Survey encuesta 2006.

What do business leaders expect of the Mexican economy next year? BUSINESS MEXICO asked eight of the most important AMCHAM members. Their general consensus is positive, with healthy volumes in their respective markets and a growing economy. At the same time, they agree, the growth of competition and the search for more efficiency will keep prices stable. Their wishes for 2006? That the Mexican public elects the government that best defends the country's interests, that transportation infrastructure is improved and that long-awaited structural reforms are approved.

?Que esperan los grandes empresarios de la economia mexicana el proximo ano? BUSINESS MEXICO consulto a ocho de los socios mas importantes de AMCHAM. Su diagnostico general es positivo, con volumenes saludables en sus respectivos mercados y una economia en crecimiento. Al mismo liempo, coincidieron, el incremento de la competencia y la busqueda de mayores eficiencias, hara que los precios se mantengan estables. ?Sus deseos para 2006? Que los mexicanos elijan el gobierno que mejor defienda los intereses del pais, que haya una infraestructura de transporte mas eficiente y que se aprueben las tan esperadas reformas estructurales.

Guillermo Fernandez

President & General Manager / Presidente y Gerente General

Colgate-Palmolive 

Sector: Manufacturing and distribution of personal hygiene and household cleaning products / Fabricacion y distribucion de productos de tocador y limpieza

--How do you think your market will behave in 2006 in terms of prices and competition? / ?Como cree que se comportara su mercado en 2006 en terminos de precios y competencia?

--We expect that the volumes will be very healthy, and the fundamental reason is that, in addition to the economic growth, we are going to have the special chance of the presidential election, which normally generates a large flow of money in the street. And that translates into consumption and a much more intense commercial activity, and as a result in more competition. In terms of the prices, the competition tends to make them decline, but the buying power and the monetary disposition makes the prices rise. I think that these two forces are going to even out and that we will not have large inflationary pressures next year, unless we have another round of bullish prices in oil. Predictions are that next year oil will stay high but will be much more accessible. / Esperamos que los volumenes sean muy saludables, y la razon fundamental es que, ademas del crecimiento economico, vamos a tener la coyuntura especial de las elecciones presidenciales, que normalmente generan mucho flujo de dinero en la calle. Y eso se traduce en consumo y en una actividad comercial mucho mas intensa, y por lo tanto en una mayor compelencia. En cuanto a los precios, la competencia tiende a hacer que declinen, pero el poder adquisitivo y la disposicion de dinero hacen que los precios suban. Yo pienso que estas dos fuerzas se van a equilibrar y que no vamos a tener grandes presiones inflacionarias el ano que viene, a menos que tengamos otra ronda de precios alcistas en el petroleo. Las predicciones son que el ano que viene el petroleo se mantendra alto pero sera mucho mas accesible.

--What will happen with the costs in your market, and how do you think they will affect the earnings of your company? / ?Que pasara con los costos en su mercado y como cree que afectaran las ganancias de su compania?

--I do not see a new round of increased prices, unless there are enormous disturbances in the economy. I forsee the prices staying at the very high level that they experienced as a result of the oil crisis, it would be very difficult for them to recede in a significant way. But I think that we have adjusted to this new reality and the question is if we can, through efficiency programs, even neutralize some of these effects of increased prices. I hope so, because the strong shock of three or four months ago already passed, and so we look for forms of making the costs more efficient through new technologies, reformulation of products, packaging changes ... In 2006 the earnings will be under more pressure from the competition than from the costs. It will be more of a struggle of sales than a struggle of costs. / Yo no veo una nueva ronda de alza de precios, a menos que haya desajustes muy tremendos en la economia. Veo que los precios se van a mantener al nivel mas alto que experimentaron como resultado de la crisis petrolera, es muy dificil que vayan a retroceder de una manera significativa. Pero creo que nos hemos ajustado a esa nueva realidad y la pregunta es si podremos, a traves de programas de eficiencia, inclusive neutralizar algunos de esos efectos de los precios en alza. Yo espero que si, porque el shock tan fuerte de hace tres o cuatro meses ya paso, y entonces uno busca formas de hacer mas eficientes los costos a traves de nuevas tecnologias, reformulaciones en productos, cambios en empaques ... En 2006 las ganancias van a estar mas presionadas por la competencia que por los costos. Va a ser mas una lucha de ventas que una lucha de costos.

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--What is your year-end wish? / ?Cual es su deseo de fin de ano?

