The relationship between Mexico and Spain took an unexpected turn. Three years after Pedro Sánchez, president of the Spanish government, traveled to Mexico City to strengthen ties with his Mexican counterpart, President Andrés Manuel López Obrador decided to “pause” the relationship with the European nation.
Until now, the Mexican Foreign Ministry has not given more details about the scope that this unexpected pronouncement could have. Nor has the Spanish government said anything concrete in this regard. However, diplomatic sources -quoted by the newspaper El País- expressed their “surprise” for some statements that they described as “inexplicable” at a time when relations seemed to be sailing on calmer waters.
Regarding the reasons that motivated this pause in the relationship with Spain, López Obrador has insinuated that they have to do with the dynamics established by some Spanish companies with past administrations. In particular, he named companies from the energy and construction sectors that made contracts with the administrations of Vicente Fox (2000-2006), Felipe Calderón (2006-2012) and Enrique Peña Nieto (2012-2018).
“We are going to give ourselves time to respect each other and not be seen as a land of conquest… We do want to have good relations with all governments, or all the peoples of the world, but we do not want them to rob us,” said the Mexican president in his morning conference .
How long will the pause last? Will it be accompanied by trade barriers? Are the investments of Spanish companies in Mexico at risk? Or of the Mexicans in Spain? Dozens of questions arise after the statement by the Mexican president, who three years ago recognized Spain as the second largest foreign investor in Mexico and stated that Spanish companies “had their doors open” in the country.
López Obrador has changed his mind and now says that it is time to “wait” and “go slowly” with the relationship between Mexico and Spain. This unexpected change in rhetoric has turned on red lights in more than one of the 6,000 Spanish companies with operations in the country. Although some of them believe that the message is aimed at companies that participate in regulated sectors, such as energy, they assure that it is still surprising. “These types of ads do mobilize us.”
Energy companies at the center of the controversy
Iberdrola has been perhaps the company most singled out by the Mexican president so far this six-year term. The company, which arrived in the country before the 2013 reform, owns some power plants that dispatch electricity to the state-owned CFE with contracts that were granted more than 20 years ago, but which the current administration has described as “advantageous.” ‘.
At the beginning of the six-year term, the Spanish company and the federal administration announced a deployment of investments for 5,000 million dollars, which would be spent in the following six years, but the relationship began to wear out after the cancellation of a combined cycle plant that Iberdrola would build in Tuxpan, Veracruz. Finally, the Spanish company put the brakes on and ruled out the disbursement of new investments as long as the regulatory instability in the sector continued.
Iberdrola has already filed some amparos before specialized competition judges to try to stop some of the secondary changes launched by the Ministry of Energy and initiated an international arbitration process against the state company related to Topolobampo III, a combined cycle power plant awarded to Iberdrola in March 2017, under the figure of External Energy Producer.
Another Spanish with operations in Mexico is Repsol. The company maintains six contracts resulting from the oil rounds of the past administration and has become one of the five companies with the most service stations in the country after the state-owned Pemex.
Spanish-owned Naturgy describes itself as “the leading private company in the energy sector in Mexico.” The company has natural gas distribution and electricity generation businesses. In this last business it participates with four combined cycle plants, a wind farm and two solar generation plants.
The footprint of Spanish companies in Mexico
In addition to the Spanish energy companies, which have been the target of the Moreno administration, there are dozens of other companies distributed in seven strategic sectors in Mexico, from infrastructure and telecommunications to banking and automotive.
Telecommunications.
Telefónica, which arrived in the country in 2001, has managed to capture 20% of the Mexican telecommunications market. However, the Spanish company has faced two obstacles that have prevented it from increasing its market share: regulation and the cost of the radio spectrum.
The company chaired by Camilo Aya in Mexico has explained that América Móvil’s market concentration of 61.1% prevents other players in the sector from growing and even replicating its service offerings. The cost of the radio spectrum has been a burden for the company because, according to industry specialists, the price for the use and right of bands in the country is one of the most expensive internationally, preventing other players from increasing their service offering and expand its market share.
