for clear, 
rational fiscal reform that would benefit, not handicap, the 
business community.  All lamented the lack of a clear GOM 
strategy to deal with the current downturn and hoped that both a 
short range plan of assistance and a long range plan of reform 
would be forthcoming from their government. 
MGRANDFIELD