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Market News

 March 10, 2009
Mexico - Waste Management Equipment Market

 

Summary

The following report describes the market in Mexico for equipment used for the collection, transport, recycling, and final disposition of solid municipal waste.  The total 2008 market for solid municipal waste equipment was USD 905 million. It is expected that the total market will increase to USD 932.2 million by the end of 2009 and grow 5 percent from 2009 to 2010.

Market Demand

In 1992, the Secretariat for the Environment, and Natural Resources (SEMARNAT) created an enforcement agency, the Attorney General for Environmental Protection (PROFEPA). SEMARNAT and PROFEPA have been working together with Mexico’s 32 states towards improving the infrastructure needed to dispose of the large quantities of solid municipal waste that is generated annually in major urban and rural areas of the country.

Mexico has an environmental protection regulatory system that has directed the 32 states to be responsible for implementing local laws and programs to handle solid municipal waste. Today, the states have adopted their own environmental laws and are responsible for the policies and implementation of programs to properly handle the solid municipal waste generated in their states.

According to the National Program for the Prevention and Integral Management of Solid Waste 2008-2012 published recently by SEMARNAT, at the end of 2008, the 32 states were generating over 105,000 tons of solid waste daily. Fifty three percent is considered organic waste, 28 inorganic waste with commercial value (recyclable), and 19 percent of waste with no commercial value.

Management Equipment Market

Mexico has a total of 2,400 municipalities with a population (December of 2008) of over 103.2 million. Of the total waste generated daily, 87 percent is collected and 13 percent is dumped illegally. Of the 87 percent collected, 64 percent goes to sanitary landfills and controlled areas

and 33 percent is sent to open air landfills with no control. SEMARNAT indicates that Mexico needs at least 50 new sanitary landfills to meet the existing demand of the 105,000 tons of solid waste generated daily. SEMARNAT also reports that at the end of 2008, Mexico had a total of

11 sanitary landfills; 30 controlled landfills; and 17 open air landfills.

According to SEMARNAT and SEDESOL officials, the number of transportation trucks used in Mexico for the collection of solid municipal organic and inorganic waste is over 10,000, of which 20 percent are models manufactured from year 2001 to 2008; 50 percent are models from 1990 to 2000; and 30 percent are trucks that were manufactured from 1975 to 1989.

As of 2008, there are 40 separation facilities; 80 transfer stations, and a total of 100 composting plants for organic waste.

Best Prospects

Best prospects for this sub-sector include the following:

Automated carts, lifters, dumpers, containers, bin systems, recycling equipment for corrugated boxes, plastic bottles, tin cans, etc, cranes, landfill cover materials/equipment, landfill dozers, scrapers, landfill treatment systems/equipment, odor control systems, shredders/pulverizers,

conveyors/live floors, safety equipment, transfer trailers/liners, truck bodies, rear loaders, recyclers, truck parts, vehicle washing mad maintenance equipment, solid waste balers, classification systems, scales, transfer trailers, transportation trucks, landfill covers, landfill compactors, liners/geotextiles, methane recovery systems, methane analyzing instruments, cranes, crushers, sorting systems, tub grinders, wood chippers, garbage incinerators, etc.

Key Suppliers

Key suppliers for this sub-sector includes the following:

Freightliner, Navistar International, Volvo Trucks North America, Sterling Truck Corporation, Coleman Tool and Manufacturing, Leach Company, Dempster Equipment, McNeilus Truck and Manufacturing, Wastequip, Wayne Engineering Corporation Caterpillar, Continental Biomass

Industries, Detroit Diesel, Cummins, Duratech Industries, Geotech Environmental, Equipment, Harris Waste, Industrial Lifters, Hustler Conveyors, Komatsu America, Pioneer Cover, RJM Equipment, Marathon Equipment, PTR Baler and Compactor, Waste Pro, etrc. The main third-country competitors are Canada, Germany, Japan, and France.

Third-country competitors

Third country firms usually have a representative in Mexico or have a strategic alliance with a local solid municipal waste equipment firm. Many have actively promoted their interests during the last five years by participating in trade shows and technical seminars in Mexican cities

where the demand for the equipment is greatest. When shows and seminars are held in their countries, they may invite private sector executives and state officials, and potential representatives to participate with all expenses paid. These visits include tours of the manufacturing plants, landfills, end-users, research institutions, which many times result in

cooperation agreements, exchange of research information, and technical training programs.

Prospective Buyers

Private Sector: Proactiva, Ecolimpio, Ambtec, Germen, S.A. de C.V., IECOSA Corporacion, Eco Ingenieria, Control y Equilibrio Ecologico, Promotora Ambiental, Wolf Consultores y Asesores Ambientales,

Tecma, S.A. de C.V., Comercializadora y Servicios Ingenieriles, Constructores e Ingenieria del Medio Ambiente, Halcon Internacional de Proyectos Ecologicos, Equipamiento y Suministros Industriales, Sistemas de Ingenieria y Control Ambiental, S.A. de C.V., Soluciones Ambientales Integrales, Control, Ingenieria y Medicion, etc.

Government Sector

The 32 Mexican states have either a Public Services or an Environmental Division that is charged with researching equipment and creating or increasing their existing infrastructure to properly manage the solid waste generated daily in their major cities.

The following cities are among the 142 with more than 100,000 people that as December 2008 have expressed the intention to build a landfill and buy some type of solid waste equipment:

San Cristobal de las Casas, Celaya, Salamanca, Chilpancingo, Tulancingo, Guadalajara, Puerto Vallarta, Chalco, Texcoco, Lazaro Cardenas, Cuernavaca, Oaxaca, Salina Cruz Chetumal, Ciudad dobregon, Coatzacoalcos and Zacatecas.

