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MERGERS & ACQUISITIONS

BUSINESS VALUATION

CORPORATE FINANCE

MARKET INTELLIGENCE

Investment Bankers To The Middle Market

c Travel and Hospitality

November 8, 2012

Why Global Economic

Convergence Is a Myth

Presentation for:

United States-Mexico

Chamber of Commerce

Global Growth Drives Logistics?

Confidential and Proprietary 2

McLean International Services

Macro Overv iew

Premise: Global Growth Dr ives Logist ics

G lobal Dr ivers

$69.9 t r i l l ion?

$36 .8 t r i l l ion?

2 .3%?

Confidential and Proprietary 3

McLean International Services

Global Drivers

$69.9 t r i l l ion = Global GDP

$36 .8 t r i l l ion = G -20 Sovere ign Publ ic Debt

52 .6% of Global GDP

2.3%= Debt Average In terest Rate

$850 b i l l ion in in terest every year

G lobal GDP has to grow by a t least 2 .5%

every year just to s tay even

Confidential and Proprietary 4

McLean International Services

Global Drivers

BRICs

Braz i l

Russia

Ind ia

China

Dr iv ing Global Growth?

Confidential and Proprietary 5

McLean International Services

Global Drivers

BRICs

B r a z i l ’s g r o w t h h a s d r o p p e d f r o m 4 . 5 % t o 2 . 0 %

R u s s i a ’s h a s d r o p p e d f r o m 7 . 0 % t o 3 . 5 %

I n d i a ’s h a s d r o p p e d f r o m 9 . 0 % t o 6 . 0 %

C h i n a ’s g r o w t h h a s d r o p p e d b e l o w d o u b l e d i g i t s

Confidential and Proprietary 6

McLean International Services

Global Drivers

BRICs

I t i s ve r y d i f f i c u l t f o r a c o u n t r y o r r e g i o n t o s u s t a i n

r a p i d g r o w t h f o r m o r e t h a n a d e c a d e

O n l y M a l a ys i a , S i n g a p o r e , S o u t h K o r e a , Ta iw a n ,

T h a i l a n d a n d H o n g K o n g h a ve s u s t a i n e d a h i g h

g r o w t h r a t e f o r f o u r d e c a d e s

Confidential and Proprietary 7

McLean International Services

Global Drivers

BRICs

O f t h e 1 8 0 c o u n t r i e s t r a c k e d b y t h e I n t e r n a t i o n a l

M o n e t a r y F u n d , o n l y 3 5 a r e D e ve l o p e d E c o n o m i e s

T h e B R I C s a r e R a p i d l y D e ve l o p i n g E c o n o m i e s t h a t

a r e s l o w i n g d o w n

T h e r e s t a r e E m e r g i n g M a r k e t s

Confidential and Proprietary 8

McLean International Services

Global Drivers

BRICs

T h e p e r c a p i t a i n c o m e g a p b e tw e e n D e ve l o p e d

E c o n o m i e s a n d t h e B R I C s a n d E m e r g i n g M a r k e t s h a s

s t e a d i l y w i d e n e d f r o m 1 9 5 0 t o 2 0 0 0

E m e r g i n g M a r k e t s s t a r t e d t o “ c a t c h u p ” a f t e r 2 0 0 0

A s o f 2 0 11 t h e i n c o m e g a p i s b a c k t o w h e r e i t w a s i n

t h e 1 9 5 0 s

Confidential and Proprietary 9

McLean International Services

Global Drivers

BRICs

F r o m 1 9 8 7 t o 2 0 0 2 B R I C s a n d E m e r g i n g M a r k e t s

s h a r e o f g l o b a l G D P a c t u a l l y f e l l , f r o m 2 3 % t o 2 0 %

C h i n a i s t h e o n l y e x c e p t i o n . I t s m a r k e t s h a r e

d o u b l e d t o 4 . 5 %

E m e r g i n g M a r k e t s ’ S t o c k M a r k e t g a i n s b e tw e e n 2 0 0 3

a n d 2 0 0 7 a ve r a g e d 3 7 %, b u t a r e e x p e c t e d t o s l o w t o

a b o u t 1 0 % i n t h e c o m i n g d e c a d e

Confidential and Proprietary 10

McLean International Services

Global Drivers

China

5 0 % o f t h e C h i n e s e p e o p l e n o w l i ve i n u r b a n a r e a s

C h i n a i s a p p r o a c h i n g “ t h e L e w i s t u r n i n g p o i n t ” a t

w h i c h p o i n t a c o u n t r y ’s r u r a l s u r p l u s l a b o r h a s b e e n

e x h a u s t e d

T h i s c o u p l e d w i t h C h i n a ’s “ o n e c h i l d ” p o l i c y m e a n s

t h a t l a b o r c o s t s a r e r a p i d l y e s c a l a t i n g

T h e g a p b e t w e e n w e a l t h y a n d p o o r i n C h i n a i s

a c c e l e r a t i n g

Confidential and Proprietary 11

McLean International Services

Global Drivers

Logist ics Growth Wi l l S low

A s g r o w t h s l o w s i n C h i n a a n d i n t h e A d va n c e d

I n d u s t r i a l Wo r l d ( U S & E U ) e x p o r t s w i l l s l o w

E x p o r t - d r i ve n c o u n t r i e s ( B r a z i l , M a l a ys i a , M e x i c o ,

R u s s i a , Ta iw a n ) s aw t h e i r t r a d e b a l a n c e s i n E m e r g i n g

