JPRS ID: 10622 LATIN AMERICA REPORT

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500070068-5
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 33
• Document Creation Date: November 1, 2016
• Sequence Number: 68
• Content Type: REPORTS

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000500074468-5
FOR OFFICIAL USE ONLY
JPRS L/1Q622
29 auNE 1982
~ Lat~r~ America t~e ort
p
.tF0U0 ~1G/82)
= FB~$ FOREIGN BRO~DCAST INFORMATION SERVIGE
FOR OFFIC[AL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5
NOTE
JPRS publications contain information primarily from foreign
newspapers, periodicals and books, but also from news agency
transmissions a:nd broadcasts. Materials from foreign-language
sources are tr~nslated; those from English-language sources
are transcribed or reprinted, with the original phrasing and
other ~haracteristics retained.
Headlines, editorial reports, and material enclosed in brackets
are supplied by JPRS. Processing indicators such as [Text]
or [Excerpt] in the first line of each item, or following the
- last 1 ine of a brief, indicate how the original information was
- processed. i,Jhere t~o processing indicator is given, the infor-
- mation was summarized or extracted.
Unfamiliar names rendered phonet~cally or transliterated are
- enclosed in parentheses. Words or names preceded by a q~~es-
- tion mark and enclosed i.n parentheses were not clear in the
original but have been supplied as appropriate in cantext.
Other unattributed parenthetical notes within the body of an
= item originate with the source. Times within ~tems are as
given by source .
_ The contents of this publication in no way represent the poli-
cies, views or at.titudes of the U.S. Government.
COPYRIGHT LAWS AND REGULA.TIONS GOVERNING OWNE~2SHIP OF
MATERIALS REPRODUCED HEREIN REQUIRE THAT DISSEMINATION
OF THIS PUBLICATION BE RESTRICTED FOR OFFICIAL USE ONLY.
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R004500074068-5
FOR OFFICIAL USE ONLY
JPRS L/10622
~ 29 June 1982
- LATIN AMERICA REPORT
_ (FOUO 10/8 2 )
CONTEMTS
COLA~ITRY SECTION
~ ARGENTINA
U.S. Seen as 'Discordant, Inconsistent'
(Andres Ruggeri' SAPORITI, 10 June 82) 1
~ Dissident C(~ Official Discusses ILO Conference
(DYN, lU Jun 82)........... 3
Senior Officers Criti~ize Military Tactics
(Jimu{y Burns; FINANCIAL TIMES, 16 Jun 82) 5
CUBA
Isle of Youth School Trains Ycung r'oreigners For Revolution
(Pierre Cayrol; AFP, 5 Jun 82) 6
- NIE;XI 00
Descript ion of Financial Institutions, Business Groups
(PARIS MATCH, 19 mar 82) 8
IMCE: tmproving the Trade Defi.cit
The Promoters of..Mexican Industry
~ Private Benks: a Necessity
Hermes: An Exceptional Case
Alfa: From Steel to Paper
Vit ro: Bastion of the Mexican Economy
I CA: More Than 40 Companies
- a - [III - LA - 144 FOUO]
F(1R nFFIr~4i. USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-00850R000540070068-5
f~(3R OF'FICIAL USE ON1.Y .
COUNTRY SECTION ARGENTINA
U.S. SEEN AS 'D:[SCORDANT, INCONSISTENT'
- PY101533 Buenos Aires SAPORITI in Spanish 1200 GMT 10 Jun 82
[Report by Andres Ruggeri]
[Text] Buenos Aires, 10 Jun (SAPORITI)--The disagreements between U.S.
Secretary of State Alexander Haig and U.S. delegate to the United Nations
Jeane iC3rkpatrick have seartled the Weste�rn world which is watching in
bewilderment the number of disagreements [desinteligencias] which, given
the fact that they involve high-ranking representatives of the top Western
. power, are extremely worrisome.
~ The United States is revealing a serious gap in its foreign policy. Nobody
understands why very well. When a ni~tion reaches the stature of the United
_ States it is because it has a privileged class of leaders, or at least had
~ such leadets.
Various diplomatic circles have observed that in Washington a scapegoat is
being sought for so many disagreements in handling the crisis in the South
Atlantic, the conflict over the Malvinas between Argenti.�s snd Great Britain
as well as to qu~Il the wave of anger unleashed in Latin America against
the United States.
Is Alexander Haig the culprit, or is it Thomas Enders? We must not believe
- that they are the only ones whose heads are on the block. Charles Percy,
who is chairman of the Senate Foreign Relations Committee and who has always
tried to obtain a carte blanche for Margaret Thatcher from President Reagan,
- is also fingered by those looking for culprits in the Latin American con-
frontation with the United States.
The WASHINGTON POST talks about the Latin American collapse, the 13ttle or
no influence which as of now the U.S. Government will have on the countries
soutli of the Rio Grande. The WASHINGTUN POST wonders how difficult it will
be for the U.S. governments which succeed Fresident Reagan's administration
to restore Latin American faith in the United States. These are questions
~asked by U.S. politicians today, those politicians who at some time in their
lives have seriously considered South America the backyard (geopolitically
speaking) of the United States.
1
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R004500074068-5
r~K urr~~.~ni, u~~ uN~.v
- In Washington there are many political analysts who txy to tune their ears
to hear those muffled predictlons which are being cast on the future of
sever.al State Department officials beginning with General Haig. They all
- know that President Reagan is very attached to this personality who had
been NATO's chief, th,~ugh they also know that even the President can be
dragged down if he insists on acting as a barrier or retaining wall against
Haig's collapse.

� And to make things worse, in the East a wick has been lit. Instead of
sputtering it is burning bright. At the moment n}d one wants to know where
will it cau.:e a major explosion, whether in a powderkeg or a nuclear bomb.
But in light of this event which might have very serious consequences,
anothcr question arises: How will that discordant and inconsistent U.S.
foreign policy act?
CSO: 3010/1697
~
2
FOR OFF'ICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-40850R040500074068-5
FOR OFFICIAL USE QiVLV
~ .
COUNTRY SECTIO~ ~ ARGENTINA
DISSIDENT CGT OFFICIAL DISCUSSES ILO CONFERENCE
PY111041 Buenos Aires DYN in Spanish 1458 GMT 10 Jun 82
[iext] Buenos Aires, 10 Jun (DYN)--Saul Ubaldin i(bre~+ery wor?~~rs), secretary
general of the General Labor Confederation (CGT)--Brasil St--on his arrival
*_o4ay from Geneva made it clear that "ther.e has been no (disagreement wita the
other) CGT--Azopardo St--" and that "on the contrary we have been working on
a priority objective" regarding the defense of Argentina's position in the
Malvinas conflict.
Ubaldini participated in the Geneva ILO conference heading a reduced delegation
from the CGT--Brasil St-~-that attended the meeting separately from the official
. labor group. Ubaldini's dele~;ation included Juan Carlos Godoy (oil workers)
and Albertfl i Tyhron (b ank employees).
Ubaldini, ref erring to the harmony that existEd between the two groups that are
at loggerheads here, said that "there were not two groups in Geneva, but ~ust
- a bur.;.h of Argentines defending, with everything they had, the position of our
Malvinas."
Ubaldini stated at Ezeiza that the resul*_ ~f the ILO conference had been
"auspicious" and he stressed that "we have carried out the mandate given us
by the buard of directors of the CGT--Brasil St--and we are satisfied with the
task that was carried out very well due to the fact tlxat Argentina's position
on our Malvinas was of top priority for this delegation, it was defended on~
every possible occasion and we received a great deal of support."
The union leader termed as "truly ragrettabl~e" the attitude of the British and
U.S. Government delegates "because they practically cut off the minister's
(Julio Porcile) speech."
. Ubaldini stressed that "the chairman af the confe:rence (Peri.rvian Labor
Minister Alfonso Grados) was very correct and h e put them down completely.
"It cannot be," Ubald in i emphasized, "that in an international forum thos~e who
be.lieve ttiat they currently own everything should carry on in such a way."
Ubaldini highlighted the fact that "the booing and catcalls against the ~nglish
and American representa tives was unanimous" and i1e noted that "it was the
official representatives of" Great Britain and the United States who acted
in this way.
3
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-04850R000500070068-5
. .
As for the representatives of the British and U.S. woxkers, he stated that
"they did not address" the conference. "The group of w~rkers," he added,
"were silent. They did not say anything and Zogically t~ey maintained the .
dLstance that we Argentines currently deserve."
For Ubaldini, another important event at the cc:?ference was the "solidarity
of our brother Latin Americans, who have supported us tn everything,
including the possibility of another meeting. Countries from other
- continents, such as Africa, Oceania and Asia, have supported reason and
~ reason at this time is on Argentina's side."
Regarding the relationship with the members of the official ~delegation,
all of them members of the CGT--Azopardo St--he said that "It was maintained
with the courtesy of any Argentine who at this time leaves the country to
defend the priority problems, that of the Mal~~inas."
"We did not attend to contest anyone, we attended in order to give every type
of support to that position and thus we behaved, as all Argentines who were
there behaved, in th e same way. There were no problems with anyone. OI1
the contrary, we have been working on a priority objective such as this one."
Regarding Porcile, he stated that "We greeted him in the corridor after he
spoke" at the conference. That was the only cont~ct with thi.s official.
t1s for union unity, Ubaldini stated that he was "optimistic" and he said
- that "when one goes after such clear ideals or objecti�~es such as those we
are def ending," they can be ach ieved.
He stressed tt~at in Geneva "it was not two CGT's that attended, it was a bunch
c~f Argentines defending, with everything they had, the position of our
Malvinas" and he noted that "we lean toward unity and we are convinced that
we will achieve it soon, not only for *he good of the workers, but also for
the overall good of the country."
