Dec 222016
 

Some parts of Mexico have been working on Christmas for most of the year… For example, the manufacturing of beautiful handmade Christmas tree decorations is the main industry today in the former gold and silver mining town of Tlalpujahua in the state of Michoacán. The production of Christmas ornaments in Tlapujahua has a great series of photos by Arturo Toraya of Notimex, showing some of the steps involved.

ornaments-2

As the accompanying text explains, “Making baubles for Christmas trees is the main source of jobs in the town, which is now one of the top five producers in the world. Due to their quality, 90 percent of the total production is exported to the U.S. and Canada. There are 200 family workshops in the town with seven-hour shifts, and each worker can make up to 550 baubles per day. Each workshop decorates about 500 per day. Red, blue, green and yellow are the top selling colors in Mexico, while black, brown and grey are more popular in the U.S.”

The village of Tzintzuntzan, on the shores of Lake Pátzcuaro, also in Michoacán, is another settlement where Christmas seems to be a year-round source of inspiration. The village handicraft market is a cornucopia of straw work in every conceivable color, design and size, which make ideal Christmas decorations or gifts.

Happy Christmas from Geo-Mexico! – ¡Feliz Navidad!

Craft market in Tzintzuntzan, Michoacan

Craft market in Tzintzuntzan, Michoacan

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Oct 152015
 

Since we first reported on Bicycle manufacturing in Mexico in 2010, a number of things have changed.

At that time, the website of the National Association of Bicycle Manufacturers claimed that its 14 member companies produced about 3 million bikes a year and employed, between them, 4,000 workers. Today, the group has fewer members – 12 – who make “over 2 million” bikes a year and provide 3,000 jobs.

Stamp of Bike exports

The Mexican bicycle manufacturing industry looks like it has to overcome a tough problem. Recent press reports suggest that the total number of bicycles produced nationally fell to around 1.8 million in 2014. Manufacturers are blaming the uncontrolled imports of less expensive bikes made in China. Gunter Maerker, a representative of the National Association of Bicycle Manufacturers, argues that manufacturers need greater protection from Chinese imports, which have an average cost of about 7 dollars a unit, compared to a unit cost of production that is closer to 20 dollars to make a bicycle in Mexico.

Domestic manufacturers sold 1.5 million bikes in the national market in 2014. Mexican manufacturers believe that sales of imported bikes equaled or exceeded that number. The fall in national bicycle manufacturing has already had impacts on suppliers of components since national bikes are made largely of domestically-manufactured parts (along with some items sourced in China or Taiwan).

Mexican bicycle manufacturers are also worried about the implementation of the Trans-Pacific Partnership (TPP), agreed in principle earlier this month, but still needing formal approval in all signatory countries. The 12 countries involved are Mexico, the U.S., Canada, Chile, Peru, Australia, Japan, Brunei, Malaysia, New Zealand, Singapore and Vietnam.

China has had no part in TPP discussions, but it is feared that Chinese manufacturers may triangulate their products into Mexico via signatory countries such as Malaysia or Vietnam.

In 2015, the National Association of Bicycle Manufacturers lists 12 bike manufacturers:

  • Bicicletas Cinelli – Santa Catarina, Nuevo León
  • Nahel – Durango, Durango
  • Goray – Torreón, Coahuila
  • Grupo Veloci – Zapopan, Jalisco
  • Rebimo de Guadalajara – Zapopan, Jalisco
  • Bicicletas Mercurio, Mérida, Yucatá and San Luis Potosí (they acquired the famous Acer-Mex Windsor brand in 2001)
  • Bimex – Mexico City
  • Magistroni – Mexico City
  • Benotto (primarily a distributor) – Mexico City
  • Grupo Oriental – Mexico City
  • Corporativo La Bici – Mexico City
  • Bicileyca – Yauhquemehcan, Tlaxcala

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Mexico’s multinationals: Mexichem, a world leader for PVC pipes and other products

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Sep 202015
 

Mexichem is a Mexican chemical and petrochemicals company (2014 total revenues: US$ 5.6 billion), with headquarters in Tlalnepantla, in Greater Mexico City. Mexichem is a world leader in making and marketing plastic pipes and other products required in the infrastructure, housing, telecommunications, drinking and potable water sectors.