M a r k e t s t r i p l e a s a s h a r e o f G D P t o 6 % - S i n c e 2 0 0 8

i t h a s f a l l e n t o h i s t o r i c a l l e ve l s o f 2 %

Confidential and Proprietary 12

McLean International Services

Global Drivers

Micro-Snapshots

A . P. M o e l l e r - M a e r s k A / S ( M A E R S K B ) , t h e w o r l d ’s

l a r g e s t c o n t a i n e r l i n e , s a i d i t w i l l r e m o ve 1 9 s h i p s

f r o m A s i a - E u r o p e t r a d e l a n e s i n a b i d t o b o l s t e r

r a t e s a s d e m a n d s l u m p s

I n t h e P a c i f i c , t h e U S We s t C o a s t - b o u n d c o n t a i n e r

vo l u m e s h a ve g r o w n b y j u s t 1 . 2 % i n t h e f i r s t e i g h t

m o n t h s o f t h e ye a r, a n d s aw a ye a r o ve r ye a r d r o p i n

vo l u m e s i n J u l y a n d A u g u s t .

Confidential and Proprietary 13

McLean International Services

Global Drivers

Global demand is s lowing

G lobal capaci ty w i l l shr ink accordingly

Ef f ic ient logist ics w i l l become ever more

impor tant

Confidential and Proprietary 14

McLean International Services

What is this?

Confidential and Proprietary 15

McLean International Services

Or this?

Confidential and Proprietary 16

McLean International Services

Global Drivers

$600 mi l l ion Google Cool ing Plant

and Server Center

Over 12 centers and 1 mi l l ion p lus servers

wor ldwide

3 b i l l ion da i ly search inqui r ies

Indexes 20 b i l l ion web pages da i ly

Free e -mai l s torage for 425 mi l l ion people

Confidential and Proprietary 17

McLean International Services

Global Drivers

Google has become one of the largest IT

manufacturers , bu i ld ing i ts own servers and

server centers

Google owns one of the largest f iber opt ic

networks in the wor ld

Google has an in terna l team (DiRT) that

a t tacks Google systems everyday to test and

improve i ts systems and logis t ics

Confidential and Proprietary 18

McLean International Services

Global Drivers

Big Data Logist ics

S e r ve r c e n t e r s c o n s u m e 1 . 5 % o f a l l t h e e l e c t r i c i t y

i n t h e w o r l d

B i g D a t a “ C l o u d ” d r i ve s g l o b a l g r o w t h

G l o b a l B i g D a t a g r o w t h d r i ve s

L o g i s t i c s G r ow t h

D a t a p r o d u c t i o n w i l l b e 4 4 t i m e s g r e a t e r i n 2 0 2 0 t h a n

i t w a s i n 2 0 0 9

Confidential and Proprietary 19

McLean International Services

Global Drivers

Big Data can automate your factory,

coordinate your supply chain , d is t r ibute your

products and d isrupt your business model

Where do you f i t?

Can you in tegrate your log is t ics w i th the

Googles of the wor ld?

I f not , can you compete against them?

Confidential and Proprietary 20

McLean International Services

Global Drivers

Seven Countr ies that are Winners a f ter 2008

South Korea - R&D spending 5% of GDP

Poland- 15 .8% GDP Growth

Canada- S lashed Tax Rates

Sweden- Debt 38% of GDP + Low Taxes

Indonesia - 4 .5% Growth Dur ing Recession

Turkey – Europe’s Largest Car Maker

&

Mexico

Confidential and Proprietary 21

McLean International Services

Global Drivers

Mexico’s Unchal lenged Tradi t ions

Nat ional is t Approach to Oi l Weal th

Sovere ignty Sensi t iv i ty

Entrenched Labor Monopol ies

Pers is tent Corrupt ion

Sel f -serv ing Bureaucracy

Confidential and Proprietary 22

McLean International Services

Global Drivers

Mexico’s Metamorphous

The vast major i ty of Mexicans now bel ieve

that the only way pol i t ic ians should get and

keep power is through the ba l lo t box and that

the c lamor for greater accountabi l i ty and less

corrupt ion is leg i t imate

H é c t o r A q u i l a r C a m i n a n d J o r g e G . C a s t a ň e d a

F o r e i g n A f f a i r s

N o v e m b e r / D e c e m b e r 2 0 1 2

Confidential and Proprietary 23

McLean International Services

Global Drivers

Mexico’s Advantages

Po ised to pass leg is la t ion to a l low pr ivate

investment in Pemex

700,000 jobs created in 2010 as Mexico’s

factor ies chal lenge China

Growth ra te h igher than Braz i l

Confidential and Proprietary 24

McLean International Services

Global Drivers

Mexico’s Advantages

In f la t ion and debt leve ls are low

Net migrat ion to U.S. in 2012 is n i l

Mexico is contending to rep lace China as

Amer ica ’s second largest t rad ing par tner a f ter

Canada

Confidential and Proprietary 25

McLean International Services

Global Drivers

Mexico’s Advantages

The U.S. is s t i l l the largest economic engine

in the wor ld w i th a GDP of $15 t r i l l ion

Mexico is per fect ly co - located to in tegrate i ts

indust ry, b ig data and logis t ics w i th Amer ica

Confidential and Proprietary 26

Richard L. Wottrich, Senior Consultant – International Services

McLean Chicago International Services Office – 312.346.5100

Direct – 312.286.5315 Fax – 312.276.4477 Email – rwottrich@mcleanllc.com

The McLean Group, LLC - 155 N. Wacker Drive - Chicago, IL 60606 USA

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