At CEMEX, the key to success has been a relentless focus on providing value for our stockholders, creating a positive working environment for our employees, fostering the well-being of our communities and protecting the environment. This holistic approach has allowed us to be remarkably successful over a span of 100 years and to become the world’s most efficient building solutions company.

Our approach to doing business has proved valuable during challenging times, such as the adverse economic circumstances that prevailed in Mexico during the 1970s and 1980s, and the keen international competition that’s part and parcel of globalization. CEMEX has learned to thrive in difficult environments, and today is one of the world’s top players in the cement industry, with production facilities in more than 50 countries and trade relations with more than 90 nations.

Corporate responsibility is a natural component of our business, not an afterthought or a glossy finish added to core activities in order to be politically correct and in tune with the times. This approach has allowed us to find new business opportunities that fulfill unmet needs. We have been able to do good business and at the same time do good.

Supporting low-income housing in Mexico

A case in point is the major shortfall of housing in Mexico (estimated at one million houses per year), due to a complex combination of factors, including high population growth in past decades, internal migration from the countryside to major cities, and the high mortgage rates and onerous guarantee requirements that prevailed in the Mexican financial sector for years. Through creative thinking and a deep understanding of local circumstances and needs, CEMEX has been able to make a significant contribution to the low-income housing market through three programs: Patrimonio Hoy, Construmex, and Piso Firme.

Before...

Patrimonio Hoy (PH), launched in 2000, provides low-income families with financing and technical advice to build houses at a reasonable cost. Many self-built houses in Mexico have only one room, a roof that is permeable to rainwater and no access to sewage facilities. Given that low-income families tend to fall outside normal credit channels, it typically takes them five years to build a single low-quality room. PH provides low-income families with access to credit for cement and other building materials, warehousing, and architectural consulting services so they can build a sound house — with possibilities for further enlargement — at 80 percent of the cost and less than one-third of the time it takes to build one without the aid of PH.¹

PH works by using social capital as collateral. It requires three families to form a group, which is then responsible for weekly contributions. Should a member of the group fail to make its contribution, all group members temporarily lose access to PH and their social standing is also affected. This program has resulted in repayment rates of over 99 percent and allowed over 120,000 families to build a house. We plan to expand the program to two million families by 2010.

The savings discipline and marked improvement in living conditions have allowed thousands of Mexican families to enjoy a better present and envisage a brighter future. Gema López was able to build additional rooms in her house, ensuring that her children have an adequate space to do homework. This is not a trivial development; for when all activities take place in a single room, children are unable to find the peace and quiet needed to study, and their performance in school naturally reflects this.

Construmex, launched in 2001, is an offspring of PH which provides financing for Mexicans living in the U.S. who want to build or remodel a house in Mexico. They face a no-win situation situation: Mexican banks will not lend them money if they are not living in Mexico, while U.S. banks will not grant them credit to build a house in Mexico. Construmex designs credit terms in line with the needs and capabilities of immigrants, and also provides them with technical assistance to build their house. It has helped people such as José from Michoacán who had been in the U.S. for seven years without seeing his family, but was nevertheless able to provide them with a house. In 2006, we expect to support the families of 5,000 immigrants through Construmex.

After ... the interior

Piso Firme is the result of joint action between the Mexican government and CEMEX. The aim is to replace dirt floors in self-built houses with an antibacterial concrete floor, reducing the risks of contamination and disease. The program has benefited more than 200,000 families since its inception in 1995.

How do CEMEX’s low-income housing programs dovetail with its commitments under the UN Global Compact?

Article 25 of the 1948 Universal Declaration of Human Rights provides that everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, and housing, provides a real challenge for many countries. CEMEX helps improve the standard of living of Mexicans by allowing them to make the most out what they have, not only in terms of being able to afford a well-built house, but by also increasing the value of their assets. The market value of a house built through PH — with its quality materials and construction — is some 20 percent higher than that of a traditionally-built house. In addition, about 25 percent of PH families who have built an additional room are using it to run a small business.

These CEMEX housing programs also support our environmental commitments under the Global Compact. Our insistence on continuous improvement means that our production processes rank among the cleanest in the industry, so the cement used in our housing programs — as well as all our other specialty cements — is environmentally friendly. In addition, since PH houses have sanitation facilities, the health and well-being of inhabitants are enhanced, also the case for those who are only able to install an antibacterial cement floor through Piso Firme. Where sanitation facilities are non-existent, health and environmental problems are pervasive.

With conviction and creativity CEMEX has been able to address some of the housing challenges in Mexico, and to show that apparently simple actions can have a significant impact on the well-being of thousands of people in Mexico. Doing good makes good business sense and allows our housing programs to be sustained over the long-term.



Photos: Professor Arthur Segel
Endnotes:
1. Harvard Business School. Patrimonio Hoy: A Groundbreaking Corporate Program to Alleviate Mexico's Housing Crisis. Arthur Sagel, Nadeem Meghji.