It employs 19,200 workers and has 120 manufacturing operations in more than 30 countries, with a sales presence in 90 countries.

Mexichem operations, 2015

Mexichem operations, 2015 (Source: mexichem.com)

The company’s origins date back to 1953 when a group of Mexican and English investors founded Cables Mexicanos S.A. to make high carbon steel wire ropes. Several changes of name and owners later, it emerged in 2005 as Mexichem. Mexichem has grown rapidly since then, largely due to an aggressive series of acquisitions.

In 2006, Mexichem bought Bayshore Group (PVC compounding). In 2007, it bought Amanco (PVC pipe systems and fittings), Petroquímica Colombiana (maker of PVC resins) and DVG, Industria e Comércio de Plásticos (producer of rigid PVC water and sewage pipes).

In 2008 Mexichem acquired Fluorita de Río Verde (fluorspar production plants and two fluorite mining concessions), Quimir (sodium phosphates), Geotextiles del Perú (geotextiles), Fiberweb Bidim Industria e Comércio de Não-Tecidos (Brazilian geotextile producer) and Colpozos (Colombia’s leading supplier of irrigation and well drilling systems).

The list goes on in succeeding years, with a succession of acquisitions of companies making PVC pipes, connections, polymers, resins, and fluorochemical competitors to become a world leader in the fluorine chemical segment, particularly in the production of refrigerant and medical gases.

mexichem-fluor

To consolidate its fluorite business, in 2012, Mexichem bought Fluorita de México, ensuring access to the highest pure fluorspar available worldwide.

Mexichem has four main business divisions:

  • Pipe systems, fittings, conduits and plastic accessories for the delivery of data, video, communications, electricity, water and gas. The pipe systems are made from polyethylene, PVC, polypropylene and specialty flame and smoke resistant compounds.
  • PVC resin and valuable industrial compounds based on chlorine and caustic soda. PVC has uses from pipes that carry drinking water, wastewater or water for irrigation to construction materials and products, as well as  auto parts, household appliances, clothing, footwear, packaging and medical devices. Caustic soda is used to make soap, shampoo, lotions and detergents and to treat water.
  • Fluorine-based products, technologies and services. Mexichem’s “Mine to Market” structure ensures a secure supply chain of flourine-based products for the steel, cement, aluminum, automotive, refrigeration and pharmaceutical sectors.
  • Energy. This division was created in 2014 in order to capitalize on opportunities arising from Mexico’s new energy policies.

A note on Mexico’s importance for fluorite

Exports of fluorite from Mexico were worth $180.7 million in 2014 (29% of the world total), making Mexico the world’s leading exporter of that mineral, ahead of China ($120.2 m). In 2014, Mexico mined 1.1 million metric tons of fluorite, and was the world’s second largest producer after China (4.4 million tons).

Mexichem sits on the world’s largest high-grade fluorite deposits, in its mine in San Luis Potosí. It produced 529,464 metric tons of fluorite from this mine in the first six months of 2015, 96% of the national total.

The world’s largest total reserves of fluorite are in South Africa (41 million tons), followed by Mexico (32 million), China (24 million) and Mongolia (22 million), according to U.S. government figures.

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Mar 052015
 

The Nava brewery, which started operations in May 2010, was built by Grupo Modelo but subsequently sold in 2013 to Constellation Brands, the U.S. company that holds the rights to import Modelo products into the U.S.

Nava brewery

Nava brewery. Credit: Constellation Brands

Constellation Brands (founded in 1945 and based in Victor, New York) is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy.

The Nava brewery is the world’s largest brewery of its kind (see this video overview from company webpage), with about 2000 employees and a brewing capacity of 20 million hectoliters of beer a year. A planned expansion (see 26-second video) will increase capacity to 30 million hectoliters.The plant produces Grupo Modelo brands such as Corona, Corona Light, Negra Modelo and Modelo Especial, under license for export to the U.S.

Where is it?

The beer brewery and bottling plant is located in the Nava municipality in the northern state of Coahuila, about 21 km (13 mi) from the border town of Piedras Negras. It is built alongside highway 57 and spreads over 334 hectares (825 acres) of a greenfield site.

