Massachusetts Governor Deval Patrick, who led a trade mission to Central America in March, met recently with 75 Massachusetts business leaders convened by AIM to discuss trade opportunities and challenges in Mexico.
A panel of executives from Waters Corporation, Holland & Knight LLP, Rocheleau Tool & Die, Harvest Power and Harvard Business School spoke about how to succeed in Mexico.
The US-Mexico trade relationship is strong. More than $1 million in goods crosses the US-Mexico border every minute. The US exports more to Mexico than to all the BRIC nations (Brazil, Russia, India and China) combined. Nearly 18,000 US companies have operations in Mexico.
Mexico is now the third largest—and fastest growing—market for Massachusetts exports. Bay State companies sold $1.86 billion worth of goods and services to Mexico in 2013, trailing only Canada and China.
But that’s only half the story. Many Mexican companies are doing business with, and in, Massachusetts. Two of the previous three presidents of Mexico now live in Boston. And Mexican business leaders are interested in investing in the commonwealth.
After many years of Mexican government control of key industries - particularly oil, gas, energy, mining and telecommunications - deregulation is now opening up opportunities for US businesses. Growth potential exists in clean energy, logistics, security, infrastructure, aerospace, electronics, transportation, technology, pharmaceuticals and education. Mexico is a sophisticated market with a need for products and services at the center of the Massachusetts economy.
Mexico certainly faces issues: lack of clean water, high poverty levels, inconsistent educational achievement, a need for skilled workers, and security and corruption challenges. However, progress is being made. Fiscal reform holds great promise. Entrepreneurship and innovation are taking hold. Manufacturing is catching up to the US and Canada in self-sufficiency, and demographic growth and education reform are increasing worker capacity.
Massachusetts companies are paying attention to the opportunity:
- Rocheleau Tool & Die of Fitchburg, which manufactures machinery that makes plastic containers, has been exporting to Mexico since 1970. Massachusetts’ historic expertise in plastics has resulted in Mexican businesses seeking out companies like Rocheleau. The company has negotiated favorable pricing for trucking its product to Mexico.
- Harvest Power, which uses discarded yard trimmings and food scraps to produce renewable energy, found a compelling business opportunity in Mexico City. With 25 million people, Mexico City has the largest produce market in Latin America, producing 1,000 tons a day of food waste. Landfills are full, so waste is transported at high cost to distant locations. Harvest Power has a Mexican partner with strong domain expertise and local contacts; their joint initiative may bring a Harvest Power anaerobic digester to Mexico soon.
- Waters Corporation of Milford, which manufactures filters and spectrometers for the pharmaceutical and food safety industries, operates in Mexico City, Monterrey and Guadalajara.
These employers say that face-to-face contact is critical companies looking to do business in Mexico. Waters continuously upgrades its equipment to meet increasingly rigorous US and international regulatory requirements, and educates its customers on-site to get the most from new technologies. Holland & Knight is pursuing a North/South America business strategy, which is why it recently acquired a full-service law firm in Mexico City. Holland & Knight, which calls itself “bilingual and bicultural,” sees new opportunities in many industries due to recent Mexican government reforms. Private companies can now get involved in more industry sectors.
Numerous resources are available locally for Massachusetts businesses interested in Mexico. Mexico Consul General in Boston Daniel Hernandez Joseph, who calls Mexico “a nation of opportunities,” recently announced that Mexico is opening a trade office in Boston. The Consul General’s office can make introductions to key people in Mexico and facilitate industry contacts. Interested companies may also contact AIM’s Kristen Rupert, who participated in the recent trade mission to Mexico, at firstname.lastname@example.org
Many international customers of Massachusetts companies see North America as one block. The US-Mexico-Canada partnership represents one of the most competitive regions in the world, and an active transportation corridor exists between the US, Canada and Mexico. There is also a shared vision among the three countries that we have mutual strengths. Going forward, as Governor Patrick quoted, “We need to look for ways to build things together, not just buy and sell more to each other.”