This situation caused Telefónica to decide in 2019 to return the radio spectrum that it had deployed in the country and rent the infrastructure from AT&T with the aim of reducing its operating costs.
Banking and insurance
In the financial sector there are several firms of Spanish origin, including Santander, Sabadell, Mapfre and BBVA. Last year, the latter obtained a profit of 2,568 million euros, which represents 45.6% of its global attributable profit. Sabadell resumed its banking operations in Mexico in early 2016 and now has 12 customer service business centers and more than 1,000 employees in Mexico.
Mapfre, for its part, registered a growth of 38.9% at the end of 2021, to 2,187.7 million, in its North Latam unit, where its Mexican subsidiary is integrated. This impulse was due, mainly, to the biannual policy that the company subscribes in Mexico for the Pemex oil company. This contract has contributed 476 million euros, according to company data.
Infrastructure
OHL, now restructured and named OHLA after the recapitalization of the Amodio brothers, is one of the most relevant Spanish construction companies in Mexico not only for its works, but also for the controversy that surrounds it. The company was involved in a corruption case during 2015, when recordings were leaked in which workers spoke of inflating concession figures in the country, mainly in the State of Mexico, to have profit margins higher than what should have been originally projected. .
Its participation in the Mexican market has not ceased, despite the investigations in which it has been involved. The company’s works history in Mexico includes the electrified double track of the Suburban Train, the Río Grande Bridge in Michoacán, section 36 of the México-Toluca Interurban Train and the construction of 400 kilometers of highways throughout the country, among other. One of its most recent projects is the construction of a double cantilever viaduct on the Interurban Train, thanks to a contract won in 2021 under the supervision of the Secretariat of Infrastructure, Communications and Transportation (SICT).
FCC is another company in the sector with more than 20 years of operation in Mexico. Since 2020, the majority shareholder is Carlos Slim, after having acquired 77% of the shares with the settlement of a debt with the investor Carso. Since then, FCC has been involved in larger projects in the country, such as the Mayan Train, from which it won the concession to build Section 2, which will run from Escárcega to Calkiní. His participation is carried out by the hand of Cicsa, a company also owned by the Mexican tycoon.
FCC has a stake in Latin America, mainly in Costa Rica, Panama, Colombia, Peru and Chile, countries that together with Mexico represent 17.5% of its revenues (figure as of 2019).
In energy, the Spanish infrastructure groups with the most interests in Mexico are ACS, Acciona and Abengoa, among others. Firms such as Técnicas Reunidas, Elecnor and Duro Felguera are regular suppliers to both the CFE and Pemex.
aerial
Iberia, which arrived in Mexico in 1950, today offers two daily flights between Mexico City and Madrid. It is the largest airline by number of passengers in the market between Mexico and Spain, where other Spanish companies also operate, such as Evelop Airlines (owned by Grupo Barceló), Air Europa (which is in the process of being purchased by Iberia) and World2Fly, an airline founded by Iberostar during the pandemic.
sightseeing
Mexico plays a very relevant role for the main Spanish hotel chains. Chains such as RIU, Barceló, Meliá and Iberostar, among others, have a wide presence mainly in the Riviera Maya region.
Textiles
Grupo Inditex is another of the Spanish companies that has an important footprint in Mexico through brands such as Zara, Zara Home, Massimo Dutti, Oysho, Uterqüe, Pull & Bear, Bershka, Stradivarius and Lefties. The company arrived in Mexico in 1992 and since then it has established itself in the market with more than 400 stores of all its brands. Zara ranks first with 89 units, followed by Bershka with 73. Globally, the Inditex Group reported sales of 19.325 million euros from January to September 2021, an increase of 37% compared to the same period in 2020.
automotive
The chassis parts manufacturer Gestamp has seven plants in the country and 3,600 employees, while Antolín is present in a dozen cities in the country, where it manufactures interior components such as roofs, doors, lighting, instrument panels and electronic systems.
With information from Mara Echeverría, Ana Luisa Gutiérrez, Diana Nava, Ivet Rodríguez, Juan Tolentino and Diana Zavala.