Why is it located in Nava?

The major advantages of this location include:

  • the availability of good quality water
  • proximity to the U.S. border and the U.S. beer market
  • presence of good road, rail and power infrastructure

How does the brewery work?

The brewery is a three-story brewhouse with large metal silos, about 1.6 km (1 mi) of conveyors and four pasteurizers. The facility consists of two brewhouses with malt intake, vacuum evaporation and energy recovery systems, 70 cylindro-conical fermentation and storage tanks, seven clean-in-place (CIP) stations, a yeast cellar with 16 tanks and continuous microfiltration (CMF), 30 pressure tanks and three filtration lines with 1,200 hectoliters/hour capacity each, and a Siemens automated process control system.

The brewery uses rice, barley malt, corn grits and water to produce beer. The feedstock is transported by trains to the plant and stored in silos. A 60 km (37 mi) pipeline connects the brewery to a mountain aquifer supplying about 20 million cubic meters of water a year. The site includes its own wastewater treatment plant.

A raw materials supply system handles the raw materials in bulk and conveys them to the brewhouse, where they first enter a collection bin, and then a mash tun, where water is added. The mixture is then pumped along a pipeline to the cereal cooker of the brewhouse.

Two brew systems consisting of mash tuns and cereal cookers are designed to efficiently use the internal heat. These heaters can also clean them automatically by CIP (clean-in-place) technology. Fermentation takes place in unitanks configured with automated clarification, purging systems and turbidity monitoring. The brewery consumes less than 3 liters of water for each liter of beer. The carbon dioxide reclamation capacity of the brewhouse is about 4,000 kg/hour.

The three bottling lines have the capacity to handle 144,000 bottles/hour, while a canning line outputs up to 66,000 cans/hour.

Filling, pasteurizing and cap feeding is handled by 37 robotic machines. Output is linked to the warehouse by automated trolleys. The automated warehouse is equipped with digisat satellite, a state-of-the-art warehouse management system, and can store about 63,000 pallets.

The high level of automation means that this beer manufacturing and bottling plant has operational costs about 40% lower than the seven older breweries that still belong to Grupo Modelo.

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Mexico’s vehicle industry

 Teaching ideas, Updates to Geo-Mexico  Comments Off on Mexico’s vehicle industry
Dec 272014
 

Mexico is one of the world’s “Top Ten” countries for vehicle production and for vehicle exports. In 2014, it has overtaken Brazil to become the world’s 7th largest vehicle producer and fourth largest exporter. 80% of Mexico’s production of around 3.3 million vehicles in 2014 were made for export. The trade surplus generated by the automotive sector exceeded 47 billion dollars in 2014.

auto-exports-forbes

Mexico’s vehicle exports in 2014. Credit: Forbes, México.

The industry attracts large amounts of Foreign Direct Investment (FDI). Vehicle assembly plants provide around 65,000 jobs, with a further 85,000 employed in distributorships nationwide and a whopping 450,000 employed in the autoparts sector.

The autoparts sector along produces items worth $80 billion/year, but Mexico also has to import components made elsewhere worth a further $35 billion. Clearly, this offers some opportunities for additional investment aimed at import substitution. Most of the opportunities are likely to be for Tier 2 companies. It is customary to divide the autoparts sector into three distinct parts: OEM, Tier 1 and Tier 2. OEM (Original equipment manufacturer) refers to companies that make a final product for the consumer marketplace (eg Volkswagen). Tier 1 companies are direct suppliers of components to OEMs, and Tier 2 companies are the key suppliers of parts or raw materials to Tier 1 suppliers.

Total production in 2014 topped the 3 million barrier, and the Mexican Automotive Industry Association (AMIA) believes production could reach 4 million units by 2015 and 5 million by 2020.According to  AMIA, the best selling models on the domestic market are the Aveo (GM), Jetta (VW), Versa and Tsuru (both Nissan).

There are about 30 vehicle assembly plants in Mexico, manufacturing many brands of cars and trucks (see map). In addition, there are 1200 firms specializing in making parts for vehicles.

