What are GEOs competitive advantages?
In Mexico, with a crisis every two or three years, only the very efficient can survive. We have developed our technology. We are building homes in Mexico for an average price of U.S. $11,000 — less than the cost of a car in the U.S. The average price of our homes in the U.S. could be close to $50,000, which is very cheap. For national companies like Centex, [Houston-based] U.S. Home Corp., or even our partner, Beazer, the average is above $170,000. Q: GEO’s sales rose 27%, to $282 million in 1998, but profits dropped to $22.5 million from $29.1 million in 1997. What was the problem? A: We were growing with a negative cash flow. Now we are reducing receivables and, with that, our debt. That will give us a more neutral cash flow. Also, to open a new region in Mexico requires capital. So we have decided to grow only in cities where we are already present. Q: With buyers in Mexico whose income averages only $500 a month, how how do you maintain collections? A: The focus is what we call a
