International Economic Exchange Spring 2014

Helen Sheng, Fiona Wilkie

Devon Roura, Pollo Suarez
Automobile Transportation: Mexico USA
Freight Rail
Freight revenue
will grow 63.6%
to $1.3 trillion
annually by
2024
All the automakers
have been reinforcing
their presence in
Mexico, and rail access
is one of the musts
for the auto industry
2
Mexico is rising and USs neighbor
International Organization for Motor Vehicle Manufacturers (OICA)
Increased interaction with United States increases diplomacy and economic relations
between the countries
Note: This slide
was created by a
team member,
included for the
sake of context.
3
The reason for this increase in
production is lower prices
KPMG LLP, Competitive Alternatives: KPMGs Guide to International Business Location; AMIA with data from Bank of Mexico (Banxico)
Most competitive in
terms of cost
Mexico Automotive
Industry
Note: This slide
was created by a
team member,
included for the
sake of context.
4
The industry is not stopping, it is looking
forward
KPMG with information from the Mexican Association of the Automotive Industry (AMIA); Reuters
Mexico is quickly turning into the China of the West, said J oseph Langley, a senior analyst at
Michigan-based research firm HIS Automotive, pointing to Mexicos low wages, a strong supply
base and a global web of free-trade agreements
Leading Players
$10 billion factory investment
Note: This slide
was created by a
team member,
included for the
sake of context.
5
Brookings Institute 2013
Improving the Social and Political Stage
Growth in Auto
Industry
More
jobs/possibilities
Less people
joining drug
cartels
Note: This slide
was created by a
team member,
included for the
sake of context.
6
Federal Railroad Administration 2009
Shift from Trucking to Freight Rail
Set global standard for fuel efficient freight transportation
7
Union Pacific Annual Report 2013; World Herald 2013
Union Pacific will be first to reap
benefits of Mexicos auto manufacturing.
UP controls 90% of auto shipment via
rail from Mexico to the US
Total Revenue for UP was $20.9
billion in 2013
10% of UPs revenue was in automotive
transportation, growing by 15%
NASDAQ 2014; Stock Analysis 2014
The company shows high stability, high
growth, and high return
NASDAQ financial experts
overwhelmingly suggest
investment, with 1.33
PEG ratio EBITDA for 2013 saw a
$700,000,000 rise to $9.3
billion
High P/E ratio in 2013, but
expected to consistently drop
in the future
World Herald 2013; NASDAQ 2014
Union Pacifics Competitive Potential
Industry
Potential
$10 billion investment in factories from all leading players in the
Mexican auto industry supporting transport business
Skilled, low cost labor
Investment
$14.3 EPS Growth Rate in the company
Auto revenue increased 17% in 2013, with 10% growth in volume
and 7% increase revenue per car
Social &
Political
Increase employment and standard of living
Allow stronger diplomatic relations with US through commerce
Set global model for efficient exportation methods