Mexico: 2,500 Companies Close Due to High Gas Costs South American Business Information

January 05, 2001

Mexico's senate has called on the federal government to resolve urgently the situation within national industry caused by the high price of gas - up by 150 % of late and 400 % through 2000 - which it claims has already provoked the closure of up to 2,500 firms - 400 directly - and the subsequent loss of almost 500,000 jobs. The latest company to fall by the wayside was Hylsamex, Alfa group and Hylsa subsidiary, a few days ago, with the closure of its plants and three mines (Hylsa itself has cut 1,250 direct jobs which will put an end to a further 6,000 indirect jobs). The senate claims that the government will have to offer Pesos$11bil in subsidies to keep thousands more companies from closure - from sectors such as glass, textiles, steel, mining, paper and pulp, food and ceramics - if the gas price problem is not addressed directly. The demands are for a 'Mexican price' rather than using Texas as a price reference. The point has been made that Mexican natural gas exports fell fromUS$12.4mil toUS$11mil in 2000 whilst imports rose fromUS$99.1mil toUS$246mil. In Nueva Leon alone, the glass sector has lost Vidriera Continental, Vidrios y Derivados, Vidriera Punta de la Loma and Krisco as well as many reductions in production across the remainder of the sector.

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-- Martin Thompson (mthom1927@aol.com), January 05, 2001