Vehicle manufacturing firms that have announced or confirmed major new investments during 2014 include:

  • Chrysler – 1.25 billion dollars to expand its assembly plant in Saltillo and manufacture a new line of Tigershark engines.
  • Nissan – to open its second plant in Aguascalientes.
  • Mazda – an additional 120 million dollars for its plant in Salamanca (Guanajuato), where it will manufacture several Mazda models as well as one Toyota model.
  • GM – investments worth 690 million dollars, divided  between its plants in Silao (Guanajuato), San Luis Potosí and Toluca (State of México).
  • Audi – about to open a 1.3-billion-dollar plant in San Jose Chiapa, near Puebla.
  • VW – 700 million dollars investment to adapt production lines in Puebla to produce its redesigned Golf hatchback.
  • Kia – plans to build a $1 billion vehicle assembly plant at Pesquería in the state of Nuevo Leon (scheduled to open in 2016) to produce up to 300,000 vehicles a year. The new plant is expected to generate a further 1.5 billion dollars in investment from firms seeking to join Kia’s supply chain.

This map is an updated version of the map we included in Where are Mexico’s vehicle assembly plants located? (2011).

Vehicle assembly plants in Mexico, 2014

Vehicle assembly plants in Mexico, 2014. Credit: Tony Burton/Geo-Mexico; all rights reserved.

As the map shows, certain areas of Mexico have attracted more investment in vehicle assembly plants than other areas. The two largest existing concentrations are focused on Toluca in the State of México, and on Saltillo-Ramos Arizpe in northern Mexico. However, the fastest growing cluster is in the central state of Guanajuato.

Virtual visit to the Chrysler plant in Saltillo (video, no commentary):

For a series of discussion questions related to this map and the vehicle assembly industry, see our earlier post – Where are Mexico’s vehicle assembly plants located?

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Aug 042014
 

Mabe is one of Mexico’s largest multinational companies (2013 sales: $3.3 billion) with a total workforce of 21,000. The company designs, produces, and distributes domestic appliances (stoves, refrigerators, etc) to more than 70 countries.

mabe-plantThe company was founded in 1946, in Mexico City, by two Spanish immigrants: Egon Mabardi and Francisco Berrondo. It started by making kitchen furniture but quickly added gas ranges and refrigerators. By 1960, Mabe had already become Mexico’s single largest exporter of home appliances.

It continued to expand via an aggressive series of acquisitions, including the purchase of companies in Venezuela, Ecuador, Colombia, Brazil, Peru, Argentina and Canada.

To boost its presence in the USA and Canada, in 1986 Mabe created a joint venture with General Electric to produce appliances for the US market.

mabe-sales

Mabe sales, by region

GE held a 48% minority stake in the new venture and hoped to gain access to Mexico’s low cost labor pool, while Mabe was able to use GE’s existing distribution network to gain wider access to markets throughout the USA. Within a decade, two out of every three gas ranges and refrigerators imported into the USA were designed and manufactured by Mabe in Mexico. Almost all (95%) of the ranges and refrigerators sold as General Electric brands were designed in Mabe’s San Luis Potosi plant, the biggest kitchens plant in the world.

The implementation of NAFTA in 1994 led to further opportunities for Mabe. Since NAFTA, Mexico has become the leading supplier of household appliances, such as stoves, refrigerators, dryers and washing machines to the USA and Canada. In 2005, Mabe continued its expansion by acquiring Canadian firm Camco.

NAFTA also led to the firms competitors, including Whirlpool, Electrolux, Samsung and LG all establishing factories in Mexico.

The company, which is still headquartered in Mexico City, is a major purchaser of steel on the North American market, consuming steel worth around $500,000 each year. Its products include microwaves, washing machines and dryers, wine storage systems, air conditioning, motor-compressors, plastic injection and die-casting machinery.

It has about 15 manufacturing facilities in Latin America. The company’s factories in Mexico –located in Mexico City, Coahuila, Guanajuato, Nuevo León, Querétaro and San Luis Potosí– account for half its total output. In addition, refrigerators and ranges are manufactured in Colombia; freezers, refrigerators and ranges in Ecuador, and refrigerators, washing machines and ranges in Argentina and Brazil.

Mabe’s business practices incorporate a degree of “glocalization” in which the company’s designs are modified to be specific to particular regions, based on the consumer preferences and tastes in each country or region.

