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ARTHUR D. LITTLE STUDY EXAMINES IMPACT ON U.S. COMPANIES OF NEW LEVELS OF EXPORT BUSINESS WITH MEXICO

 ARTHUR D. LITTLE STUDY EXAMINES IMPACT ON U.S. COMPANIES
 OF NEW LEVELS OF EXPORT BUSINESS WITH MEXICO
 CAMBRIDGE, Mass., July 30 /PRNewswire/ -- According to a newly released economic study by Arthur D. Little, U.S. companies are reaping the benefits of Mexico's open trade policy. The evidence is clear by examining the explosive growth of U.S. exports to Mexico. From 1987 to 1991, total U.S. exports more than doubled from $18.1 billion to $40.5 billion -- an increase of 124 percent (22.3 percent annual compounded growth rate). Mexico now ranks as the third-largest export market for the United States (after Canada and Japan), representing 7.9 percent of total U.S. exports as compared to 5.7 percent in 1987.
 Border states, traditionally known for their close ties to Mexico, are not the only states that are exporting. Forty-six states have increased exports to Mexico. The states that have experienced the most dramatic increase in exports: Nevada, Montana, Georgia, Pennsylvania and Illinois. Not only have exports to Mexico increased substantially, but Mexico has also become a significant foreign market for some states and is especially important to Texas where almost one-third of total U.S. exports originate. In addition, Mexico is the No. one export market for Texas. Key Findings
 In addition to examining the export figures, Arthur D. Little consultants in Mexico looked at U.S. companies that have been successful in exporting and evaluated the impact of these exports on the company and its suppliers. The sample, although small (14), included a range of firms, large and small, in different industries, and located in both border and non-border states. The major findings are summarized below.
 -- Many companies depend heavily on the Mexican market for sales/exports. For some companies, Mexico is the largest export market. Examples include companies as diverse as: Barry Wehmiller Company, St. Louis, Mo. (brewery and soft drink equipment manufacturer); Inland Container Corp., Irving, Texas, (corrugated box manufacturer); Newco Fiber Co., Charlotte, N.C. (cotton processor); and T.W. Williamson, Tulsa, Okla. (pipeline maintenance), which is now a key supplier to the newly opened, state-owned Mexican oil service industry (PEMEX).
 -- Production sharing operations in Mexico provide U.S. companies (probably for the first time) with a developing country springboard for exporting U.S. products to Japan. A good example of this trend is Tyson Foods, Springdale, Ark. (poultry raising and processing).
 -- Jobs threatened by the U.S. recession have been saved. Examples: Sun Electric Corporation, Crystal Lake Ill. (computerized test and service equipment for the transportation industry) and Coulter Corporation, Hialeah, Fla. (manufacturer of health care instruments and supplies).
 -- New jobs have been created. Examples: Plantation Foods Corporation (raises and processes turkeys), Waco, Texas, had to hire 40 new employees in 1991 because of Mexican exports. As a result of exports to Mexico, Rubbermaid, Inc. (manufactures plastic products), Wooster, Ohio, established a new export office in Miami and recruited specialized staff to service the Latin American market.
 -- Utilization of U.S. production capacity has been improved by supplying the Mexican market from the United States instead of a local production facility. Example: McIlhenny Company (Tabasco(tm) sauce), Avery Island, La.
 -- Cash flow has been generated for new investments and the expansion of production capacity. For example, Cal-State Lumber, (purchase and sale of forest products) of San Ysidro, Calif., was able to invest in a new plant. The Melroe Company (compacting equipment for the construction industry), located in South Bend Ind., used income from Mexican imports to help defray the extensive cost of translation of manuals and brochures (a very complicated process in this business) into Spanish to be used in other Spanish-speaking countries. As a result of their successful experiences, many of the companies studied are considering export strategies to other Latin American countries.
 -0- 7/30/92
 /CONTACT: Victoria Arnold of Arthur D. Little, 617-864-5770/ CO: Arthur D. Little ST: Massachusetts IN: SU:


TM -- NE0015 -- 5040 07/30/92 11:14 EDT
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Date:Jul 30, 1992
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