With a booming middle class and new economic reforms reshaping the way the country does business, Mexico represents a significant opportunity for Arizona companies, said Ricardo Pineda, consul of Mexico in Tucson.
Speaking Monday at the Cinco de Global event sponsored by the Global Chamber, Pineda stressed that emerging industries such as aerospace, medical equipment, biotechnology and pharmaceuticals offer U.S. companies in Mexico a chance for continued growth.
With more than $500 billion a year in trade, Mexico is the third largest trading partner for the United States. It is also Arizona’s biggest trading partner as well as its No. 1 export market, with $21.1 billion in exports for 2014.
More than 6 million jobs in the U.S. depend on trade with Mexico, Pineda said, and thanks to the North American Free Trade Agreement, the economies of both countries are more entwined than ever.
For companies looking to do business in Mexico, there are three options, said Maria Elena Rigoli, CEO at Collectron: launch standalone operations, subcontract or go through a shelter program.
Although Collectron is not the only shelter company in operation, it is the oldest. Formed in 1968, it has established 250 foreign companies in Mexico since it began, Rigoli said.
A shelter program allows foreign companies to set up a manufacturing operation in Mexico without having to establish a legal presence and with minimal investment.
It gives businesses the chance to test the waters for their products without having to deal with Mexican laws and regulations firsthand.
It is not uncommon for companies to start off under a shelter program before fully taking over their operations in Mexico, Rigoli said.
Tucson-based Airtronics, which does machining and manufacturing for the aerospace industry, recently used a shelter program to set up shop across the border in Nogales, said Don Parkhurst, senior vice president for corporate development.
Asked by its largest single customer to lower costs, Airtronics saw the move as essential to its operations.
“The alternative there was no longer having them as a customer so we were definitely interested in making that move,” Parkhurst said.
While opening for business in Nogales could have meant taking jobs away from Tucson, Parkhurst said it’s been a win-win.
“While we’ve seen growth in Mexico we’ve also seen growth here in the States,” he said. “For every three jobs we’re adding in Mexico, we’re adding a job here.”
“Both sides of the border are winning, not just down south.”
This shared growth is one of the benefits of doing business with Mexico, officials said.
About 40 percent of the content of U.S. imports from Mexico was originally made in the United States, Pineda said, which means that even though something may be made in Mexico, it still represents jobs in the United States.
The same cannot be said about products made in China, officials said.
Mexico can also provide U.S. companies with access beyond its national market, said Julio Espinoza, international trade specialist with the Tucson Hispanic Chamber of Commerce.
“With 12 trade agreements with 44 countries, Mexico is literally your gateway to the world,” he said.