In 2014, Mabe announced that it was spending $80 million to repatriate its only Canadian plant from Montreal to Ramos Arizpe, Coahuila. The plant makes washing machines, driers and dishwashers. Together with Mabe’s existing plant in Ramos Arizpe, the two plants have the capacity to turn out about one million washing machines annually.

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León hosts Latin America’s largest trade fair for footwear

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Mar 262014
 

Mexico’s footwear industry is heavily concentrated in three main cities: León, Guadalajara and Mexico City. Factories and workshops in the city of León in the state of Guanajuato account for about 68% of all shoes made in Mexico. The two other important manufacturing areas for footwear are Guadalajara (Jalisco) where about 18% of the national production originates, and Mexico City (together with surrounding parts of the State of Mexico), responsible for 12%.

Footwear industry in Mexico

Concentration of shoe industry in Mexico.

According to the 2009 Economic Census, there were close to 7500 “productive units” related to shoe manufacturing in Mexico, with about half of them located in the state of Guanajuato. In 2012, national producers turned out 244 million pairs of footwear, of which 171 million pairs (70%) were made in Guanajuato.

Shoes are also an important international trade item. In 2013, shoe exports reached 26 million pairs, worth almost $600 million (an increase of 14% compared to 2012). The main export markets were the USA, Canada, Colombia, Guatemala, Panama and Japan.

Mexico’s shoe industry hosts several major trade fairs each year. The single biggest event, SAPICA (Salón de la Piel y el Calzado), is Latin America’s largest international footwear trade fair and is held in León twice a year. The next SAPICA trade fair opens today and runs 26-29 March 2014 in León, Guanajuato. This show has 45,000 square meters of exhibition space, more than 2000 stands and 850 presentations. SAPICA has gained international recognition and attracts 11,000 buyers (from the USA, Canada, Europe, Japan, and Central and South America) and 35,000 visitors each year.

The flexibility of León’s shoe manufacturing industry has enabled firms such as Poppy Barley (based in Edmonton, Canada) to be able to market custom-made boots via their website and without the overheads of any conventional footwear stores . Individual purchasers take their own foot measurements, and then the boots are made to order and shipped to their homes. This “made to measure digital retail” approach flies in the face of the mass production that has become the norm in the footwear industry. The Poppy Barley website includes a section devoted to its manufacturing partner in León.

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Mar 062014
 

In The market for commercial and industrial real estate in Mexico, we looked at a recent snapshot of the industrial real estate market in the last quarter of 2013, and saw how cities in the Bajío Region were outpacing cities in Central Mexico or Northern Mexico. (The snapshot came from the report ‘Industrial Markets in México (Q4 2013)‘ by Jones Lang LaSalle, a global real estate services firm.)

In this post, we take a look at the “Industrial Property Clock” for the same period, from the same report.

Industrial property clock (Jones Lang LaSalle)

Industrial property clock (Jones Lang LaSalle)

In general, cities in Central Mexico and in the Bajío are well “ahead” of cities in northern Mexico on this clock. The analysis by Jones Lang LaSalle suggests that the commercial and industrial property markets in Mexico City, Guanajuato, Guadalajara, San Luis Potosí, Puebla and Toluca are “peaking”. The two remaining cities in the Bahío (Querétaro and Aguascalientes) are joined by several cities in northern Mexico in the “rising market” portion of the graph, while Reynosa, Matamoros, Nuevo Laredo and Chihuahua are anchored in the “bottoming market” portion.

The following quotes are taken from the report:

Mexico City’s industrial market grows its footprint annually; rents have grown to pre-crisis levels

Puebla market is very tight; land is scarce and vacancy is at a low

Toluca market has been growing as an alternative to Mexico City, it is also attracting local businesses

Guanajuato is growing in several submarkets like Silao and Celaya thanks to car manufacturing and food related businesses

Guadalajara keeps occupying space and growing at El Salto and South Periférico

San Luis Potosí keeps attracting new industries related to consumer goods. The car manufacturing industry is taking advantage of the city’s communications and infrastructure

Querétaro has been active inaugurating new developments near the airport both for the aerospace business and for car manufacturing. These industries have taken advantage of the local educated labor force