--I would make a macro wish and a micro wish. The macro wish would be that Mexico chooses as president the best candidate for its interests, for its people and its future. The micro wish is that we have in our particular markets the good star that has accompanied us in recent years and that all of our shares grow significantly in 2006, the year in which my company celebrates its 200th year. / Yo haria una peticion macro y una peticion micro. La peticion macro seria que Mexico escoja como nuevo presidente al mejor candidato para sus intereses, para su gente y para su futuro. La peticion micro es que tengamos en nuestros mercados particulares la buena estrella que nos ha acompanando en los ultimos anos y que todas nuestras participaciones aumenten significativamente en 2006, ano en el que mi compania cumple 200 anos.

Luis Arriaga

General Director / Director General

UPS de Mexico

Sector: Delivery and logistic services / Servicios de mensajeria y logistica

--How do you think your market will behave in 2006 in terms of prices and competition? / ?Como cree que se comportara su mercado en 2006 en terminos de precios y competencia?

--At UPS we see 2006 with good eyes, since nowadays businesses in Mexico are beginning to perceive logistics and distribution as tools for growth of their businesses. In industrialized countries, the supply chain has taken an increasingly large importance in the success of businesses and has gained recognition for being one of the most effective operating processes. Likewise, the use of technology will be fundamental and is another one of our advantages. In 2006 new services will continue to be launched to help businesses export their products and thereby be more competitive in international commerce. In terms of prices I can say that, although they are really relative, given that the efficiency in supply chains saves a high percentage of distribution costs, we see a reasonably favorable tendency, and aggressive increases in rates are not expected. / En UPS vemos 2006 con buenos ojos, ya que hoy en dia las empresas en Mexico comienzan a percibir la logistica y la distribucion como herramientas de crecimiento de sus negocios. En los paises industrializados, la cadena de suministro ha tomado cada vez mayor importancia en el exito de los negocios y ha ganado reconocimiento por ser uno de los procesos operativos mas efectivos. Asimismo, el uso de la tecnologia sera fundamental y es una mas de nuestras ventajas. En 2006 se continuaran lanzando nuevos servicios para ayudar a las empresas a exportar sus productos y asi ser mas competitivas en el comercio internacional. En cuanto a los precios puedo decir que, aunque realmente son relativos, dado que la eficiencia en las cadenas de suministro ahorra en un alto porcentaje los costos de distribucion, se ve una tendencia bastante favorable y no se esperan incrementos agresivos de tarifas.

--What will happen with the costs in your market, and how do you think they will affect the earnings of your company? / ?Que pasara con los costos en su mercado y como cree que afectaran las ganancias de su compania?

--Cost control has always been an important initiative for UPS, and right now our principal focus is taking care of all non-operative costs. Moreover, the company has invested more than US$1 billion annually during the last 10 years in technology and renewal of our vehicular fleet. Our costs vary and we do not foresee any alarming changes. Fortunately, UPS has been showing important advances: In the third quater of 2005, the company's income has grown 18 percent and the earnings 23 percent. / Para UPS siempre ha sido una iniciativa importante el controlar los costos, y en este momento nuestro principal enfoque es cuidar todos aquellos gastos no operativos. Ademas, la compania ha invertido mas de US$1,000 millones anuales durante los ultimos 10 anos en tecnologia y en la renovacion de nuestra flota vehicular. Nuestros costos son variables y no prevemos cambios que pudieran alarmarnos. Afortunadamente, UPS ha venido presentando importantes avances: en el tercer trimestre de 2005, la compania crecio un 18% en ingresos y un 23% en ganancias.

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--What is your year-end wish? / ?Cual es su deseo de fin de ano?

--To successfully execute our plans and strategies for 2006. To achieve our goals, continue our development and support the companies established in Mexico in its growth. That the companies in our country continue to see us as a facilitator of trade and a leader in logistical solutions. And to continue working with the authorities to develop propitious environments in which to do business and to develop even more efficient processes to support the companies in having easy access to the global market in a competitive way. / Ejecutar exitosamente nuestros planes y estrategias para 2006. Alcanzar nuestras metas, continuar nuestro desarrollo y apoyar en su crecimiento a las empresas establecidas en Mexico. Que las companias en nuestro pais continuen viendonos como un facilitador del comercio y lider en soluciones logisticas. Y continuar trabajando con las autoridades para desarrollar ambientes propicios en los que hacer negocios, y desarrollar procesos cada vez mas eficientes para apoyar a las companias a tener facil acceso al mercado global de forma competitiva.

Jose Luis Roman-Pumar

General Director / Director General

Merck Sharp & Dohme Mexico

Sector: Manufacturing of pharmaceuticals / Produccion de medicamentos

--How do you think your market will behave in 2006 in terms of prices and competition? / ?Como cree que se comportara su mercado en 2006 en terminos de precios y competencia?

