LastWeek

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GlobeSt.com: Why did you purchase G. Accion ratherthan retaining the previous relationship?

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Reilly: The acquisition of the remaining piece isa pretty natural transition. It's accompanied by an increasedoptimism on our part for the industrial business in Mexico. Higherfuel prices and currency fluctuations have improved the country'smanufacturing prospects, and we wanted to take advantage ofthat.

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GlobeSt.com: Does that mean you will focus more onmanufacturing than distribution in Mexico?

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Reilly: In the future we may move more into themanufacturing sector, but we're still focused on distribution dueto the country's impressive consumer expansion. But the consumerexpansion is being driven by the manufacturing expansion, which iscreating jobs and wealth. Mexico's consuming class is growingfaster than its GDP. Obviously a healthy manufacturing environmentis very important in that.

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GlobeSt.com: What are Mexico's greatestattractions for AMB?

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Reilly: We think GDP growth in Mexico will beslightly higher than in the US, and we see growth in our businessin Mexico being higher than the GDP growth. They're creating theirsupply chain from scratch. There's very little existing product buta lot of demand. There's a lot of work to do. For example, twothirds of Mexico City's product is functionally obsolete. Thatmarket alone serves 22 million people. That's more people than livein Southern California.

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GlobeSt.com: Which markets will you focus on?

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Reilly: In addition to Mexico City, we're inGuadalajara, Queretaro, Tijuana and Monterrey. For the time being,those markets are going to keep us active. We're focused on theconsumer market, so we've tended to stay away from border towns. Weare in Tijuana, but with distribution facilities. I feel betterabout border markets like Juarez and Reynosa than I did in the pastbecause I think you're going to see a major manufacturing reboundin the north of Mexico. But again, our focus is on the internaldistribution market, not distributing Mexican manufactured goods tothe US.

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GlobeSt.com: How much activity do you haveplanned?

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Reilly: We have about $120 million of developmentstarts there this year. We'll be ramping up in '09 to about $175million. The US is slowing down a bit. We see Mexico as probablythe leading the charge for us over the next couple years.

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