Guillermo Ortiz
Director General
Consorcio IUYET
View from the Top

Eyeing the Mayan Train, Other Rail Infrastructure

Mon, 11/05/2018 - 17:29

Q: As a civil engineering and project management company, in which kinds of projects would you like to participate?
A: The newly-elected government is advancing the Mayan Train project, which would be the biggest infrastructure initiative in the country, crossing five states. We would like to take part in this project. So far, we know that it will reuse part of the ancient Palenque Rail, while another segment will cross Tulum and will be available for both passengers and freight. This project is a challenge given the geography of the areas it will straddle, full of cenotes and underground rivers. This would mean stringent due diligence in terms of ROW and for social aspects with so many communities and ejidos involved. It is also of utmost importance to highlight the cost-effectiveness of carrying out this project with Mexican infrastructure companies as we can offer a more competitive price.
We also expect more investment in other rail projects during the next administration and we would like to participate more in this endeavor as I think that Mexico needs more rail. We must also focus on finishing ongoing projects, such as the Mexico City-Toluca Interurban Train and NAIM. I think that both projects are doing well despite some construction setbacks.
Q: How would you address corruption in Mexico?
A: The construction industry is fundamental for the development of the country as it generates new economies, new towns and new local businesses, to mention a few. To address corruption, my approach would be to pay high and competitive salaries to public officers as a measure to tackle extortion. Lowering public wages will not solve anything. According to Maslow’s hierarchy of needs, we must have our workers’ needs covered by their salaries, so they can focus on doing their jobs instead of worrying about how to pay rent and feed their families.
I also perceive the need for more private investment as it is proven to yield better results, delivers projects on time and with higher returns. But the government is giving zero incentives to Mexican construction companies. The reality is that our majority shareholder is SAT. Taxes are killing construction companies as we must invoice and tax return every peso spent. Also, when advancing a construction project, the government automatically sends the contract to IMSS, so we end up having two partners that do not contribute a cent to the project but are its main shareholders. So, when we submit a budget for a project, we calculate all these payments and, in the end, the project is awarded to some company tendering for half of the price. If the government makes a base budget, why is it tendering projects that come in under what it calculated? I think it is in Mexico’s best interest to have healthy businesses.
Q: What are your goals and expectations as a company over the next two years and what do you need to accomplish these?
A: Seeking to broaden our structure, we are bidding for projects in Guatemala, Peru and Ecuador. We foresee a lot of infrastructure investment in these countries applicable to the technologies that we can offer. In Mexico, we saw the need to expand our range so we are currently collaborating with companies such as Grupo Sordo Madaleno and CAABSA. I find that projects such as Sordo Madaleno’s Torre Reforma Colón are shaping the image of our country to the world. In this project, we are participating in its engineering, with a high-resolution topographic survey. We are also exploring the possibility of using BIM. The added value of our engineering is that it includes the whole project ecosystem.
The country needs to have the right conditions for construction companies and projects to thrive. The market is contracted and people do not want to invest. The proof is that we are working and invoicing 30 percent of what we used to. However, some public officers that have been in charge for too many years are being replaced, which we expect will be beneficial. We also need the incoming administration to fulfill its promises. I think that it must focus on generating more infrastructure as this is the way to foster the country's growth. For this to happen, Mexico needs long-term planning.