MEXICO’S economy has suffered a series of blows in recent months —
drug violence, swine flu and the worldwide economic downturn. Yet some companies
on each side of the border with the United States are prospering because they
serve the expanding Mexican-American market in the United States.
A new economy is emerging that builds on the economic relationship between the
countries. Exports and imports between Mexico and the United States have grown
rapidly in the last decade, to close to $400 billion annually. And now trade
is taking on new complexity, with operations in Southern California sometimes
serving as Mexico’s link to the global economy.
Viz Cattle Corporation, for example, the American division of Mexico’s
SuKarne Global, handles exports of Mexican beef to Japan and South Korea, through
contracts made in Compton, Calif. The beef originates in SuKarne’s home
base in Culiacán, Sinaloa, in northwest Mexico. “Japanese and Korean
executives buy here, and they go to inspect the ranches in Mexico, too,”
said Jesus Tarriba, manager of Viz Cattle’s warehouse operation in Compton,
in southeast Los Angeles County. “Last year we sold $40 million of beef
to Japan and Korea and $80 million here in the U.S.”
Viz Cattle has grown rapidly, from less than $10 million in revenue five years
ago to $120 million in 2008. And it is doing well this year despite the downturn,
Mr. Tarriba said. Its main business is importing beef from Mexico for American
restaurants and retailers. “We specialize in smaller cuts of rib-eye and
strip steaks because Mexican ranches slaughter livestock at younger ages than
American ranches,” Mr. Tarriba said. “Restaurants like those cuts.”
Viz Cattle and other food companies on the border have also capitalized on the
expanding Latino population across the United States and the changing tastes
of the public.
“Chipotle was unknown here five years ago,” Marcelo Sada, president
of Source Logistics Center Corporation, said of the smoked jalapeño pepper
in many Mexican foods and sauces. Mr. Sada’s company, based in Montebello,
Calif., imports bakery and soft drink products from Mexico.
Martinez Brands/Tequila Holdings Inc., from Pasadena, Calif., has also been
a beneficiary of the growing American taste for Mexican products. “Tequila
is the fastest growing liquor variety in the United States for the last seven
years,” said Javier Martinez, president of Martinez Brands. “And
why? Because young Americans vacation in Mexico and associate tequila with fun,
freedom and friendship.”
Business is good as well, for Inter-Con Security Systems, a company also based
in Pasadena, that protects State Department installations in the United States
and abroad as well as private businesses, hospitals and sports arenas, said
Carlo Gobelli, who leads Mexican operations. “Security is in very great
demand, to guard executives and company operations and also shipments of goods,”
Mr. Gobelli said..
Inter-Con employs 6,500 people in Mexico; the company has 30,000 employees over
all. “A new concern here,” Mr. Gobelli said, “is that we are
getting demands to protect pharmaceutical laboratories against theft of key
ingredients that drug gangs can use.”
Still, some companies are seeing a more mixed picture. ICS Group Inc. of Rolling
Hills Estates, in southwest Los Angeles County, represents Carlisle Companies’
roofing and building products in Mexico and Latin America, said, “Right
now, American companies are holding back from investing in Mexico and are not
sending their personnel because of dangers from the drug wars,” said Mark
Aston, the president of ICS.
But he credited business in the Caribbean with helping the company’s annual
revenues grow to an estimated $15 million this year from $300,000 in 2004. “Mexican
business people and investors are confident that when this recession ends, Mexico
will do well again,” he said.
Mr. Gobelli and other Mexican executives generally agreed that the economy’s
overall outlook was positive. “The businessmen say, ‘This crisis
did not start here in Mexico’ as have so many crises in the past. It started
in the U.S. and the world,” Mr. Gobelli said. “Therefore, they say,
when the U.S. and the world recover, Mexico will too.”
Meanwhile, the slow American economy and moves to control illegal immigration
with increased border patrols and raids on domestic job sites have reduced migration
from Mexico. So remittances to families in Mexico from people working in the
United States have declined sharply in the last year. But the Latino population
in the United States has grown as a result of children born to immigrants in
recent decades. That Latino population is 45 million, according to the Pew Hispanic
Center.
This has led to more online commerce with Mexico and other shifts in the marketplace,
said Hector Orci, co-founder of La Agencia de Orci, an advertising agency in
Los Angeles. “For example, Liverpool department stores in Mexico sell
online to people here and the goods can be delivered to their mother living
in Mexico,” Mr. Orci said.
Spanish-language media is also shifting to more use of English language commercials
and programs, he said. So Mr. Orci is building a new division of his agency,
called One Plus Two, for the population that speaks English but enjoys Spanish
language programming like telenovelas from Mexico.
“Online use is very high among Latinos, maybe 20 million people using
broadband Internet,” said Michele Ruiz, a former television anchorwoman
who started the Saber Hacer (to know, to do) Web site in 2007. The site offers
advice to Latinos on such subjects as parenting, personal finance, health and
medicine and college preparation.
Ms. Ruiz said she had raised $700,000 to start the Web site and investors have
now put in “several million more.” The site has close to 200,000
visitors, Ms. Ruiz said, and she is looking to private equity funds and other
investors to raise an additional $5 million.
She wants to expand the Web site’s reach and content, which includes presentations
in English or Spanish on the importance of annual mammograms, on how to write
résumés and apply for positions and how to talk to your doctor
or your children about sex. “We understand the culture and how people
think,” she said.