He expla ined that unity cannot be achieved away from the fatherland (Argentina),
but must be achieved within our fatherland, and he said that for the time being
he could give no deta ils regarding the contacts tr.at have been made to achieve
th is unity .
CS~t; 3010/1708
~
FOR OFFICIAL USE aIVLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5
FOR OFFICI~IL USE ~NLY
CUUNTRY ST:CTi~N ARGENTINA
_ SENIOR OFFICERS CRITICIZE MILITARY TACTICS
PM161217 London FINANCIAL TIMES in English 16 Jun 82 p 4
[Dispatch by Jimmy Burns: "Military Tactics Criticised in Ba"]
, [Text] Buenos Aires--An agonised military inquest has opened unofficially
in Buenos Aires on the strategy, tactics and equipment used in the Argentine
campaign.
Senior officers are saying that trie policy of building a"maginot line"
around Port Stanley, allowing the British forces to advance boldly out of
the San Carlos bridgehead, was a grave error.
His decision [as published) not to throw much greater forces at the British
when theq first lauded, not to fight harder for Goose Green and Darwin, and
to sit in what was considered ~t ~the time to be a redoubt in Port Stanley
is seen to have been grossly misconceived.
The navy has little good tu say Por its two modern submarines and their
missiles which had been built in West German yards. In the first two
weeks of the conf lict a total of four torpedoes are said to have hit the
aircraft carrier Hermes without exploding and a boat stalking the Queen
Elizabpth II had to return to base with defer_tive weapons.
Seniar naval officers, rebutting criticism that the naval units played
little part in the fighting, say that submarines often got in among the
Briti~h task force only to be let down by Wea~t German technology.
Army officers, meanwhile, have paid tribute to British army technology,
particul~3rly with re~ard to equipment for night fighting and communications.
_ CSO: 3020/136
5
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5
FOR OFF[CIAL USE ONLY
COUNTRY SECTION CUBA
ISLE OF YOUTH SCHOOL TRAINS YOUNG FOREIGNERS FOR REVOLUTION
PA062225 Paris AFP in Spanish 1157 GMT 5 Jun 8~.'.
[Report by Pierre Cayrol: "A School for Revolutionaries"--with AFP caveat
"Panorama: Complete or Partial Reproduction Prohibited Without Prior AFP
Consent"] '
[~xcerpts] Havana, 5 Jun (AFP)--We have young people here from nine countries.
They come from different worlds, but these boys, whose ages ran~e from 12 to 20
and who wear Cuban school uniforms, speak the same lanpuage--they proclaim them-
� selves to be, ubove all else, revolutionaries, anti-imperialists, antiracists
and anticolonialists.
Adult politics have placed them together on the Isle of Youth, south of Cuba.
- This island is none other than that made famous by Robert Louis Stevenson in
Treasure Island. Its na~ne before the Castroite revolution was the Isle of
Pines. There are 10,000 such students here. They come from Mozambique,
Guinea Bissau, Ethiopia, Namibia, Sahara, Sao Tome and Principe, the Congo,
~ Angola arid Nicaragua,and they are the future executives and leaders of their
countries.
The 18 school buildings that house them share the same architectural structure.
These buildings are located in an open field. The students dedicate part of
their time to study and part to peasant work, within a workstudy program.
- The students are di.stributed in accordance with the countries from which they
come. They all have Cuban teachers, along with teachers from their own coun-
tries. In the school for Nicaraguan students, for example, there are 34 Cuban
and 6 Nicaraguan professors.
`1'iie program in these schools is similar to that in Cuban schools. But here the
yo�ngsters study geography, history and political education adapted to their
respective countries.
The general rule is that all of the students belong to a revolutionary
political organization. To~ny, from Namibia, is a member of "the youth of the
Soutl~ West African People's Organization." Javier, from Nicaragua, has a
Sandinist youth identification card. �
6
FOR OFFICIAL USE ONLY .
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00850R000500470068-5
All of these students, without exception, are on a scholarship from the Cuban
state, which handles all. expenses.
Schedules are very strict, almost like those of the mi].itary. The Caribbean
- day begins early for these boys. At 0600 the students hoist their national
flags and that of Cuba in the schoc~lyard, while they sing their national
anthem and the national anthem of ~:,ub~, standing at attent~on. Thus the day
begins under the sign of proletarian internationalism and of friendship with
Cuba.
After the salute to the flag, the students form two groups; one goes to the
countryside to work and the other goes to school. There are apparently no
discipline-related problems in these schools. "The students are here volun-
tarily and therefore they behave very well," a Namibian professor says with
conviction. "They want to learn, to be able to contribute later to the devel-
opment of their countries," he noted.
There is a problem, though: "They all want to be doctors and engineers. Eut on
the day we gain our freedom, we will need all sort of professionals--not ,just

1 doctors and engineers," the professor cautioned. The school's personnel can
remember the difficult days in Cuba after the revolution, when it was left with
practically no technicians. We have to avoid a skills shortage, the professors
insist.
What causes the biggest impression on foreign visitors is the students'
apparent political determin.a.tion. They have completely and perfectly assimi-
lated the ideological education courses they take. They have no doubts: there
is one line, and one only, in the struggle against the imperialist enemy, that
of proletarian internationalism.
Slogans like this one, which Nicaraguan students chant in their schoolyard,
testify to this: "A peso for a bullet and a bullet for the tyrant. There
can be no argument over sovereignty, for sovereignty is defended with arms.
(Sandinist) National Directorate: at your orders."
Whateverttieir nationality, all of these boys affirm that they are well-fed and
well-treated and they never miss an opportunity to express their gratitude to
the Cuban state for having freely welcomed them. They seem to be in gooii shape
and are happy with their comfortable quarters and their pleasant classrooms.
11~ey chant: "Viva the friendship between Cuba and Mozambique," "Viva the friend-
iriendship Uetween Cuba and Angola." This applies to all nine of the coun-
_ ~ries that ttiese 10,000 young people represznt.
Al.l ot a sudden, the groups break up. The time for politics is over and the
kinds go happily to a football field to kick balls, to play games proper ~or
their age...we had almost forgotten that.
CSO: 3010/1712
7
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-40850R040500074068-5
FOR OFFICIAL USE ONLY
COUI~TAY SECTION MEK~CO
DESCRIPTIOII OF FINANC?AL INSTITUTIONS, BUSIDTESS GROUPS
IMCE: Improving the Trade Deficit
Paris PARIS MATCH in French 19 Mar 82 p 45
[Text] Ev-ar si~ce 1963, the annual reports of the Bank of Mexico on the
country's econo,.ny have stressed tl:e need for closer coordir.ation with com-
mercial export targets ta be more effective. For too lo~g Mexican producers
~ have had trouble creating products that are competitive on foreign markets.
- Their ignorance of the technical specifications and quality standards re-
, quired on foreign markets and their lack of experience in international .
- marketing were a strong handicapo At~the same time, it was evident that ~
imports were dispropor~tionately high in comparison to exports, and for good
reason.. The trade deficit, therefore, had to be offset by a more aggressive
export policy. This is what led to consideration of a draft bill to estab-
lish a national export promotion institute responsible for coordinating ac-
tions to deal with the following problems: the promotion of foreign trade;
the lack of unity among decisions made at state level; a lack of information
on tariffs and preferential treatment applied by other countries; and, fi-
nally, the lack of experience of export firms,
_ On 30 December 1970 the law establishing the Mexican Foreign Trade Institute
~ (IMCE) was promulgated. It provided for a decentralized entity to be granted
all ~he means needed to promote foreign trade, coordinate decisions favoring
exports, and to advise businesses open to foreign markets. "The IMCE is an
institution in which the public and private sectors are equally represented,"
explained Paul Salinas Solano, the Institute's director genera. "We promote
tl-?e export activities of the public and private sectors. We serve as ad- ~
visers to the federal government in the area of foreign trade." The IMCE
has been operating since 1971.
Or~e of the.reasans why Mexico's economy has not developed in a balanced way
in recent years is the success of oil on foreign markets. Accarding to Mr ~
Salinas Sol.ano, however, "oil has its own dynamics and has a tremendous
~influence o:1 our trade balance--a positive influence so far, to be sure.
But now we have to think about promoting exports of our manufactures, whetkier
related to industry, agriculture, livestock or services." Export tigures
have gone from $3.6 billion in 1976 to $20 billion in 1981. This increase
reflects t.he oil boom. Oil exports today accosnt for 60 percent of our total
8
FOR OFFIC(A~. USE ONLY ~
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-44850R000500070068-5
r~K urrt~twL u~~ urvLY
- exports. This is why we ~:-e concerned abcut increasing non-oil exports in
tt~e primary sector--coffee, vegetables, fruits, and cattle. Or even manu-
factures sucli as textiles, shoes, building materials, petrochemicals, auto-
^~obiles, and machinery and metalso The IMCE director general pointed out
that "serious efforts are being made to diversify foreign markets, since
our proximity to the United States places us in a dependent relationship.
~
, Thus our efforts are focused primarily on Canada, Europe, Japan and the ~
Orient in general, and of course on Latin American countries."
Trade between France and Mexico has grown re~~arkably in the past 4 years,
mainly as a result of oil. The economic relationship betwean the two
_ countries has a political and sentimenta 1 side. Mexico and France in fact
share a number of common historical and political factorso A~i example of
this complicity is construction of the Mexican subway using French tech-
nology and also the creation of the large firm, "E1 Infiernillo," with
French credits. "We believe that there is every reason to deve lop an
economic relationship with France in a spirit of mutual.good will," con-
- cluded Mr Salinaso "France is a test market for our products. If we ex-
port pineappler it has to be excellent pineapple. But if we are able to
sell it in France, then we know that we could sell it on any market."
