Thread: Mexico invests, puts its mark on more U.S. brands

Mexico invests, puts its mark on more U.S. brands

Posted 5m ago
By Sergio Solache, Special for USA TODAY

MEXICO CITY — A new kind of Mexican immigrant is making it big in the USA: huge Mexican corporations that are snapping up U.S. brand names, opening U.S. factories and investing millions of pesos north of the border.
From Thomas' English Muffins to Borden milk, Saks Fifth Avenue department stores to The New York Times newspaper, Mexican investors have taken advantage of low interest rates and depressed prices during the economic downturn to expand their holdings in el norte.

"These companies show we're not just a bunch of uneducated migrants," says Jorge Smeke, a business professor at Iberoamerican University in Mexico City. "Clearly there are Mexican investments (in the USA) that are creating jobs."

In some cases, Mexican companies have taken over U.S. brands. Others have expanded their U.S. operations or increased their investments in U.S. firms.

A slice of the pie

Newcomers include Grupo Lala, Mexico's largest dairy company, based in Gómez Palacios in the northern state of Durango.

Lala bought a yogurt plant in Omaha in 2007. In 2009, it purchased Dallas-based National Dairy Holdings, which controls the Borden brand and 18 regional dairies selling milk under the names Flav-O-Rich, Dairy Fresh, Velda Farms, Sinton's, Cream O' Weber, Goldenrod and others.

Grupo Bimbo, Latin America's largest baked-goods company, has also expanded its U.S. operations.

In 2009, Mexico City-based Bimbo bought the U.S. baked-goods operations of Weston Foods for $2.4 billion, taking over 22 industrial bakeries and 4,000 distribution routes. In all, the Mexican company has 35 bakeries in the USA turning out national brands such as Entenmann's pastries, Boboli pizza crusts and Thomas' English Muffins to regional brands such as Brownberry bread and Mrs. Baird's snack cakes. About 43% of Bimbo's 2009 sales were in the USA.

New investment in the USA by Mexican companies rose from $3.6 billion in 2005 to nearly $8 billion in 2008, according to the latest statistics from the U.S. Department of Commerce. Mexican companies employ about 59,000 people in the USA.

Like Bimbo and Lala, many of the Mexican companies operate regional subsidiaries, a structure that obscures their immense size.

Cemex, the world's third-largest cement maker, markets its products as Victor, Dixie, Richmortar and other names depending on the U.S. state.

"Many people don't even realize (the companies) are Mexican," says Teresa Gutierrez-Haces, an economist at the National Autonomous University of Mexico.

Cemex became a giant in 2008 after acquiring Australia's Rinker Group for $14 billion. The deal included 415 U.S. plants that produce concrete, gravel, blocks and other building materials. The company says it employs about 18,000 people in the USA.

The Mexican investment in the USA is good news for both countries, says Lorraine Eden, a professor of management at Texas A&M University. The USA benefits with jobs and tax income, while the stream of foreign profits strengthens Mexico's economy.

"In the end, it improves growth and competitiveness back home in Mexico," Eden says. "It's a two-way flow, and it's good for both of us."

Mexican billionaire Carlos Slim has expanded his empire into the USA. In March, Forbes magazine ranked him the world's richest person, beating out Americans Bill Gates and Warren Buffett with a net worth of $53.5 billion.

In 2008, Slim bought a 6.9% share in The New York Times Co., making him the largest shareholder outside the Ochs-Sulzberger family. He increased his stake in the Saks Fifth Avenue department stores from 10.9% to 18%.

Tuesday, Slim entered the Manhattan real estate market, buying an office building on Fifth Avenue for $140 million.

América Móvil, a cellphone company controlled by Slim, has increased its U.S. subscribers 26% since 2008 from 11 million to 15 million. The company sells prepaid cellphone service under the names TracFone, Straight Talk and Net10.

Adding foreign flavor

Some Mexican companies have benefited from the spread of Hispanic culture in the USA.

Gruma, which claims to be the world's largest maker of tortillas, wraps and corn flour, makes 47% of its sales in the USA and Europe, thanks to the growing popularity of Mexican food.

The company has 25 bakeries and flour mills in Texas, California, Indiana and Kentucky. It is a major supplier to restaurants and fast-food chains. The González Barrera family, which controls Gruma, owns one of Mexico's largest banks, Banorte, which bought Texas-based Inter National Bank in 2009.

"They're not going (to the USA) just to sell to Latinos anymore," says Juan Enciso, an economics professor with the Institute for Advanced and Continuing Studies in Monterrey.

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