Aguascalientes seems to be the new frontier for developers: at least three major national developers have inaugurated parks in this market, one of them is Nissan’s supplier park

Tijuana continues its path towards quickly becoming a speculative development marketplace once again. It is the first border city to regain this business climate

Nogales, the smallest of the Northwest Border region cities, is also enjoying the expansion of Kimberly Clark (KCI) leasing vacant space within the Nuevo Nogales Industrial Park

Ciudad Juárez keeps lowering the existing vacancy rate

Monterrey submarkets have been improving, especially Apodaca and Santa Catarina, where land prices and rents are growing

Nuevo Laredo, Reynosa and Matamoros have seen a slow down in their activities, however, tenants have stayed at their buildings; there are no new developments on the horizon and vacancy rates are around 10%

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The market for commercial and industrial real estate in Mexico

 Mexico's geography in the Press, Other  Comments Off on The market for commercial and industrial real estate in Mexico
Mar 012014
 

A recent snapshot of the industrial real estate market in the last quarter of 2013 compares progress in three industrial regions in Mexico: Northern Mexico, Central Mexico and the Bajío Region. The snapshot comes from the report ‘Industrial Markets in México (Q4 2013)‘ by Jones Lang LaSalle, a global real estate services firm specializing in commercial property management, leasing, and investment management.

Cities included in industrial real estate study

Cities included in industrial real estate study (Jones Lang LaSalle)

The pattern of commercial and industrial real estate in Mexico

The five main cities of the Bajío Region (Aguascalientes, Guadalajara, Guanajuato, Querétaro and San Luis Potosí) are booming in terms of commercial and industrial real estate. In the final quarter of 2013, the region added about 550,000 m2 of commercial and industrial space. This was more than double the additional space added in Central Mexico (Mexico City, Toluca and Puebla) and close to the total amount (614,000 m2) spread between 10 cities in northern Mexico (see map).

In the North Region, “Tijuana has been occupying vacant space… and Ciudad Juárez is on its way to recovering from low rents and high vacancy”, while the automotive sector is driving growth in Saltillo-Ramos Arizpe.

The Central Region is helped “by third party logistics companies that grow their business and footprint in Mexico City’s surroundings”, while “Toluca and Puebla grew mainly because of the car manufacturing demand for space.” Commercial rents rose in Mexico City and in Toluca. “Big Box requirements keep driving this market. Development has been very active at the Tepotzotlán toll booth surroundings.”

The Bajío Region has consolidated “with new industrial parks related not only to the new car manufacturing plants, but also for new investments related to aerospace, food and personal consumer” products.

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Tultepec: the fireworks capital of Mexico

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May 252013
 

No Mexican festival is complete without a dazzling display of fireworks. Gunpowder was unknown in Mexico prior to the arrival of the Spaniards, but its use in fireworks quickly caught on. Firework production is usually a small-scale family affair, and there are workshops specializing in fireworks throughout the country. The undisputed  capital of fireworks is Tultepec, a settlement with 130,000 inhabitants on the northern edge of Mexico City. Generations of expertise have led to Tultepec becoming the source for about half of all the fireworks manufactured in Mexico.

To celebrate its skilled pyrotechnic craftsmen, Tultepec hosts a 9-day National Pyrotechnic Festival in March each year. The festival, first held in 1989, includes competitions for the best castillos (castles) and toros (bulls) or toritos (little bulls). Castillos can be several stories high, with an intricate interconnected network of sections representing saints, animals, flowers, birds and other designs. Toritos, first recorded in the nineteenth century, are bull-shaped frames placed over the heads of willing volunteers. As the firecrackers explode, the toritos are carried through the streets or dance in imitation of a bull fight as young bystanders pretend to be matadors. About 250 toritos ran the streets of Tultepec in 2013.

The manufacturing of fireworks is tightly controlled by the military, but accidents are all too common and often serious, sometimes fatal. About 2,000 people work directly in the industry, in some 300 small workshops. The creativity of these coheteros (fireworks makers) knows few limits. For example, mid-way through this video, look for the small, firework-propelled vehicle that goes alternately forwards, then backwards, entirely on its own once its fuse has been ignited.

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