The Promoters of Mexican Industry
Paris PARIS MATCH in French 19 Mar 82 pp 52-53
[Text] When talking about credit movements in Mexico today, it is impos-
- s~.b~e to leave out the activities of NAFINSA [National Financial Bank] and
S~~I~X [Mexican Industrial Credit Corlpany], which are subsidized by the
f~~eral government to the tune of ovar 50 percent. AFINSA, whose capital
is more than $190 million, handles assets valued at approxima.te ly $10
million through its stock exchange transactions, its private banl:ing ac-
tivities, and its investments in strategic industries which, through their
many branches, enable NAFINSA to cover the entire country. For the past
_ 6 years, SOMEX, for its part, has undergone a sustained, planned growth
y ttiat has put it among the five leading financial institutions in the country.
- Two-thirds of SOMEX' stock is held by the government and its growth has been
_ spectacular in the last 4 years, going from $1.5 billion to $5.5 billion by
the end of 1981. These are exemplary results.
SOMLX: An Example of a Semi-Public Company
'1'I~e SOI~X organization stands ost in the Mexican economy as a model of a
joint publicly- and privately-owned company. The SOMEX banking group is
made up of tl~e SOMEX Mexican Bank, PROMEX Bank, and the Jalisco Reconstruc-
- tion Bank [Banque de Refection]. SOMEX has a financial branch and an
industrial branch. FISOMEX, the SOMEX industrial development branch,
groupc together all the firms in the industrial sector in which SOMEX
has holdings.
9
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5
FOit OFFICIAL USE ONLY
According to Ma.rio Raman Betet~, chairman and general manager of SOMEX, "we
are a company that is publicly- and privately-owned but with greater par-
ticipation by the public sector, and I believe that we have the most posi-
tive features of the two models."
SOMEX' industxial activities mainly involve manufacturing boilers, refrig~.
erators and speed reducers. The group is also the largest producer of water
pumps for deep wells and alkali and chlorine. This organization is alsa
Mexico's leading producer of buses and the only producer of trolleys.
As for its contribution to Mexico's self-sufficiency in foodstuffs, the
SOMEX organization is planning to combine the production, storage, indus-
trializaL-ion and ma.rketing of farm products and livestock and to engage in
~ a series of agro-industrial and farming activities. With these projects,
- SOMEX is supporting the SAM [minimum wage], creating jobs, promoting farm-
ing, forming agro-food enterprises, channeling private sector funds to the
primary sector, and reducing the pressure on the national transportation
- system.
The SOMEX organization has a financial service that ~oes beyond that of a
= pure bank. Aside from the banking secto~, it is involved in stock exchange
= activities with its awn stock exchange. It also owns a warehouse company
= and a real estate firm. It is a large sharehoZder in the country's two
leading insurance companies. "We have three banking services," explained
Mr Beteta, [namely] "the bank that provides services for individuals, the
corporate bank that engages in larg~ operations, and the 'social bank,'
which engages in operations of social interest, such as the minimum wage
or the low-income housing pr~gramo" But Mr Beteta stressed the important
role of income from the tourist sector. "Among the major priorities of
national economic policy, tourism is highlighted since it is a source of
foreign currency." "The SOMEX Mexican bank is directly involved in tourism.
~ It is a member of the National Hotel-Keepers [Association]. We also play
an important role as promoters. We encourage potential investors in the
tourist sector. We organize and finance hotel construction."
~ The Mexican banking system is a highly developed system that receives a sub-
' stantial proportion of public savings and has evolved from a specialized
bank into a"diversified" bank. According to Ma.rio Ramon Beteta, "our
banking system not only has a guarantee of survival built into its struc-
ture, but also a guarantee of continued grawth. Half of the income our
group receives is managed by the private banking sector, but the other half
is administered by the public sector. In other words, we have the structure
of a private bank, a public bank, and a semi-public bank, which provides us
with everything we need to grow and become stronger." In Mexico there are
no foreign banks, or no foreign banks that operate as such by collecting
funds in ttie country. Bank operations ara federal in nature. None of the
~ States in the Mexican Republic has the power to legislate in banking mat-
ters. It is a question of national--and thus federal--interest. Given its
i*~portance, the Investment Law for Foreigners prohibits them from invest-
ing in banking activities. "The only foreign bank that operates in this
_ area is the National City Bank of New York," stressed Mr Beteta. ``It was
10
. FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-40850R040500074068-5
NUK VMMII:iAL U,L'. UIVLY
tV~e only bank tt~at remained in Mexico during and after the Revolution. The
rest of ti~e foreign banks left. A foreign bank can, however, render a
service and contribute to the economic development of the country. About
150 banks from throughout the world have offices in Mexicoo However, they
do not engage in active operations, i.e., loans, and they cannot collect
- income from Mexicans and invest it elsewhere," Mr Beteta added that this ~
principle is consistent with their idea of foreign investmento Foreign
investment can play an important role in Me~ico, not only in the banking
sector but in others as well. It helps reduce our trade deficit.
The National Financial Bank: For Industrial Development
' For 50 years the National Financial Bank (NAFINSA] has ensured Mexico's
- industrial development by helping to strengthen the country's infrastructure
and contributing to the growth of private and public industrial enterpriseo
In 1925 and in 1958, Mexico not only underwent a major transformation but
_ also slowly formed the basic institutions for its development. It was dur-
ing this period that the Bank of Mexico, the Secretariat of Transportation
and Public Works and the Federal Electricity Co~nission were established.
These transformations concluded with the nationalization of the oil indus-
try and the creation of PEMEX (Mexican Petroleum)o NAFINSA was founded in
1934, on the heels of the revolution, when the country was in the midst of
reconstructian. In the beginning it was involved only in economic develop-
- ment activities, but, little by little, it broadened its field of action
by increasing its interests in industrial development and by serving at the
same time as the federal government's financial agent and an institution to
_ promote industrial development by financing large-scale economic infra-
structure projects. Jorge Espinosa de Los Reyes, general manager of NAFINSA,
believes that "NAFINSA has been one of the most important institutions for
_ the country's development throughout its 50 years of existence."
NAFINSA obtains its capital on the domestic as well as the foreign market.
On the outside market, it appeals to the World Bank or the Inter-American
Development Bank. ~ccording to Mr Espinosa de Los Reyes, "this capital
is channeled mainly into farming, infrastructure projects and industrial
training projects, but a large share of the capital goes to the primary ~
sector and is used to develop transportation." ~
You could then say that nearly all the financial revenue NAFINSA obtains
on eitt~er the domestic or the foreign financial ma.rket is channeled into
major economic activities, and more specifically into industrial develop-
ment, a priority established under President Jose Lopez Portillo's adminis-
tration as part of the overall development plan and the National Industrial
Development Plan. Mr Espinosa de Los Reyes explained that "we want to con-
- centrate our efforts primarily on the strategic industrial development
sectors in order to create jobs, better coordinate industrial structures
and establish new development centers. We want to curb imports and develop
exports."
The National Financial Bank has recently focused its attention on unused
capital, and it has channeled funds toward creating new companies in the
11
FOR OFFiC1AL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-00850R000540070068-5
~ FOR OF'FICIA~. USE ONLY
_ engineering and equipment sectors. A lot of money is needed to satisfy the
growing demand For capital essential for the development of other sectors,
sucl~ as oil, electricity, mining, the cemenC industry, etc.
- "The most isnportant sector NAFINSA is investing in today is the steel in-
dT,~stry," the general manager added. "NAFINSA helped establish the largest
sreel complex in the country, the Blast Furnaces of Mexico, and has con-
tinued to assist in its expansion and growth." ,
The National Financial Bank's industrial group has about 90 affiliated firms
operating in the chemical, petrochPmical, textile, forestry, mining and con-
struction industries. '~Je have substantial holdings in two large national
copper-mining companies, the Mexican~Company and ~he Canalea Mining Com-
pany," Mr Espinasa de Los Reyes added. NAFINSA ma.nages about 350 branches
- of different types. The ones that take on special importiance are the ones
involved in development activities. Mr Espinosa explained that "develop-
ment funds are used in different sectors, such as tourism, industrial de-
centralization, equity capital investment, and pre-investment studies~�
These funds are resources that the federal government has granted to the
National Financial Bank to channel toward priority activities, so the de-
velopment branches are a basic instrument for NAFINSA.
The National Financial Bank, as a national credit institution, has a close
relationship with private Mexican and foreign banks, either directly through
NAFINSA itself or through its coumaercial bank, the International Bank, in
which NAFINSA is a majority shareholder. "The International Bank," ex-
plained Mr Espinosa, "operates as a'diversified' bank and ma.kes an im-
portant contribution to NAFINSA's development activities by collecting pri-
vate savings to be used for economic deveZopment." NAFINSA has also com-
pleted an internationalization project and has opened offices in Washington,
= Lond~n and Tokyo.
Private Banks: a Necessity
Paris PARIS MATCH in French 19 Mar 82 pp 56-57, 60-61, 64
[Text] Private banks are present in so ma.ny sectors that it is difficult to
tell the type of industrial project that each prefers. BANCOMER is a power-
ful institution that figures on the list of the major banks of the worldo
As with all large banks linked to industrial groups, BANCOMER has large-
scale projects and relies on the aid of an extremely important L-eam of
~ specialists and financiers. When it became operational, BANAMEX promoted
agricultural development, and it was the first bank that succeeded in
- I~aving branches tliroughout the countryo At the present time, BANAMCX also
- finances industry and, more specifically, the construction industry. The
evolution of Mexican banks toward the "multiple" bank system has brought
about a change of attitude. As a result, fox instance, Serfin Bank had to
reorganize to meet current needs for services. Modernization was carried
out with new, flexible methods which have enabled it to cope with the new
world economic situation. The Atlantico Bank, established at the initiative
12 ~
- FOR OFFICIAI. USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-00850R040500070068-5
FOR UFFICIAL USE ONLY
of the National Bank of Paris, has developed a considerable industrial pro-
motion business and has participated in the establishment of semi-public
enterprises combining foreign and Mexican capital.