Mexico City:

The city’s only operational landfill will be closed by the middle to 2009. It currently receives daily 12,500 tons of waste generated by over 20 million people living in the metropolitan area. The landfill started operations in 1994 and it has accumulated 60 million tons of waste that now emit nearly 1.3 million tons of CO2 annually. The authorities will build a methane capture system and a power plant to convert the captured methane into electricity that can be fed back into the city’s grid. The city’s goal is to begin construction by the end of 2009 of a waste management center to

include: a Recycling Integral Center and Energy (Centro Integral de Reciclado y Energia), a new landfill with state of the art recycling technology for tires, plastics, electronics, tin cans, etc., and a composting facility. The Mexico City authorities have a budget of US$150 million.

Import, Duties and Taxes

According to the 1998 modifications in the Mexican customs law, the participation of a customs broker is not obligatory for imports if all legal and technical requirements are met. In the same change, in order to import some goods, it is now required that the importer be registered as

such with the Secretariat of Treasury and Public Credit (Secretaria de Hacienda y Credito Publico-SHCP). The participation of a customs broker is suggested when the exporter is not familiar with Mexican standards and customs processing procedures.

For companies interested in offering engineering services for the design and construction of sanitary landfills, they should know that SEMARNAT has the NOM-083-SEMARNAT-2003 that must be followed.

Market Entry

Often, the decision to select a solid municipal waste equipment and services provider depends on the demonstrated commitment to service after the sale has been made. This has been the most effective tool that third country manufacturers have used to penetrate the market. They

offer to have their maintenance personnel at the clients’ facilities in no more than 48 hours after

a service call is made. The availability of required spares is the natural complement to the presence of their technicians. Customers in the solid municipal waste equipment and services are demanding uniform quality

control, compliance with international standards, productivity, lower production costs, just-in-mtime deliveries and above all, reliable local service and maintenance programs. This last factor has become, in many instances, even more important than pricing or financing in the solid municipal waste equipment purchasing decision.

OPPORTUNITIES FOR PROFILE BUILDING

U.S. firms wishing to promote their products and/or services to Mexican representatives and/or buyers can do so by participating in the trade exhibitions program of Commercial Service Mexico, held annually in Mexico through privately held exhibitions and/or seminars.

Advertisements in specialized magazines are very effective, especially in publications distributed to members of associations or distributed to large potential end-users, equipment distributors, contractors, and government officials.

Financing

Financing is very important to marketing in Mexico, particularly in the solid municipal waste equipment. Mexico’s 10 commercial banks offer a full spectrum of services within one institution. These services range from offering deposit accounts, consumer and commercial lending, corporate

finance, and the operation of trust and mutual funds, to foreign exchange and money market trading. Mexico’s commercial banking sector has been opened to foreign competition. The North American Free Trade Agreement (NAFTA) permits U.S. and Canadian banks or any other

foreign bank with a subsidiary in the U.S. or Canada to establish wholly owned subsidiaries in Mexico. It is not a requirement for U.S. suppliers of solid municipal waste equipment to bring the financing to sell their equipment. It is a general practice for Mexican companies that purchase

solid municipal waste equipment to use commercial bank financing to pay for the technology.

An irrevocable letter of credit is commonly used when dealing with foreign suppliers. The major Mexican commercial banks, besides having correspondent banks in the United States provide typical bank services, such as transfer of funds, letters of credit, and money orders.

Additionally, U.S. government agencies, such as the U.S. Trade and Development Agency (USTDA), the U.S. Export Import Bank (Exim), the Overseas Private Investment Corporation (OPIC) have programs in this sector. USTDA finances feasibility studies and other forms of technical assistance. Exim can guarantee up to 85% of the U.S. content and OPIC can provide insurance if 25% of the project investment is from the United States. High value sales usually are made through letters of credit. Small value sales are either made with cash or with a 50 percent advance payment when the order is placed and 50 percent on delivery.

BANOBRAS

BANOBRAS is Mexico’s infrastructure bank that has an important role for municipalities to purchase equipment to provide the solid waste services. BANOBRAS can finance the construction of a new landfill, purchase of trucks, garbage carts, compactors, transfer trailers, shredders, equipment for the recycling of inorganic waste, etc. Mexico’s national infrastructure bank (BANOBRAS) has a budget of US $200 million for solid waste projects.

NADB

North American Development Bank (NADB) and its sister institution, the Border Environment Cooperation Commission (BECC), were created under the auspices of the North American Free Trade Agreement (NAFTA) to address environmental issues in the U.S.-Mexico border region.

The two institutions initiated operations under the November 1993 Agreement Between the Government of the United States of America and the Government of the United Mexican States Concerning the Establishment of a Border Environment Cooperation Commission and a North American Development Bank (the "Charter"). Since its creation to the end of 2008, the NADB has financed over 38 projects on the Mexican

side of the border related to the solid municipal waste. The projects have included the building of new landfills, the purchase of trucks, containers, solid waste compactors, etc.

Resources and Key contacts

  • Secretariat for the Environment and Natural Resources: www.semarnat.gob.mx
  • Secretariat for Social Development: www.sedesol.gob.mx
  • National Institute of Ecology: www.ine.gob.mx
  • Attorney General for Environmental Protection: www.profepa.gob.mx
  • National Council of Environmental Executives: www.conieco.org
  • Mexico City Government: www.df.gob.mx
  • Mexico’s Public Works Bank (BANOBRAS):www.banobras.gob.mx

  Excerpts from Mexico - Waste Management Equipment Market, 2009 US Commercial Service