Wanted: More trade with Mexico

Bilateral trade between the United States and Mexico totals $1 billion per day and Arkansas companies are hoping to cash in on more of that share.

Graham Catlett, chair of the Arkansas Export Council and two other key Mexican trade officials spoke to a group of Northwest Arkansas area business owners Thursday (July 12). The event was hosted by the Springdale Chamber of Commerce.

Catlett said the sectors ripe for export opportunities include agriculture, packaging, auto parts, energy and environmental.

Arkansas companies exported $697.377 million of goods and services to Mexico last year, up 24.81% from the previous year, according to the International Trade Administration.

Local poultry companies like Tyson Foods have a longstanding business in Mexico in addition to exporting products into the market. Last year Tyson recorded sales to Mexico worth $804.23 million, which constituted 14.64% of Tyson’s international revenue.

Last year Fort Smith-based O.K. Industries was purchased by Mexico-based Bachoco, who noted at the time this deal would give Bachoco the knowledge and expertise it sought from the U.S. market.

The entire Arkansas poultry industry from the smallest integrators, to cold storage facilities and pet food operations are registered to export to Mexico, according to list on file with the U.S. Department of Agriculture.

Eric Johnson, acting director for the U.S. Commercial Service, said the wine and organic foods industries hold huge potential as the demand for those products continues to swell south of the border. He said unlike Mexico’s own mature meat protein industry that already enjoys substantial exports of its own, the wine and organic foods sectors are virtually untapped.

With obesity growing in Mexico amid a burgeoning middle class, Johnson said consumers are looking for more healthy/organic food options.

“Mexican consumption of wine is also expected to increase 12% over the next couple of years which provides export potential for Arkansas wineries,” Johnson added.

Environmental concerns continue to plague Mexico and Johnson said the national government is spending to beef up infrastructure adding water purification plants and solutions for 40 million tons of solid waste created annually. This provides opportunities for companies to sell equipment, services and sustainable technology.

Last year alone, he said 112 land fills were constructed in the country.

Carlos Marron, commercial counselor with Promexico Trade & Investment, said the Mexican economy is growing at healthy 4% clip this year, with inflation running about 3.4%, slightly above that in the U.S.

He said the lower inflation rate has armed consumers with more money to spend and helped Mexico’s economy to expand.

U.S. exports to Mexico last year totaled $197.5 billion, more than all of the BRIC counties combined or Japan and China together. (BRIC refers to Brazil, Russia, India and China.) Marron said for every $1 dollar Mexico earns in exports, it turns around and spends 50 cents purchasing U.S. goods, which constitutes a very healthy trade partnership.

Local companies participating in Thursday’s discussion included Superior Industries, Wal-Mart and Con Agra-Lamb Weston International.

Diana Strange, corporate training director for Superior told the group the California-based wheel maker took full advantage of the Maquiladora initiative that followed the North American Free Trade Agreement.

Superior dramatically downsized its U.S. wheel manufacturing plants and built four new plants in Chihuahua, Mexico. Today the company has two plants in Northwest Arkansas and the rest of its operations are south of the border. The Fayetteville plant employs 1,100 and there are 500 who work in the Rogers facility.

“We were able to streamline those operations to mimic the plants in the U.S. and have had essentially no problems with this set-up. We do keep a plane hopping between Drake Field and Chihuahua but the whole transition ran smoothly.” Strange said.

She said the plants in Mexico pack and certify the wheels that are loaded on to semi trucks hauled directly to automakers in the U.S. The Maquiladora terms allow for no duties or tariffs on the goods produced in Mexico and transported into the U.S.

“All of our plants are running at full capacity, seven days a week and 24 hours shifts. It feels great to be busy after the major cutbacks we sustained in 2007,” Strange said.