BANCOMER: An Institution
BANCOMER, the leading private Mexican bank, was established 50 years ago
in October of 1932, under the name of Bank of Commerce, Inc. The firm was
founded by ~alvador Duarte, who began the venture with only 10,000 Mexican
pesos in capital and 17 employeeso The institution expanded in 1955 when
Manuel Espinusa Yglesias came in as general manager of the group~ He
~ established a financial company, an insurance company, a mortgage firm
- and a real estate company. Manuel Espinosa Yglesias, chairman of the
board and general manager of B~NCOMER, informed us that the group actually
owns "37 different institutions besides the affiliated banks. The Bank of
Commerce had its main office in Mexico City and there was an affiliated bank
witl~ regional boards in each stateo"
_ BANCOMER has not only strengthened its position but also ma'intained its
place as the leader of tt~e Mexican financial system, as evidenced by the
665 offices it has throughout the country. "Our institution has succeeded
in combining support for productive activiCies with the assurac~ce of re- ~
muneration for its stockholders and an improvement in the well-being of its
~ personnel," Mr Espinosa Yglesias statedo
BANCONlER has its ow~ ma.nagement style. At the head of the institution is a
- management committee, established in 1974 and consisting of a group of the
liigllest-level professionals who are responsiLle for furthering the develop-
menL- of BANCOMER. The ability and experience of the members of the manage-
ment committee is such that they are able to analyze the most important
matters ot business with a high degree of objectiveness, consider carefully
short- and long-term implications, and thus make intelligent and timely
decisions. The banking group is divided into several sections: the
Metropolitan Bank, the Bank of the Interior and the International Bank;
and, for specialized operations, the Real Estate Bank, the Development Bank,
Credit and Operations and, to assist, the Personnel Group.
- The administration of the group is also made up of a number of divisions:
tl~e Bureau of Auditors, the Cash Division, Financial Analysis, Organization,
Accounting, Corpo.rate Legal Relations, Marketing, Administrative Services,
Information Services, Economic Advisory Services, and, finally, the Techni-
_ cal Real Property Division. The recently established Public Services Div-
ision is respor.sible for ensuring that all BANCOMER branches maintain qual-
- ity and efficiency in their services to customers.
One of tl~e main concerns of Mexico today is the development and transforma-
tion of farming. There are official and private programs designed to in-
crease the land's productivity by encouraging small farmers to develop.
13ANCOMER }~as been no stranger to these activities. Ttie institution has
participated in agricultural development programs, as the president of
BANCOMER explained to us, by "lending as much money as possible to the
13
FOR OF'FICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-00850R040500070068-5
� FOR OFF[CiAL USE ONLY
"agricultural sector. We are trying to give the small farmer technical
security. Ta respond to all the requests, we have experts in all the re-
gional sectors and in all our branch offices." BANCOMER's interest in the ~
farm sector was demonstrated by "the financing grarated to this sector in
1980, that totalled more than $460 million. Once again, we le3 private
- banks to aid to farming of crops, livestock, poultry and fishing," Mr
Espinosa not_ed.
"As is customary," he added, "credits were basically directed taward the
productive aspect of the farm sector, and the same was true of the fishing
industry. The agro-industrial sectur was also covered satisfactorily, and
we continue to increase our aid to the low-income sector."
_ For the direct support of basic productive actiei.ties, the Group uses re-
sources from various guarantee and development funds. The overall amount
~ channeled .by the end of 1980 was $13 billion, a 33 perc:ant increase over
the figure for the preceding year~ "The support we give to produ;:Eive
- activities through credits has reached an unprecedented level in recent
years," the BANCOMER president said. Moreover, our total revenue amounted
to $13 billion as of 3 1 December 1981, steu�ning from public savings, local
and foreign bank loans, and bank profits.
BANCOMER continued to turn toward the international sector in 1980 and 1981.
One of the most important events in 1980 was the opening of the branch on
Grand Cayman Island, which is on the third financial market in the world.
Thus, this branch is added to the operational offices that BANCONIER has
opened in Los AnBeles, New York and London, and to the agencies it has in
Tokyo, Madrid and Sao Paulo. "Our main transactions are with the.United
States," explained Mr Yglesias, "and then in Europe, with England, Spa.in,
France, Germany and Switzerland. We also do business with Japan." .
BANCOMER has also made promotion trips to all the continents and it has
participated in international meetings with the International M~onetary
Fund (IMF), the World Bank, and the Inter-Amerlcan Development Bank, among
the major world financial organizations. Last year BANCOMER issued $60
million worth of certificates of deposit on the London market. This was
the largest issue made by a Mexican bank abroad. Also in 1981, BANCOMER
affiliated with Visa for traveller's checks.
BANAMEX: The Leader
Ttie National Bank of Mexico, BANAMEX, that will soon be celebrating its
100th anniversary and is regarded as one of the promoters of Mexican de-
velopment, is one of the leading commercial hanks in the country today.
Revenue in excess of $12 billion,. a total of 15,000 shareholders and over
22,000 employees support this position as a leader in Mexican banking
circles. "The National Bank of Mexico was established in 1884 and, up to
= 1925, tf~ere was a series of institutions authorized to print money, in-
cluding our bank. However, when the Central Bank began operations, the
ottiers stopped issuing notes," explained Augustin F. Legorreta, general
14
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-40850R040500074068-5
rv~ vrri~.~r+~. IJAG V1rLl
u~a~~a~c:r ot t}ie institution since 1971. "As regards the name," Mr Legorreta
added, "I think that far from representing an obstacle, the National Bank
of Mexico today is totally detached from the image of issuing money, and
tha name is representative of our operations as a leading comm~rcial baizk,
while at the same time it is identified with part of our historya" Mr
Legorreta modcstly acknowledged that when he talks about 15,000 share-
holders and l~e compares this with the situation in other countries--ma.inly
in Europe, the United States and Japan--does not seem to be very many.
However, to have that many shareholders is not commonplace in Mexico~
rrom the beginning, the National Bank of Mexico has always tried to have
as broad a base of shareholders as possible. "Today, for instance, our
stock is still quoted on the Paris Stock Exchange~ From a strictly economic
standpoing, Mr Legorreta stressed, "it is important to keep these European
shareholders wtio deal through the Paris Exchange, while at the same time try
to increase the number of Mexican stockholders."
_ Tur~iing to the internal organization, Mr Legorreta said that the Board of
Directors of the National Bank of Mexico has a broader base than what is
usually found in other coun~ries. "Our Board of Directors, which primarily
represents the shareholders, is composed of 45 members from different regions
of the country. It also endeavors to represent the most dynamic activities
in different economic sectors. In this way we are trying to~ establish a
closer rapport with the country's economy, through the Board members and at
the same time to give our shareholders the impression that they are repre-
sented by people whom they know on a local level~"
Wl~en Augustin Legorreta refers to what has been called the "boum" in
Mexican banking, he is talking about the "development of financial activ-
i~ies in tiie country whict~ is nothing more than a reflection of Mexico's
dev::iopment over the past few years." However, he does point out that the
increase in savings in Mexican banks is higher than the rate of inflation,
and that savings have increased at a greater rate than the gross domestic
product. For Mr Legorreta, "this indicates that domestic savir?g has in-
creased in real terms and that is very significant, since financial re-
sources are always scarce in a~country in full expansion like Mexico, and
we believe that the increase in real terms in domestic savings is a factor
stimulating development."
13oth the increase in domestic savings and the fact that tl~is increase is
_ proportionately greater tt~an the increase in the gross domestic product
mean tl~at a larger share of income is being saved, and is thus available for
investment.
"Tl~is plienomenon," explained Mr Legorreta, "can be attributed to a series
ot measures adopted by the fiscal and monetary administration and also to
tf~~ ducision by the competent authorities to apply interest rates resulting
from and in proportion to the rate of inflation, so that the Mexican saver
is actually receiving positive interest." Mr Legorreta added that he felt
that it was for this last reason that savings increased. He went on to
say that "in the specific case of BANAMEX, we were able to ma.intain our
15
_ FOR OF~FICIAI. USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000500074468-5
FOR OFFICIAL USE ONLY
"proposal [rates] ttirough inter~vention, and we even increased t}iem by several
fr~ictions of a point. In other words, we profited frcm the development of
_ the local banking market, and we also made our presence felt by stimulating
devel.opment in the country." This increase in savings is the result of the
- development of a.middle class in Mexicoo "Our bank relies on the middle
- classo We also have corporate depositors, companies, etc. But they com-
prise only a bare 20 percent. Eighty percent of our tota~l savings comes
fram the middl~ class," noted Mr Legorreta.
Today BANA?~X has tY~e most extensive network of correspondents in Latin
America. Mr Legorreta spoke further on this sub3ect. "Given the origins
of BANAMEX, we have always had a certain predilection to do business with
other countries, perh~ps more so than other Mexican banks. From the very
beginning, for instance, we maintained correspondent relations with
virtually the enti,:e world." Since Mexico as a country has enhanced its
importance in the world economy, it is natural that its banking system
shoulci also look toward increasing its role in the international financial
system. "This is what we have tried to do for the past 10 years, by open-
ing offi.ces and investing in various banks abroad. We have tried to create
_ a Mexican presence in international transactions," Mr Legorreta added.
INTERMEX bank, with its ma.in office in London, was eatablished by the
- National Bank of Mexico. This is the first internatLonal bank in which
Mexico is a ma.jority shareholder. Since 1980, it has spread to California.
_ "It was logical that we should choose London, headquarters of the major
world market, to launch our international operations," con tinued the man-
ager. "That led us to set up INTERMEX, which is not very large but has
- gained a certain reputation on the London market because of the number of
transactions it concludes." In 1980, BANAMEX handled about $3.5 billion
~ worth of loans, and it financed Mexican exports valu~d at nearly $23
billion. BANAMEX' activities to support Mexican exports are concentrated
in two sectors: traditional exports, including vegetables, minerals, and
- farm products in general; and, the manufacturing sector. According to Mr
Legorreta, "it is in part thanks to us thatMexico is able to export manu-
factures."