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--Pharmaceuticals is a market that will continue to grow in competitiveness, and will have to keep in mind that clients, as much as buyers of services, will have a larger sensitivity to prices. / El farmaceutico es un mercado que continuara creciendo en competitividad y habra que lener muy presente que tanto clientes como compradores de servicios tendran una mayor sensibilidad al precio.

--What will happen with the costs in your market, and how do you think they will affect the earnings of your company? / ?Que pasara con los costos en su mercado y como cree que afectaran las ganancias de su compania?

--We estimate that the costs will follow the trends established in 2005, and that the main focus of attention should be human resources and talent. / Estimamos que los costos seguiran las tendencias expresadas en 2005, y que el principal foco de atencion debera estar en el recurso y talento humanos.

--What is your year-end wish? / ?Cual es su deseo de fin de ano?

--That Mexico betters the rule of law, including a more efficient and just regulatory model. And also that there is more valuation of and compensation for innovation. / Que en Mexico mejore el apego al estado de derecho, incluyendo un modelo regulatorio mas eficiente y justo. Y que tambien haya una mayor valoracion y recompensa a la innovacion.

Juan Carlos Marroquin

General Director / Director General

ExxonMobil Mexico

Sector: Production and distribution of automobile lubricants / Fabricacion y distribucion de lubricantes para automoviles

--How do you think your market will behave in 2006 in terms of prices and competition? / ?Como cree que se comportara su mercado en 2006 en terminos de precios y competencia?

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--Just as in this year, in 2006 the prices will be determined by the behavior of the costs of raw materials. But the market is what establishes the price dynamic independently of the increases or decreases in the costs of the raw materials. / Al igual que este ano, en 2006 los precios seran determinados por el comportamiento de los precios de las materias primas. Pero es el mercado el que establece la dinamica de precios independientemente de los incrementos o bajas en los costos de las materias primas.

--What will happen with the costs in your market, and how do you think they will affect the earnings of your company? / ?Que pasara con los costos en su mercado y como cree que afectaran las ganancias de su compania?

--Prices move according to the costs and the dynamic of competition in the market. According to this behavior, the future of the profitability could be affected. / Los precios se mueven segun los costos y la dinamica de competencia en el mercado. Segun este comportamiento, el futuro de la rentabilidad se podria ver afectado.

--What is your year-end wish? / ?Cual es su deseo de fin de ano?

--The approval of structural legal reforms in Mexico, that would allow a larger and freer participation of those involved in this market and would incentivize both the energy industry and Mexico's economic growth. / La aprobacion de reformas legales estructurales en Mexico, que permitirian una mayor y libre participacion de los involucrados en este mercado e incentivarian la industria energetica y el crecimiento economico para Mexico.

Robert Potter 

General Director / Director General

Tempel Mexico

Sector: Manufacturing of steel laminations / Fabricacion de laminados de acero

--How do you think your market will behave in 2006 in terms of prices and competition? / ?Como cree que se comportara su mercado en 2006 en terminos de precios y competencia?

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--We are going to continue to be pressured by the lower cost producers, China and India, to keep our businesses capable of providing adequate returns on our investments here. / Vamos a seguir presionados por los productores de menores costos, China e India, para mantener nuestro negocio capaz de brindar retornos adecuados sobre nuestras inversiones aqui.

--What will happen with the costs in your market, and how do you think they will affect the earnings of your company? / ?Que pasara con los costos en su mercado y como cree que afectaran las ganancias de su compania?

--Our raw material supply, cold rolled steels, has seen unprecedented price increases over the past three years, and these costs will continue to increase in 2006. This, along with rising energy and transportation costs, will continue to adversely affect our performance. / Nuestra materia prima, el acero laminado en frio, ha experimentado aumentos de precios sin precedentes en los ultimos tres anos, y estos costos continuaran incrementandose en 2006. Esto, junto con costos crecientes en energia y transporte, continuara afectando negativamente nuestro desempeno:

--What is your year-end wish? / ?Cual es su deseo de fin de ano?

--Mexico's new administration needs to help reduce the liability that comes with "staying in Mexico." We must find ways to move our product, both into and out of the country, at a reduced rate, find more efficient and less costly energy sources and loosen the regulatory burdens. / El nuevo gobierno de Mexico debe ayudar a reducir la desventaja de "permanecer en Mexico". Necesitamos encontrar formas de mover nuestro producto, tanto dentro como fuera del pais, a una tarifa menor, encontrar fuentes de energia mas eficientes y menos costosas y aliviar las cargas regulatorias.

