Q: What were the biggest challenges Kepler faced during the COVID-19 pandemic?
A: Like many businesses, we never foresaw an event like the COVID-19 pandemic ever occurring. Once the pandemic was already happening, it took us some time to evaluate the size of the impact it would have, although the company did not foresee that COVID-19 would have lasting effects even two years after it started. Once we understood this, we conducted an analysis to reconfigure our business strategy.
On-site work for Kepler’s construction projects presented different challenges. In the beginning, we implemented restrictions and sanitary measures that increased project costs. In addition, at the height of the pandemic, construction work was suspended indefinitely. During this time, we had three construction projects under development, of which only one remained in operation. The other two had to be halted until sanitary conditions improved months later.
Q: Aside from the effects of the pandemic, how has the economic contraction that Mexico has experienced since 2019 affected the construction industry?
A: A lack of economic growth always reduces capital investments by companies in infrastructure; to say it in other words, to have economic growth you need to invest in infrastructure. Kepler has always worked for the private sector. Even when developing government projects, Kepler is always subcontracted by private companies involved in these public works. This is because Kepler is a medium-sized company that does not yet have the capacity to bid directly on public tenders. Because we exclusively focus on the construction side, we are not involved in any industrial engineering. We had several projects planned, for which the tenders were canceled because of the economic slowdown. Due to the lack of work, price competition has also become tougher, as more companies are looking to win the few projects on the market. This means that we need to focus on our yields, be more productive and take advantage of available technology.
Q: What industries does Kepler mainly focus on?
A: Kepler focuses entirely on heavy infrastructure for the mining, power generation, steel, oil and gas industries. Our portfolio is always dictated by the market because we adapt to the demand created by project development. Kepler started by constructing for the steel industry. As it grew, Kepler moved into power generation and then entered the mining industry. Due to corporate strategy and internal restructuring, Kepler chose to exit the power generation sector to focus on the steel and mining industries, during the past presidential administration. Mining projects require a smaller capital investment, and they are less risky and generate better profits, contrary to energy projects, where the turnover is lower, and the risk is higher. Under the López Obrador administration, we aim to reenter the power generation sector because there is an energy deficit that suggests a great deal of opportunity for growth. We are currently in the quotation stage to participate in energy generation projects.
Q: What deficiencies have you identified in Mexico's natural gas infrastructure?
A: The first area of opportunity is improving the gas supply. Many gas pipeline construction projects have been halted or remain unfinished due to various problems. The first thing that is needed is the capacity to supply gas to power plants. A network of natural gas pipelines was planned to distribute the fuel from northern to southern Mexico. However, many of these projects were interrupted due to political changes and a lack of guarantees for private investment.
Q: What opportunities does Kepler see in renewable energy infrastructure and other sustainability-minded efforts?
A: The company has been interested in entering the renewable energy industry, but we have not yet done so because we do not have experience in this niche. Nevertheless, renewable energy projects are on hold for the moment but as soon as they reactivate, Kepler’s goal is to start participating in them.
Another industry we are open to participating in is water infrastructure and waste management. Kepler's extensive experience in civil, mechanical, electromechanical, and electrical works allows us to adapt to any industrial infrastructure project while maintaining our high-quality standards.
Q: What infrastructure investments should Mexico consider to boost economic growth?
A: One of the main areas in which investment is urgently needed to promote growth is energy generation. The country already has an energy deficit that limits further industrial production. Mexico is fortunate to be rich in many resources. Mining also has strong potential and has been relatively underdeveloped by comparison. These investments demand capital-intensive projects with long-term returns. To encourage development, all types of guarantees and clarity in the regulatory framework are essential. Mexico is not providing this at the moment.
Kepler Constructora is a Mexican construction company founded in 1975 and specialized in industrial infrastructure. Kepler has completed over 100 projects in the mining, energy, petrochemical and steel industries. Its clients include PEMEX, CFE, Siemens, Ternium, Technip, Samsung and Gold Corp.