~ One problem common to developing countries is to increase their capital
ma.rkets. It is imposs3ble to imagine that a country could achieve solid
development with its own resources alone. "B~ANAMEX has had a social inter-
est in developing tliese markets for a long time," Augustin Legorreta ex-
plained. Therefore, with the new legislation governing the securities
market, BANAMEX forged ahead by making an effort to use the inst:.uments
specified in the new law and thus to find a place on the capital market.
- Tl~e BANAMEX stack exchange was established."
The BANAMEX-America Insurance [CompariyJ is another investment made by the
- National Bank of Mexico. B~ANAMEX views in~estment in insurance as an im-
_ portant adjunct to the group's investment capacity in othe r sectors, be,
cause of the reserves that insurance companies are required to have. "We
view it not only as a service for customers, but also as a source of
16
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-00850R000540070068-5
FOR UMFICtAL USE ONLY
- "income that makes it possible to develop new investments in other produc-
tive. sectors in the country."
Two years ago, BANAMEX announced its decision to move its main off ice to
Queretaro. Mr Legorreta played a leading role in the creation and develop-
ment of t~is projecto BANAMEX' decision was based on two essential factors:
the possibility of offering part of the personnel working in the bank better
living conditions; and, a desire to help a11E~:�iate congestion in the Mexico
Valley. On this subject, Mr Legorreta remarked that this project made it
possible "to get away from the bustle of life in the capital and to becnme
more efficient and productive in our work, while enjoying a higher quality
of life for ourselves and our families."
Before deciding on the move, B''.tA11EX conducted studies on 59 different
cities througl~out the country. It was finally decided that the most suit-
able spot was Queretaro, where the ~ank purchased a piece of~government
property known as "Jurica." Queretaro is the capital of Che state bearing
the same name. It ~,s located 200 kma trom Mexico City and has a population
of 300,000 inhabitants. BANAMEX drew up its "Ma,ster Plan for the Move" .
- so that this change would not be detrimental to ongoing operations and so
tl~at the new location would meet their needs. The employees did not want to
live in a dormitory town. "The operation to move the grand lady nearly
100 years old, i.e., our institution, is essential for its survival and
prosperity. This operation will not only be pursued, but, accarding to
our calculations based on detailed studies, moving out of our government
_ capital will give us ways to improve our services," Mr Legorreta added.
The central office, which has been declared a"nationGl monument, is now
ti~e office for our transactions in the Federal District. Today, Mexico
City accounts for 40 percent of our banking business, and there is no rea-
son to believe that this will change in the near future or even over the med-
ium term," Mr Legorreta concluded.
Serfin Bank: 100 Percent Mexican
Serfin Bank, one of the first~"diversified" banks in Mexico, is character-
ized primarily by the fact that it is totally Nl~xican and entirely private,
witV~ no government participation. The origins of this bank go back to
_ a meeting, of eight banks, with one of the main ones being the Bank of London
and Mexico, the oldest in the country. The "Financiero Aceptaciones" came
later, with its ma in office in Monterrey. These two banking institutions
subsequently absorbed other banks, to create a group of eight~ After the
_ reform of the Mexican Banking law, the Serfin group decided to merge these
_ eigfit institutions into a single bank, to be called the Serfin Bank. "The
Lirm tl~at merged them was the Financiero Aceptaciones, and although we
cl~anged tlie name, the Serfin Bank actually stems from the oldest bank in
Mexico, where, in fact, our main office is located," Jorge Morales T�revino,
general manager of Serfin Bank, explained. .
Mr htorales Trevino is responsible for five operational offices and manages
tw~ affiliated firms under his office. These offices, four of which handle
Mc:-�;ican operations and one international activities, are scattered throughout
17
FOR OFFICIAL .USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000500074468-5
FOR OFFICIAL USE ONLY
the~country, and this decentralization makes it possible to offer better ser-
_ vices today while at the same time preparing for the future.
When Serfin Bank drew up its balance sheet or; 31 December 1981, it knew that
it had met its targets for aid to the various production sectors essential
to the country's growth. The primary and industrial sectors were particu-
larly favored in Serfin Bank's operations. Transactions carried out
through the National EXport Promotion Fund (FOMESE) and the National Indus-
trial Equipment Fund (FONEI) attained their goals to develop Mexican pro-
duction with a view to reducing imports. But for Mr M~orales Trevino, "the
operations carried out through the Farming Promotion Fund (FIRA) for rural
financing thro~igh low-interest loans were equally important. And I would
also mention the Fund for Financing Small and Medium-Sized Firms and the
Tourism Development Fund (FONATUR), whose activities were essential.
Serfin Bank," Mr Morales continued, "used these means to provide maximum
assistance to the sectors involved, and this helped enc~urage and motivate
all the parties concerned."
As for the way in ahich the bank determines the amount of money available
for credit to the public, S~rfin Bank's general manager explained: "the
amount of money available for loans to our c;ustomers is based or. the revenue
collected by our bank, after deducting the reserve requirement. We can
also have discount funds--of FOMESE, FONEI, FERA and FONATUR. And, we
can use international credits."
The structu.re of Mexican banking today is regarded as one of the most ef-
fective banking concepts, compared to many other countries. In recent years,
tl~is structure has evolved from a system of "specialized" banks to a system
of "diversified" banks, under which a single bank can offer any service de-
sired.
"Serfin Bank," Mr Trevino indicated, "can, like all the other 'diversified'
banks in the country, offer the services of a commercial bank, a mortgage
bank, a financial bank, an investment bank, a savings bank, or a fiduciary -
batik." In this way, customers find everything they need in a single bank.
Among all the advantages of a"diversified" bank, Mr Morales Trevino high-
lights administrative centralization.
"In the past, in order to offer varied services to our customers, we needed
~ that ma.ny different directives and a separate bank for each service, whether
mortgage, investment or savings. Today everything is grouped in a single ad-
ministrative structure."
- "Serfin Bank has 348 offices scattered throughout the country and three
abroad."
Notl~ing could have been possible, however, if the personnel did not cooper-
ate. The key to success in services lies in the quality of the persons
rendering t(lem. This is why on-the-job training programs have been set up.
Tl~is makes it possible to have qualified and enthusiastic employees.
~ 18
~ FOR OFFICIAL USL ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-40850R040500074068-5
FOR OFFICiAL USE I~NLY
_ i'ersonnel training is a constant concern of the general manager of Serfin
Bank. "We have our own train~.ng centers, in Mexico City, Monterrey,
Guadalajara, Vexacruz, and in other places as well." We also have a team
specialized in instruction, and for specific courses we use a system of
gtucly fellowshipa to give our staff the possibility of receiving bachelor
degrees and even graduate degrees in various areas. A large number of em-
playees take their examinations every year."
With the expansion of Serfin Bank, 1,500 new employees were hired last
year, which brings the total to more than 5,000 Mexicans working directly
for our bank~" .
Towards the end of 1977, the Mexican banking authorities amended the banking
legislation in force to permit banking to internationalize, so that,Mexican
banks could do business on inCernational markets and thus develop in the
_ same way as the major banks in other countries in the world. "A few years
, ago, we began exploring the international money and capital markets and the
possibilities of operating on those markets while following our own bank-
ing practices," Mr Morales Trevino told us enthusiastically. The first
Serfin Bank office set up abroad was in Los Ar~ge'es, California. The
satisfactory results encouraged them to continu~. and in March 1980, a
second foreign office was inaugurated in New York. A*~:ird ane was opened
in London, and, just a short time ago, a fourth was inaugurated in the
Bahamas. Serfin Bank now has offices in the two most important financial
_ ce.nters in the world. "The primary purpose of these offices," added Mr
Morales, "is not to obtain resources on the international markets. We
are there to invest and to operate on the exchange, loan, and international
- trade markets, among others." The staff of the international department
show an acknowledged professionalism in their work. In 1980, the Serfin
- Banlc participated in syndicating some huge loans and served as an investment
agency for some. They also handled $45 million through investments of
certificates of deposit and simple bonds at variable rates. In the case of
certificates of deposit, Serfin was the first La.tin American bank to carry
out a transaction of this sort in London. These issues proved very success-
fu1 and were quickly sold in Europe, the Middle East and the Far East.
- The Aztec Bank and Serfin Deposits
In 1980, the Aztec bank resumed its operations. It is a subsidiary that
cove rs tl~e specific needs of a large part of the population of the Federal
District and that now lias a personal service specialized in financial mat-
ters. In.a few months' time, the Aztec Bank collected large sums that
- produced a net income of $142 million, This success shows that the idea
bet~ind this bank meets the needs of the population it serves.
As for "Serfin Aeposits," this is an auxilliary credit institution that
offers deposit and accounting services for credit notes. During the 1980-
_ ~81 fiscal year, the demand for deposits was enormous and the infrastructure
oF t}~is institution continued growing so that it would be able to meet the
market demand. Serfin Deposits thus consolidated its position as the most
- 19
FOR OFFICIAL USE ONLY ~
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00850R000500470068-5
FOR OFFICIAL USE ONLY
important private deposit bank in the cities it serves with its branch of-
fices and good market penetration.
- Mexican banking iegislation allaws cred it banks to participate active ly on
the capital markets, by supporting corporations directly, but as minority
shareholders. This practice has enabled companies to obtain aid to finance
their development, something that would otherwise have been diff icult.
In view of this, Serfin Bank decic~ed to set up a specialized unit to devise
the policies and mechanisms that would make it possible to deal with this
important sector of national finance in a professiona:. way. The securities
investment office in the Serfin group participates in the securities
- market by managing the stock portfolios of the Serfin Bank,and the
Monterrey-Serfin Insurance Company, the Serfin Stock Exchange and the Arka
Funds, a new investment company in which Serfin Bank is a minority share-
holder. It also owns a campany called Fomente Proa, involved in promoting
small and medium-sized industrial firms.
