Printer Friendly

At MaquinaMex: US metalworkers eye Mexico.

If the taxi business is any indication, entrepreneurism is more than just alive and well in Mexico, it is thriving. The metered fare for an identical trip on one of those only-in-Mexico VW Beetle cabs plying the streets of Mexico City can vary from 8 to 32 pesos (3 pesos to a dollar). Or, you have the option of taking a larger, no-meter cab--usually a mid- or full-sized US-made car--assigned to the hotel for what is supposed to be a flat fee, but which is, more often than not, negotiable.

Another example involves the warning "don't drink the water." A more cynical mind might conclude the admonition has more basis in Mexico's economic wellbeing than the visitor's health. Hotels charge more for bottled water than for a Coke.

People visiting MaquinaMex, an exhibition of metalworking manufacturing equipment held in Mexico City in June, found that same entrepreneurial, capitalistic spirit rapidly finding its way into the manufacturing sector as Mexico continues its trek toward privatization and searches for its place in the global trading marketplace.

The exhibition included about 100 booths with several hundred companies represented, including about 100 US firms. An estimated 7,000 visitors attended the four-day exhibition.

Among Mexico's stated economic goals is making its manufacturers more internationally competitive. The Mexican government hopes to accelerate job creation through initiatives to improve the quality of Mexican products and the productivity of its workers. It seems to be working. Last year, industrial production grew 2.8% while the economy totally only grew 2.6%.

Liberalization of investment laws in Mexico continues to attract foreign money. As of last December, direct foreign investment in Mexico totalled $40 billion, with 60% coming from US investors. Of the total foreign direct investment, 54% was channeled toward manufacturing.

Much of that money has gone into automobile manufacturing. Although there are 16 auto plants in Mexico, the industrial infrastructure to support those plants is nearly nonexistent. For example, there are only two manufacturers of lathes and two makers of presses in Mexico. They can supply less than 10% of the market, creating a demand for imports.

US manufacturers of machine tools and metalworking equipment have filled about half of that demand. "US equipment has traditionally been preferred due to geographical proximity, reputation for reliability, durability, ease of maintenance, and after-sales service," reports a US Foreign Commercial Service analysis of the Mexican market.

The same report, however, raises a warning flag. "West German and Japanese producers often offer better financing terms than US exporters. As a result, their share of the Mexican market continues to grow, challenging US manufacturers." An embassy representative points out that financing terms are even more important today with the sagging Mexican economy, tight money, and high interest rates. Some exhibitors at the equipment show reported interest rates on equipment loans can be as high as 35%.

US exhibitors at MaquinaMex, however, seemed determined not to give up the edge they enjoy.

Jose Sanchez Flores, a partner in Industries Temporans SA de CV, working as a distributor for Jergens Tooling Component Div, Cleveland, OH, put the market opportunity in perspective: "Americans have to realize that Mexico is one step below the US or Canada in every aspect--socially, politically, and economically, perhaps as much as 10 to 25 years. Americans will have to come here and help build an infrastructure and an industrial base and be patient," he tells Tooling & Production.

"But Mexico will move forward faster than the United States did," he adds. "It will be a good market for America. But this is not a short-term effort."

Timothy Golling, national sales manager of the Jergens Tooling Component unit, in Mexico for the exhibition, admits it's slow going but worth the effort. "It does take a long-term commitment. You have to come down and analyze the market, make sales calls, and determine how people in this part of the world do things. The lion's share of the market is small shops. The technology in Mexico is almost stone-age compared to what we have in the US. Some of the shops I visited are dirt floor."

The key: "You have to enlist a knowledgeable, street-wise distributor or agent," says Mr Golling.

Michael Sigrist, manager-sales and marketing, central region, Snow Manufacturing Co, Bellwood, IL, agrees that the distributor helps you bridge the language barrier. "They know they need the influx of know-how and technology more today than they did 15 years ago," he says, and is convinced Mexico will become a major player in the international global market.

The Snow executive tells of visiting a Mexican manufacturing facility producing some 25,000 irons a day that is upgrading its entire assembly operation just to remain competitive. "They understand that even though they enjoy low labor costs (average wages are about $8 per day in Mexico) they can't stay competitive without automating even more," he says.

Having on-site representation for your products is critical to success in Mexico, says Phillip Hillson of Machinery Systems Inc, Schaumburg, IL, but you also need the bi-lingual capability in the home office to communicate with the field.

Rogers Tool Works is proof that the commitment can pay off. Bruce Eggleston, international director for the Rogers, AR, tool maker, started exploring business possibilities in Mexico alone in 1986 and has since expanded to include six distributors and some 25 sales people covering the market.

"The market continues to grow. The number of businesses that have opened up shop here is tremendous," he said during a break in the brisk action at the RTW booth at MaquinaMex. He started out in Mexico dealing with the US auto companies there but has since expanded to include a broad range of Mexican customers--machine shops supplying the auto manufacturers there. "It has been a successful venture for us because the Mexican market isn't driven strictly by price. They are more interested in a quality product and good service."

Mr Eggleston dismisses the image of a sombrero-topped Mexican sleeping under a cactus. "They have a thirst for knowledge that is refreshing," he tells T&P.

"They are hungry for information and want to improve themselves," agrees Keith Kesler, general manager, Pax Products, Celina, OH. He was kept busy in a distributor's booth showing off a mist-lubricating system for stamping press dies.

"There is a lot of old equipment down here, and the Mexicans are committed to working with it and improving its efficiency," he says, explaining their interest in learning about ways of upgrading and getting more out of their equipment.

That was demonstrated by the turnout at the same booth for a seminar on press

and forming techniques, which the attendees had to pay for, presented by several of the companies represented by the Mexican distributor who hosted the event.

Michael Moran, sales manager, Greenerd Press & Machine Co, Nashua, NH, was impressed by the people that came to the seminar. "There were a lot of good questions. Primarily they were young people--under 35--who were truly interested and definitely willing to learn and to work," he said.

Tim Gallagher, asst sales manager-international division, American Saw & Mfg Co, has been working the Mexican market for six years. He has found much the same enthusiasm. Americans stereotype Mexicans as being lazy, he said, but that just is not true. "There are a lot of talented people in the metropolitan areas of Mexico looking for opportunities," he has found.

Heidenhain Corp, a controls maker with roots in Germany, sees a big future in Mexico, according to Bob Montes, retrofit area sales manager working out of Long Beach, CA. His company has been in that market for 3 years and considers it has an edge.

Mr Montes explains that there is a lot of aging German equipment in place in Mexico carrying the Heidenhain controls. He sees opportunity in the retrofit and replacement market there.

He feels success in Mexico is dependent, as it is anywhere else, on being in the right place at the right time. From the sounds coming from MaquinaMex, many US metalworking companies feel this is the right time and Mexico is the right place.
COPYRIGHT 1993 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Management Update; metalworks exhibition in Mexico
Publication:Tooling & Production
Article Type:Editorial
Date:Sep 1, 1993
Previous Article:Bottom line white elephant.
Next Article:Optimizing sheet-steel surfaces.

Related Articles
News From USWA: Steelworkers Deepen Ties with Mexico's Metals Union; Asarco and Parent Grupo Mexico to be One Focus of Joint Efforts.
Steel Giant and Unions Commit to Innovative Health and Safety Program.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters