Mexican investment in U.S. companies soaring
63 commentsby Sergio Solache - Jun. 17, 2010 12:00 AM
Republic Mexico City Bureau .

MEXICO CITY - A new kind of Mexican immigrant is making it big in the United States: 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 crisis to quietly expand their holdings in "el norte."


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

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

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

Lala bought a yogurt plant in Omaha, Neb., 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 Inc. for $2.4 billion, taking over 22 industrial bakeries and 4,000 distribution routes. In all, the Mexican company has 35 bakeries in the United States turning out everything from national brands such as Entenmann's pastries, Boboli pizza crusts and Thomas' English muffins to regional brands like Brownberry bread and Mrs. Baird's snack cakes. About 43 percent of Bimbo's 2009 sales were in the United States.

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 or other names, depending on the U.S. state.

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

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

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

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

Mexican billionaire Carlos Slim has also been expanding his empire into the United States. In March, Forbes Magazine ranked him as 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 percent share in the New York Times Co., making him the largest shareholder after the Ochs-Sulzberger family. He also increased his stake in the Saks Fifth Avenue department stores to 18 percent from 10.9 percent.

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

Meanwhile, América Móvil, a cellphone company controlled by Slim, has increased its U.S. subscribers 26 percent since 2008, to 15 million from 11 million. The company sells no-contract cellphone service under the names TracFone, Straight Talk and Net10.

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

Gruma SAB de CV, which claims to be the world's largest maker of tortillas, wraps and corn flour, now makes 47 percent of its sales in the United States and Europe because of 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. And the González Barrera family, which controls Gruma, also owns one of Mexico's largest banks, Banorte, which in 2009 bought Texas-based Inter National Bank.

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

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