In this case line of work, what they do is to support important economic
activities developed by firms that are unable to obtain funds on the
securities market for various reasons. Through decentralized portfolio
management, they try to arrange it so that income channeled into corporate
capital will contribute to the company's development and at the same time
be a good investment. Important branches of Mexico's industry have al- .
ready received the Group's backing in this way, through these investment
mechanisms.
~ In 1980, the securities portfolio of the Serfin Group amounted to $101
. million. The Serfin Group has maintained and continues to maintain that
this backing is supplementary i~i nature, useful to strengthen the companies'
financial structure, but that they in no way intend to replace the spirit
of the founders or to take over management of these companies. - ,
An important service of the securities exchange investmetiL office deals with
the promotion and investment of securities. These activities make it pos-
- sible to offer specialized assistance, essential for the later placement
of securities on the market. In view of all these.activities, the Serfin
Group is optimistic. It is expecting to see magnificent results in the n.ear
- future.
Atlantico Bank: Serving the Nation
rounded on the basis of a decision by the National Bank of Paris (BNP), the
Atlantico Bank, the fifth largest private bank in Mexico, was established
in 1951. The objective was to become part of the Mexican banking system so
as to support French exports and to set up joint Franco-Mexican enter-
prises. I'or Ca.rlos Abedrop, president of Atlantico Bank, "This bank was
basically designed as a metropolitan bank directed toward the international
sector." Despite its original leaning, in 1964-65 its directors observed
that a bank specializing in international trade had a limited field of
action in the Mexican banking system, and so they decided to provide
20
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5
M'UR Uh'M'il:lAL U~~ UNLY
national coverage, "without, however, losing our initial orientation as ar~
international bank," Mr Abedrop added. '"We have ma.intained our inter-
national activities at a highly satisfactory level and we have also de-
velaped our activities an the Mexican financial market. At the present
time, we have 150 branches scattered throughout the country and total
deposits of more than $200 milliono The current capital of the Atlantico
Bank is $26 million, distributed as follows: 75 percent in the hands of
- Mexican shareholders; 20 percent subscribed by i:he National Bank of Paris;
and 5 percent belonging to a Swedish bank, Scandinoiska Enskilda Bank,"
Mr Abedrop explained to us.
The Atlantico Bank's deposits are regarded as highly satisfactory for the
Mexican market--approximately 40 percent of the country's demand deposits,
- checking accounts and savings accounts. "We have more or less 6.5 percent
of the time deposits," Mr Abedrop said. Moreover, the bank is developing
a considerable industrial promotion business. Not only does it have a
well-qualified service to aid industry, but it also participates in the
creation of joint enterprises combining foreign and ~lexican capitalo The
institution deals primarily with medium-sized companies, either industrial
or service-oriented. Mr Abedrop confirmed that the Atlantico Bank's
participation in large firms " is generally in the form of credits, to-
gether with other banks." But then when it comes to granting credits,
the bank prefers "smaller companies for which we could become their main
banker." "The sectors where we have the greatest market penetration,"
the president continued, "are spare parts for automobiles and those re-
lated to the construction, pharmaceutical, hotel and touris,t industries."
The list of projects in which the Atlantico Bank has played a part is ob-
vious proof of its contribution to developing the Mexican economy. Con-
struction of the "E1 Infiernillo" hydroelectric power plant was financed
by the French bank, with French technology and experts. The bank has
also participated in starting basic insecticide and fertilizer plants and
in building the national railway, using French techr.ology.
According to Mr Abedrop, "the fabulous achievement of the Mexico City sub-
way is a shining example. of the quality of French technology end the co-
operation between the two countries." The bank is currently a,;sociated
with the International Wagons-Lits Company in a project to build a hotel
chain in Mexico. The project provides in an initial stage for canstruc-
tion of 10 hotels in different parts of the country with a capacity of
3,000 to 3,500 rooms~ "This project is benefiting from Wagons-Lits'
experience in building popular rather than luxury hotels. It is a very
_ new technology and a number of hotels have been built in France in this
~aay. They have small rooms which are nicely decorated and well sound-
proofed, to such an extent that when you enter a room, you have the im-
pression that you are in the cabin of a shipo We believe that this tech-
_ nology has a great future in M,exico, since there is nothing of this sort
here now," the president of Atlantico Bank said optimistically.
But one of the main undertakings of the bank during Lopez Portillo's term
was to contribute to the "Social Welfare Housing Program." "We made this
21
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-40850R040500074068-5
FOR OFFICIAL USE ONL.Y
"decision," Mr Abedrop indicated, "following the offer we made to the cur-
rc:nt president to help in solving the housing problem. As a result, we
allocate 4 percent of our deposits to building housing for low-income
families. Our pa.rticipation has ma.de it possib?~e to build 40,000 units a
year." The director added thar the bank has contributed $400 million to
renovate i~rigation areas. "As regards the SAM [minimum wage], we have
made lar$e sums available in the form of financing related to the users'
orienta~ion in relation to credit and we are offering interest rates
that are half of those charged by commercial banks. You could say that
' we have offered the President between $600 and $800 million.
Hermes: An Exceptional Case
Paris PARIS MATCH in French 19 Mar 82 pp 69, 72
[Text] One of the largest and strongest industrial groups in Mexico is the
one established by Hermes Industrial Company. Founded in June 1978 to pro-
mote industrial firms and service industries, it has experienced the great-
est development and expansion of any industrial group. In 1980, the Hermes
Industrial Company succeeded in increasing sales by 122 percent and con-
solidated profits by 85 percent over the previous yearo The main protagon-
ist of this industrial "miracle" is the president and general ma.nager, En-
gineer Carlos Hank Rhon. "The Hermes Industrial Company is made up of
several firms operating in five sectors. CH Industries, Inc., manufactures
heavy industrial cranes weighing more than 50 tons, special types of steel,
~ and tools," Mr Hank Rhon explained to us. CH is the leading company on
the domestic ma.rket. In 1980, a 35-5on electric furnace was installed and
it substantially increased output. From 90,000 tons a year, they are naw
_ producing 210,000 tons annually.
The Hermes Group, before forming a group, began alone in the industrial
sector. "We began about 10 years ago with a truck company. This was our
debut in the industrial field. There have been only two similar moments
in our history: 1976 and now," Mr Hank Rhon.explained. The Mexican steel
- industry was experiencing difficult times. There were companies that sold
~at v~ry good prices. We bought Campos Herma~os, a firm that was in the
hands of creditors. Our first step was to solve its financial and organi-
zational problems. Together we bought another financ:ial business manage-
ment company, Cerrey. This enabled us to start the Group. We combined
Campos Hermanos and Cerrey with Camsa and, in 1978, 2 years later, the
Group was created," the general manager informed us. Only 3 years old,
the Hermes Group has become an exceptional case in Mexican industry.
First because of the sensational 122-percent increase between 1979 and
1980, and second because it is the only private industrial group that has
~ been classified as a"development company" for the past 5 years, as it has
met the Mexican Finance Ministr~'s requirements. Naturally the Hermes
Industrial Company has many projects, including short-, medium- and long-
term ones. Among the short-term projects is its entry onto the Stock
Exchange. "Several people have asked whether we are doing this to obtain
new capital or to redistri~iute the company's stock and assets. In fact,
22
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5
l'Vn V~'~'~~.~Y1V VJti VI\L� ~
"we are looking for capital. We have developed because we have allocated
more capital to our enterpriseo We do not believe in having total control.
_ Becoming a member of the Stock Exchange is also an invitation to foreign
partners who can bring in another type of technology. This will contribute
to the company's growth."
At the present time, Hermes Group has one industry, "CH;' on the Exchange,
"but we do not have all the shares. The public participa.tes in this enter-
prise, because it wants to invest in 'CH,"' Mr Hank explained.
Nineteen hundred and eighty was a key year for the Hermes Industrial Com-
. pany. The Investment Division was created, which merged Cerrey, Inc. and
the Mexican Investment Company to increase production of ma.chinery and equip-
= ment. "Cerrey, Inco manufactures steam boilers, force-feed tanks, regenerat-
ing air pre-heaters, and high-pressure pipe and tube systems. The enter-
prise receives technical assistance from minority shareholders: the U.S~
firm, Combustion Engineering, a UoSo firm, and Mitsubishi Corporation of
Japan," Carlos Hank explained. The Cerrey plant covers 27,000 squar~
meters and comprises 6 factories. At present, Cerrey is the largest pro-
- ducer of steam boilers on the Mexican domestic market and the only manu-
facturer of Ljungstrom-type regenerating heaters that recover the heat of
combustion gases. The sector that supplies systems and equipment to several
industries in the country is covered by the Mexican firm, "Capital Goods,
Inc.," abbreviated as MBC. Combustion Engineering is a minority shareholder
in the company. "MBC manufactures crude oil and gas separators for the oil
industry. They provide equipment for crushing, sorting and drying to the
cement and nonmetal-ores industries. They also supply industrial equipment
_ and systems and processes to the food, fertilizer, mining, chemical metal-
lurgy and petrochemical industriesa Among MBC's immediate projects is one
to manufacture equipment from processes that were imported up to now.
"That will require a considerable expansion of the business," Mr Hank Rhon
added. ARALMEX, one of the other firms in the Hermes Ind~xstrial Company,
supplies the Mexican market with shock absorbers, Ma.cPherson-type suspension
systems and their spare parts, gas springs and direction stabilizers. The
shock absorbers for cars and motorcycles are ARALMEX's main production line.
"And Boge, its trademark, has become the best-known and most prestigious
brand in the country, garnering over 60 percent of the domestic market,"
Engineer Hank commented. ARALMEX sales exceeded $25 million in 1980 and its
production amounted to 3.21 million units. ARALMEX holds ar: important posi-
tion not only on the Mexican ma.rket, but also on the international market.
