The Delta Group has been through many of Mexico’s ups and downs, but now with a steady economy and a booming construction market, this concrete pourer is ready to boom too. Peter Krupa reports.
Observers have posited any number of indicators as the “canary in the mineshaft” that signals the health of an economy, from growth to unemployment to real estate prices. When a certain economy begins to flag or, alternatively, to take off, it’s believed that data from these sources can clue in observers as to economic trends that are just getting started.
The directors of the Delta Group are not economists, but they have provided services to the construction industry in Mexico for 28 years as a concrete pourer and survived the many seesaw moments the economy went through during those decades. Looking back at Delta’s accounting books, said Jordi Ramirez, Delta’s technical coordinator, it becomes pretty clear that the construction industry is one of the first things to waver when the economy looks sketchy, as well as the first thing to heat up when the outlook is good – a canary in the mineshaft. So how is the canary these days?
If Delta is any measure, it is singing out a lusty and cheerful tune. In the last few years, Delta’s business has grown by 150 percent, 50 percent of that just last year. “One of the advantages of being in Mexico,” Ramirez said, “is that there are a lot of things to build. Unfortunately there aren’t always resources to build them.” But that’s something that has changed in the last few years, and so Mexican construction has been booming.
Finding the foundation
As one of Mexico’s leading medium-sized construction companies, the Delta Group was founded in 1979 by Jorge Ramirez. Ramirez was an engineer who already had many years in construction under his belt, and founding Delta was his attempt to strike out on his own. The main part of Delta’s business, both then and now, is deep concrete pours for the foundations of large structures.
It’s an essential skill in the Mexican construction industry because so much of the country’s ground is not suitable for supporting the weight of large buildings. One whole area in the center of Mexico City, for example, rests on damp, sandy shale. Construction companies, therefore, subcontract the foundation pour out to the Delta Group, which has the equipment and the expertise to use a variety of different techniques to pour foundations down deep, sometimes to the bedrock, to support tall buildings like hotels, condos, and office complexes.
In addition to that original business, Delta has two other, albeit smaller, branches: one, the manufacture of premixed concrete, and two, the extraction and sale of gravel, sand, and the like. Delta added those businesses to its line up 15 and nine years ago, respectively, and both have shown strong growth, Ramirez said. “The idea of the company is to offer quality products and give our customers more options so they can (concentrate on) working on their projects.”
Big projects, big infrastructure
The projects Delta works on with its customers include just about anything that needs cement poured: bridges, docks, hotels, high rises, and subways, just to name a few. It poured the pilings for a dock for Peróleos Méxicanos in Progreso, as well as for the tourist dock in Mahahual on the Riviera Maya. Other projects Delta has worked on include: the Bosque residential complex and the Marriot Hotel in Mexico City; the Moon Palace Hotel, the Presidente Stouffer Hotel, and the Royal Sands Hotel in Cancun; and the La Pigua bridge in Villahermosa.
Such a variety of different projects brings an equal variety of challenges, and so Delta operates a wide array of equipment for use in all manner of work conditions. Included are nine crane-attached drills for deep cement pouring; several structural cranes ranging from 20 to 140 tons; hydraulic drills and diesel jackhammers; both truck-based and caterpillar-based drills and multiple pieces of transport equipment. For its sea-based operations, Delta operates flexifloat barges, dredges, jack-ups for 70 to 120 tons, and 800 hp tugboats.
In addition to all that, Delta operates out of two offices: one in Cancun, the other in Mexico City. It holds a concrete-making operation near Cancun and can supply its own material for any job, but Ramirez says the most important thing for Delta is its flexibility and capacity to work with the needs of the customer.
However, the most important resource Delta has to work with is its workforce of dedicated professionals. One of Delta’s accomplishments throughout Mexico’s economic ups and downs was that it largely maintained its roster of experienced workers, meaning that today it has some employees that have been in the business with Delta right from the beginning. “Any company can have equipment. Any company can have offices,” Ramirez said. “But our people are specialized. They have affection for the company, and in some cases have been with us for 25 or 28 years.”
Ramirez sees this as one of the principle advantages that Delta holds over its competition, both domestic and foreign. As Delta has grown organically over the years and taken on more and more ambitious projects, it has retained much of the experience by retaining the people who have worked on the jobs. This allows Delta to offer premium service to demanding customers, while at the same time expanding on its base of ambition and experience. “We don’t believe anything is impossible,” Ramirez said. “We believe we can do any job.”
Growth through struggle
Over the years, another of the great accomplishments of Delta, Ramirez said, has been not necessarily steady growth, but steady place-holding. During Delta’s existence, Mexico has seen any number of economic upheavals, almost every time the office of the presidency changes hands. Through it all, Delta managed to hold onto both its business and its employees, and today it looks like the Mexican economy might finally be emerging onto the other side.
“What there is now in contrast, maybe, to Mexico some years ago is that at least there is stability in the economy that allows you to make a very clear prediction of how it’s going to behave,” he said. The immediate effect of that stability is that industries like construction that depend on the dependable flow of capital and their ability to meet financing obligations can start borrowing dollars and planning their futures.
“That used to be difficult,” Ramirez continued, “because you didn’t know what was going to happen. When the presidency changed, there could be a currency devaluation, and then you weren’t going to be able to pay that loan you had committed to.”
Heavy domestic workload
The more long-term effect of that economic stability is that it’s helping companies like Delta grow at an incredible pace as it encourages investment on infrastructure projects like bridges, buildings, and docks. Delta grew 150 percent over the last five years, 50 percent of that in last year alone. Today it does about $34.5 million worth of business annually.
Some of that business is taking place abroad. For example, Delta has done projects in Belize and Costa Rica, and is currently working on a luxury hotel in Jamaica. But, said Ramirez, “Fortunately there are so many projects in Mexico that we haven’t been able to leave much.” If growth keeps up at this rate, Delta has a good future in front of it indeed, and although growth of this kind is notoriously unpredictable – especially in the construction industry – Ramirez is positive and speculates that this could be a signal of a bright future ahead, not just for Delta but for Mexico.
Growth for Delta, growth for Mexico
In the end, Delta sees growth for Mexico and growth for Delta as more or less the same thing. If there is a long steady growth period ahead, Delta will of course consolidate its position as a leader in the market of medium-sized construction companies. “Of the capital the company has, reinvestment is almost total,” Ramirez said. “The capital stays inside the company to make sure it keeps growing.” In addition to helping the company grow, this assures that Delta stays 100 percent Mexican owned.
But another goal for Delta is the growth of Mexico itself, especially its infrastructure. “We come to a place [in Mexico] and sometimes there’s no drainage or electricity or any of those things, and we’re going to build the infrastructure so that those services can be there,” Ramirez said. As it does so and the Mexican economy continues to prosper, Delta is indirectly creating the next generation of Mexican investors that can help keep Delta and companies like it in Mexico focused on Mexican needs.
“We’re working toward that future,” Ramirez said. “We’re not waiting for someone to do it for us. We’re being active in obtaining a better country for the generations to come.”