Pedro Farinas

President & General Director / Presidente y Director General

Schneider Electric Mexico

Sector: Manufacturing and distribution of electrical products / Manufactura y distribucion de productos electricos

--How do you think your market will behave in 2006 in terms of prices and competition? / ?Como cree que se comportara su mercado en 2006 en terminos de precios y competencia?

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--Prices will stay generally stable, pressured downwards by the proliferation of counterfeit Chinese products. Formal competition will stay very stable, while informal competition will continue to increase. / Los precios se mantendran en general estables, presionados a la baja por la proliferacion de productos falsificados chinos. La competencia de tipo formal se mantendra muy estable, mientras que la informal seguira aumentando.

--What will happen with the costs in your market, and how do you think they will affect the earnings of your company? / ?Que pasara con los costos en su mercado y como cree que afectaran las ganancias de su compania?

--We would have less pressure on the costs if the prices of both oil and metals were to stabilize. Meanwhile, we will continue to seek efficiency in operations to make up for these increases. / De estabilizarse tanto el precio del petroleo como de los metales, tendremos menos presion sobre los costos. Mientras tanto, seguiremos buscando eficiencia en operaciones para compensar estos aumentos.

--What is your year-end wish? / ?Cual es su deseo de fin de ano?

--Any plan to seek better indexes of competitiveness for Mexico on the part of the country's political forces is welcome. At the same time, the concretion of specific plans to improve the juridical security and thereby maintain the rule of law is indispensable. / Cualquier plan que busque mejoras en el indice de competitividad de Mexico por parte de las fuerzas politicas del pais es bienvenido. De igual forma, es imprescindible la concrecion de planes especificos pard mejorar la seguridad juridica y asi mantener el estado de derecho.

Jesus Alvarez Torres

General Director / Director General

Amway de Mexico

Sector: Direct sales / Venta directa

--How do you think your market will behave in 2006 in terms of prices and competition? / ?Como cree que se comportara su mercado en 2006 en terminos de precios y competencia?

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--Competition in the direct-sales sector will increase due to the growing acceptance of this offering as a source of income, just as acceptance of this way of acquiring products on the part of the final consumers. Prices in our market should remain without much change due to the economic and exchange stability of the past few years. / La competencia en el sector de venta directa aumentara debido a la mayor aceptacion de esta oferta de fuente de ingresos y de esta forma de adquirir productos por parte de los consumidores finales. Los precios en nuestro mercado deberan permanecer sin mayor cambio debido a la estabilidad economica y cambiaria de los ultimos anos.

--What will happen with the costs in your market, and how do you think they will affect the earnings of your company? / ?Que pasara con los costos en su mercado y como cree que afectaran las ganancias de su compania?

--The current economic dynamic of the Mexican market will allow us to manage the costs of our products in such a way to let us obtain our planned earnings. / La dinamica economica actual del mercado mexicano permitira manejar los costos de nuestros productos de tal manera que obtengamos las ganancias planeadas.

--What is your year-end wish? / ?Cual es su deseo de fin de ano?

--Structural reform in the area of governmental technical regulations related with the imports of nutrition supplements, which would allow the import of more supplements to satisfy the demand of the Mexican consumer and achieve more equal competition. / Una reforma estructural en el area de las regulaciones tecnicas gubernamentales relacionadas con las importaciones de suplementos alimenticios, que permitan poder importar mas suplementos para satisfacer la demanda del consumidor mexicano y lograr una competencia mas equitativa.

Ernesto Sanchez Proal

General Director / Director General

Jabil Circuit de Mexico

Sector: Manufacturing and assembly of electronic goods / Fabricacion y ensamble de productos electronicos

--How do you think your market will behave in 2006 in terms of prices and competition? / ?Como cree que se comportara su mercado en 2006 en terminos de precios y competencia?

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--There will be more pressure on prices and more competition. / Habra una mayor presion sobre los precios y una mayor competencia.

--What will happen with the costs in your market, and how do you think they will affect the earnings of your company? / ?Que pasara con los costos en su mercado y como cree que afectaran las ganancias de su compania?

--Costs will be stable, in terms of components, with inflation going down. On the other hand, pressure on the prices in consumption niches will force us to reduce costs. / Habra costos estables en cuanto a los componentes y una inflacion a la baja. Por otra parte, la presion sobre los precios en nichos de consumo nos obligaran a reducir costos.

--What is your year-end wish? / ?Cual es su deseo de fin de ano?

--That an efficient transportation infrastructure is constructed from Guadalajara to the border with the United States, whether by train or highways. / Que se construya una infraestructura de transporte eficiente desde Guadalajara a la frontera con Estados Unidos, ya sea via tren o por carreteras.

Production / Produccion: Laura Suarez Samper

Translation / Traduccion: Julia Cooke