Tl~irty percent of the company's output is for export to France, the United
States and Germany. "One of our main objectives is to be known as a company
exporting Mexican products and to make a positive contribution to the bal-
ance of payments. In general terms, the Hermes Industrial Company operates
as a resource-generating group, which enables us to furthar our development
in the industrial sector."
Tl~e newest Hermes firm is Turbo Cargadores de Mexico S.A. [Turbochargers
of Mexico, Inc,]. It has a l0,OQ0 square-meter factory and, in the middle
of tlle year, it took the lead on the market for diesel engines for trucks,
tractor-trailers, and farm tractors. "One of the main goals of the
23
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPR~VED F~R RELEASE: 2007/02/09: CIA-RDP82-04850R000500070068-5
. FOR OFFICIAL USE ONLY
. "company is to manufacture products that have been imported up to now. In
= this vein, there are plans to complete an integration program with the
help of The Garrett Corporation, a minority shareholder and the world
leader in manufacturing turbochargers." Foreign companies have a 20 to
~5 percent share in the firm~�belonging to the Hermes Group. "With
Mitsubishi, we have 15 percent of shock-absorber production, whereas
General Motors' share is 40 percent."
This young but prosperous enterprise not only is involved in eight indus-
tries, but also in ma.rketing. The Hermes Commercial Group is involved in
marketing automobiles and trucks. "In the Group we consider ourselves as
- industrialists and businessmen. If we look at Mexico as an i.ndustrial
plant, we would see that it is very viable, as it has many natural re-
sources. Fishing, oil, farming, minerals are all part of our country's
potential. We have realized that our challenge in Mexico is to organize
and prepare ourselves to lead our country fozward. Hermes corporation has
the future before it. We must therefore train our ~en," Mr Hank Rhon
said.
"We believe in decentralization. Every company must be autonomous with its
aan general manager. We have tried to keep a small decision-making group
that meets every month. We review the progress of the business, but we
delegate most of our power to our managers," Mr Hank stressed. Another
characteristic of the Hermes Group is five-year planning. "We believe
that one year is a very little time and that three years would not be
enough--especially for the group's large-scale projects. Important de-
cisions should be given more tinie, and we think that, as a rule, five
, years is the right amount of time. Now, however, we are moving toward a
. six-year planning process." Currently, the "Capital Goods" production
sector has a 10-percent share of the company's total sales. "Our idea is
to attain 20 percent. This requires a very long gestation periodo It is
" not like commerce or a textile industry. It is an industry that requires .
many years of apprenticeship and also a major decision on the part of the
government, which is the main consumer of "Capital Goods." For instance,
we purchased boilers with a capacity to produce 350 megames, which had
never been done in Mexicoo We quickly surpassed 150 and are reaching the
target that we had set."
Thus the possibility of developing our heavy industry has not been re-
jected. "Of course, we have studied other companies and have observed
that it took them 8 or 10 years to begin making money. And, at present,
we really are not large enough and this is where we should be investing
all our resources. We are doing this to the extent possible, but without ~
~ going behond our means, as that would kill all our chances to develop,"
Mr Hank Rhon concluded. .
- 2
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-00850R040500070068-5
- FOR OFFICIAL U~E ONLY
= Alfa: From Steel to Paper
Paris PARIS MATCH in French 19 Mar 82 p 73
[Text] Cha.nge is the main characteristic of Mexico today, a Mexico where we
_ find both tradition and progress, magic and science. The explanation for
this should be sought in the rapid transforma.tion the country has under-
gone. Because of its wealth of energy resources, the country has been ir-
_ revocably pushed into the sphere of developed countries. The largest group
in the country is the Alfa Industrial Group. This Group was established in .
- Monterrey in 1974, although its roots go back to the Visa group.
- At the present timey Alfa covers the entire couritry. The Group's current
activities range from steel to pa.per, consumer goods, industry, fibers,
_ petrochemicals, food and tourism. There are more than 50,000 employees
working in the Group's firms. The sectors the Group is involved in were
not chosen at random, but on the basis of previously determined industrial
development objectives. "It is precisely for this reason that we have be-
come involved in tourism, because it needs labor," Engineer Juan Morales
_ Doria, corporate director of the Alfa Group, explained. "We are interested
in the minind industry for the same reason, since, besides needing labor,
it is a source of foreign exchange, even thaugh both sectors are in a state
- of recession at present: tourism as a result Qf the high prices of air
fares, hotels and food; and, the mining industry because of the d~ecline in
~ international prices for its products."
Alfa is also involved in the food sector, "because it is essential for the
country, and, in the same way, we are participating in the development of
- the secondary petrochemical industry, which uses a raw material such as
oil, that we possess in abundance."
The Alta Industrial Group has been regarded by ma.ny as a model for Mexican
industrial expansion, or at least as a possible pattern for structuring an
industry that has produced satisfactory results as much for the country
as for the Group. A dynamic and multifaceted approach is the basis of
Alfa's success. As a result, these last few years--"and despite the fa~t
that 1981 is regarded as a difficult year"--the Group has resolutely ex-
panded its field of activities. "We own mines in Colima and Jalisco, and
we have a large tourist complex, 'Las Hadas,' in Manzanillo. When we began
in 1974, we were exclusively involved in steel and paper. The situation to-
day is very difficult: in 7 years, our assets have gone from $154 million
to $3.5 million [sic]. In 1980, the Group was cY~aracterized by a fi-
nancing strategy ai:n~d at seeking policies that would enabl~ it to expand.
To tliis end, the Group reinforced its relations witl~ do:nestic institutional
= source~, and at tiie same time it entered the exchange markets by selling
commercial paper For tl~e first time.
Tt~ere is :~o dc~velopment without technological progress, a fact of which
= Alfa is very a*a:~re. This explains its interest both in advancing its own ~
- t~:chna~ogies, and in importing and adanting more sophisticated technolog,y.
Altl~ough foreign firms, su~:'~ as the American companies, Ford and Bupont,
= 25
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPR~VED F~R RELEASE: 2007/02/09: CIA-RDP82-04850R000500070068-5
FOR OFFICIAL USE ONLY
the Japanese Hitachi and the German BASF, are asso~iated in same of its
enterprises, the Alfa Industrial Group exports its own technology. "We
~ have lots of foreign partners, but we are also very proud of the technology
we export, i.e., the reduction of iron and sponge iron to produce steel,"
Mr Morales indicated. This technology developed in Mexico by Mexican
technicians is the HYLIII process. "This direct reduction process," the
director explained, "was first used during the war when we were unable to
obtain scrap iron. At that time we began to look for a way'to replace
~ this import." The technique consists of taking iron ore and putting it
through a process of decomposition using natural gas, that reduces it by
making the hydrogen react with iron oxide. The iron loses 30 percent of
its weight in the process, ma.king it the equivalent of pure, natural scrap
iron. "This process has proved to be very economical, because we can pro-
duce different-sized units. We have exported this technology to various
- countries, including Venezuela, Argentina, Iran, Indonesia, Egypt and
Brazil."
_ Vitro: Bastion of the Mexican Economy
Paris PARIS MATCH in French 19 Mar 82 p 76
[Text] In the beginning, Vitro concentrated on producing glass containers.
Seventy years after its founding, its activiti~as have increased and de-
veloped to include a broad range of products and services, as a result of
_ accumulating knaw-haw and experience in production, industrial technology,
- commerce, finance 3nd management. "The Vitro Group was started to meet the
demand for beer bottles," explained Rogilio Sada, the general manager of
Vitro Group. "Its origins go back to the establishment of Vidriera I~bnterrey
[Monterrey Glass Company) in 1909, which improved its technology to go into
- other branches in the sector besides containers, such as glassware, and later
fiberglass. This latter product created a need for an infrastructure to
obtain raw materials for the glass industry, as well as mach'i:nery and molds,
which finally led to the estabiishment of a real industry in 1940." More
_ than 36,000 persons work in the organization which is divided into Lwo main
- sectors: banking, represented by BANPAIS, a financial group; and manufactur-
ing, comprising 75 factories grouped together in several divisions. Each
division is responsible for the operations in its se~:tor, but at the same
time it is concerned with maintaining corporate unity by participating in
overall planning and by setting the standards for the productivity of its
companies. Decentralization makes it possible for each group to have direct
contact witti its customers and employees, and at the same time to encourage
local initiative. Vitro plays an outstanding role in the national industrial-
ization program and, as Rogelio Sada pointed out, "our contribution is to de-
velop a worthy way to promote Mexico's industrializaeion, which we feel
should not only be a technological industrialization :,ut also entail impor-
tant socxal changes."
The firni has achieved a high degree of diversification, although "our basic
philosophy is to concentrate on the essential part of our operations, namely
glass and its derivatives." Vitro's operations are grouped into divisions,
~ 26
FOR OF'i~7CiAL USE ONLY .
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-00850R040500070068-5
as follows. Vitro Containers manufactures g~ass or plastic containers for
foods, drinks and pharmaceutical products. The first in this division
produce integrally-designed containers for industrial use, and they form
the country's leading industrial complex producing glass and plastic con-
tainers. This division includes 17 campanies in strategic locations,
through which it provides complete services aimed at projecting market
unity. It also exports its products, provides technical assistance abroad,
and participates in Gua.temalan and Costa Rican firms.
Vitro Crisa produces household, decorative and artistic glassware, articles
in fireproof glass, and stainless steel flatware, and is involved in the
distribution of durable consumer goods and in department stores. With sev-
eral factories in Mexico and a joint venture in Brazil, Vitro Crisa's repu-
tation for high quality has gone beyond the country's borders. Today it is
increasingly covering export markets with its products and is also helping
to improve the country's trade balance.
Vitro Window Glass [Vitro Vidrio Plans] produces sheet glass and blown glass
- for industrial and architectural use, and safety plate glass and tempered
glass for industries making safety products and products for the automobile
industry. Vitro Window Glass has developed to the point that it is now the
leading producer of sheet and blown gla.~~ for a large variety of uses. It .
is the largest domestic ma,nufacturer ot windshields and windows for auto-
mobiles.
Vitro Basic Industries, acti~ritie~ ~nclude investment in the chemical indus-
try, development of technolr~gy~ and mining. ~ao major services operate in
this division. One is concerned with mining and developing raw materials
for different industrial markets. Its ma.in products are silicious sand,
calcium chloride, sodium carbonate and feldspar. The other manufactures
highly sophisticated automa.ted ma.ctiinery, molds and other equipment used in
' the glass industry, as well as plastic injection equipment and fluid k~andling
systems, and is involved in a forging and a smelting plant.
Vitro Fibers and Silicates manufactures fiberglass for the construction in-
dustry, furniture and sports articles, and silicates and metasilicates for
various uses. Vitro Fibers and Silicates is Latin America's leading pro-
ducer of sodium and potassium silicates in their anhydrous and pantohydrous
forms, These products are used in the soap and detergent, textile, paper,
and construction industries, among others. It also produces a broad line
of fiberglass products, including heat insulators, acoiistical insulation
material and fibers for reinforcing plastic.
The fact that it competes on the international ma.rket requires the Vitro
Group to maintain a strength equivalent to that of any other world competi-
tor, wl~ich is "the only way of achieving an international scope and the only
way the country can cope with this situation," Mr Sada concluded.
27
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5
FOR OFFICIAL USE ONLY
ICA: Mnre Than 40 Companies
Paris PARIS MATCH in French 19 Mar 82 pp 77, 80
[Text] The ICA [Associated Civil Engineers] Group is a conglomerate of
Mexican companies primarily involved in civil, mechanical and elec~rical
engineering, but which also extends into the real estate and tourisC busi-
nesses. The ICA Group--whose initials stand for Associated Civil Engi-
neers, Inc., the in,itial compa.ny established more than 30 years ago--today
- has a structure that covers more than 40 companies, whose comcnon denominator
is to put technology to use in production. In f~ct, a:.~ the companies
forming the ICA Group were established and have been consolidated as a
- result of the application of new technologies, by going into unexplored
areas of production in the country, in response to domestic industry~s
unanswered needs, and by taking a very broad soaial view of private
economic enterprise~ In 3 0 years of intensive activities, the ICA.Gioup
- has played a remarkable role in developing Mexico's infrastructure, by
- participating in some of the most important projects implemented in the
_ country in the areas of electricity, irriga.tion, industrialization, com-
munications, transportation, and housing and city planning. It was aZso a
- pioneer in the metalworking industry and in developing comprehensive real
estate and urban projects. The liisr.~ry of tf~e group can be viewed as an
organi~ grocvth proLess. On 4 July 1947, the initial company, Associated
Civil Engineers, was founded with a capital stock of only $1,000. Tt?e
corporate charter was signed by 17 young engineers, most of whom had just
gradua.ted from Mexico's Autonomous Universityo Their leader was Engineer
Bernardo Quintana Arrio3a, who is the Group's Chairman of the board todayo
The Group is now composed of more tl~an 40 firms employing more than 5,000
professionals and over 80,000 persons in Mexico and other countrieso In
addition, tl~e total assets of the Group amount to $500 million.
For Bernardo Quintana Arrioja, ttte idea of a"group" as a specific Cype of
business organization "is a new phenomenon, daring back 5 years; prior to
that, the trend was different. ICA'~ backgrosnd is quite the contrary,
that is we started a company, we saw that it was developing too rapidly
and that it was getting into 3ifferent specialties that were totally unre-
lated, and then we began to set up new firms by specialties, as by-products
of the fxrst one. In the beginning there was a company that built roads,
another that handled irrigation projects, etco "~hese I~olding companies,"
Mr Quitana continued, "help a great deal in covering parts of the economy
that could i~ot be reached without the tools to stimulate them. Take tour-
ismo This is an investment sub~ect to a series of unpredictable phenomena:
inequalities in the return on rooms, variations in tourists' affluence,
etc. The l~olding companies and the promotion companies make it possible
to deal with these problems, since they protect co;rpanies working to meet
the country's development needs." In the view of the manager, the balance
sheet of this type of organization is positive: "Adopting this corporate
form worked out well for the ICA Gr~up, as it has provided good results
and t~as permitted it to increase its service capacityo"
~ . LS
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-00850R040500070068-5
MUK UMMtt;IAL U~L': UIVL~'
The ICA Group is rooted in the Mexican econo*_nic model that is based on the
joint publicly- and privately-owned enterpriseo According to this economic
model, referred to in the 1917 Mexican Constitution, both the private and
tt~e public sector should participate in the economic dev~lopment of the
cbuntrya For the president and founder of the Group, this means that "the
pri.vate sector is responsible for creating all the development sources
tt~at the country needs, but whatever the private sector does not accom-
plish the federal government reserves the right to do." Mr Quintana went
on to say that "this economic model has in fact evolved over the yearsa
Immediately after the victory of the revolution, the private aector became
very active and aggressive, while the government had very limited revenue
- and very little involvement in the country's economyo This gradually in-
creased, however, and between 1950 and 1960, the economy began to be
balanced between governme~t investment and private investment, until it
arrived at 49.3 and 4007 percent shares, respectively,"
Mr Quintana points out, however, that today the goveLr~ment is becoming in-
creasingly wealthier, since "aside from the revenue from the firms it has
- created, it also has another major resource, oil, and this is an element
- that is balancing our domestic economy today.
The subject of ineasuring the government's participation has always been
controversialo However, according to the chairman of the board of one of
the largest Mexican consortiums, this is a subject that has been resolved,
and the roles of the t~ao aectors have been clearly defined. Ii~ other
words, "the private sector has realized that it cannot handle investments
to build the infrastructure for the country's social and economic develop-
ment at a time when there are so many social needs. The private sector
has realized that the government must ma.ke these investments." Mr Quintana
observed that this is not just true for Mexico, but that there is great
similarity between the Mexican and the Frenc;~ economies. "In Mexico, the
railway belongs to Che federal government, as it does in France, and the
system of electricity, oil, and communica'tions, such as roads, airports and
ports, all belong to the federal government. However, the so-called normal
consumer activities--from investment and consumer goods to services, etc.--
nearly always belong to the private sector, and in some cases they are
- shared with the publ~.c sector. This is a joint publicly- and privately-
run ecor~omy," explainer,' Mr Quintana, who stressed the importance of this
model for the country's growth--"a strong and sustained annual growth of
more than 7 percent in the past few years, which makes the country strong
and stable."
Management of government enterprises has for a long time been a serious
problem because of the inefficiency associated with this type of manage-
ment. But according to Bernardo Quintana, an outspoken defender of joint,
public and private companies, "enterprises involved in strategic ~nd social
- areas should belong to the goverr~ment, because there is no private Mexican
capital ~apable of furttiering these basic enterprises for the development of
the country. Electxicity, oil, and transportation cannot be covered with
domestic private money, and neitlier do we want to rely on foreign capital
29
- FOR OFFICIAI. USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000500074468-5
FOR OFF[CIAL USE ONLY
'~for this type of enterprise, as this would make us feel as though the country
belonged to others, rather than to ourselves."
The chairman of the ICA Group added: "Even though we are not entirely
. satisfied, we believe that progress has been reasonable and that it is
important to bear in mind that this type of enterprise has numerous ob-
ligations as a result of bein g part of the public service." To give an
- example, he said "that it is very understandable that electricity would
be sold to small farmers at prices lower than production costs. These
enterprises fulfill a soci.al ~ask in this~way." "We could say, hawever,
- that too many enterprises were created and that there is not enough ad-~
ministrative personnel to manage them effectively. But th is is not jus~
a phenomenon peculiar to the federal government, as it is also found in
the private sector, and that is our main problem. Whether the federal
government continues to make the investments in basic infrastructure and
leaves the remaining economic activities to the private sector, "we still
have to cope with all the res ulting problems in a poaitive way," said Mr
Quintana, summarizing his philosophyo
, The Ironworks Enterprises, Inc., a member af the group, deserves a separate
chapter. It was founded 18 years ago by Bernardo Quintana. From the out-
set of their operations in 1963, the Ironworks Enterprises were the first
to start manufacturing metal products, from items as simple as reinforce-
ment for concrete to the most saphisticated articles, such as overpasses,
metal structures for construction and industrial investments.
The firm works in close collaboration. with PEMEX in a variety of areas.
"We manufacture structures and equip~~ent PEMEX needs for its facilities
and we manufacture large-diameter spf;ericxl tanks and fuel storage reser-
voirs to meet their storage needs," Mi- Q~tintana added. Ever since it be-
gan, the Ironworks has used varying technologies of different origins.
k'hen the firm was established, it used French technology, that "enabled
us for tlie first time in Mexico to manufacture different products in the
' metalworking and machine industry," Mr Quintana commented. He stressed the
cordial and productive relations that tliey have had wiCh French industrial-
ists, not only in transferrin g technology, but in the association itself.
Today the Group has developed its awn manufacturing and design technology.
"But it is the combination of the two technologies, the foreign one and our
awn, that has enabled us to participate in the most important operations,"
Mr Quintana pointed out.
"The main problem here too is personnel training. The 5,000 some techni-
cians we employ were nearly a 11 trained by us. We are members of the Na-
tional Chamber of Industry and Construction, which has set up a training
- institute for foremen and technicians," Mr Quintana pointed out.
COPYRIGHT: 1981 par Cogedipress S.A.
98OS
CSO: 3100/630 IIVD
30
- FnR OFF[C'IAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500070068-5