Mexico becoming more than a spring break destination
Strong work force, proximity allow neighbor to compete with Asia
By Ryan Johnson
Like a large chunk of students at the UA, I went to Mexico over springbreak.
I even went to a tequila factory. But I’m pretty sure I came away with an extremely different impression ofthe country than the revelers in Rocky Point, Acapulco, Puerto Vallarta,Mazatlan, Cabo San Lucas, Cancun, Cozumel, Playa Del Carmen and Rosaritadid.
While they saw beaches, bead vendors and beer, I saw a country of opportunity.As part of a master’s in business administration class called International Management, I had the opportunity to attend a field trip to Guadalajara over spring break.
The dozen or so of us on the trip went from factory to factory, seeing howMexico is trying to redefine itself. We watched Mexicans make DVDs at aTechnicolor plant (if you buy “The Chronicles of Narnia” next month, weprobably saw it being made). We saw how Wonder Bread was made, from flour tobagging. We saw where lots of Hewlett-Packard customer service calls areanswered – it’s not just India anymore. And we saw a plant for Jabil, a high-tech electronics manufacturer.
Globalization has been both a boon and a bane for Mexico. The North American Free Trade Agreement brought growth and new markets – factories right acrossthe border sprang up to produce our televisions, videocassette Now it appears that Mexico is finding its niche.
Unable to compete with Asia onprice, Mexico is now competing in quality and proximity.
recorders and shirts. But not long after, just as Americans got used toseeing “Made in Mexico” on their underwear, Mexicans faced “Made in China”underwear. Turns out when it comes to employers, $5 per day is greatcompared to $5 per hour, but pales in comparison to $5 per week.
Many of the border factories closed, and it appeared that Mexico was stuckin an uncomfortable void: too rich to be able to produce cheap goods for theU.S. and the rest of the rich world, but too poor to be in thedeveloped-world club.
Now it appears that Mexico is finding its niche.
Unable to compete with Asiaon price, Mexico is now competing on quality and proximity.
Technicolor says that movie studios prefer to produce DVDs in Mexico becausethe country is widely viewed as more secure for intellectual property thanChina. In fact, a Chinese tour group to HP was turned away simply because of nationality. Mexico is also marketing its proximity to the U.S. as an asset for therapid-turnover, high-velocity world of technological manufacturing.
Trendschange so quickly that the three- or four-week boat ride from Asia to Los Angeles can mess up a product cycle. Grupo Bimbo, the company behind Oroweatbread and Entenmann’s pastries, can get a product from the middle of Mexico to the U.S. in hours.Moreover, companies want to be in Mexico for the chance to take part in the growing domestic market.
Indeed, the big concern of 2004 – outsourcing – is now looking like a global blessing. While it used to be that for every job out sourced, one U.S. job was lost, now the Harvard Business Review reports that it takes 13 jobs outsourced to cost a single U.S. job. Not only is HP saving costs by outsourcing to Mexico, but it is also selling more computersthere and creating more jobs in Silicon Valley, Calif. And every job created in a Mexican city creates even more job opportunities throughout the country.
Jabil, the electronics manufacturer, says that its 4,000 Guadalajara jobs create 13,000 jobs throughout Mexico. What about the next step for Mexico? “Doesn’t it still have corruption?”asked my father, who studied for two years in Guadalajara.It is getting better, Mexicans respond.
One of the biggest themes of the companies we visited was transparency as well as openness of data. A workerat Technicolor couldn’t steal a screw if he tried. And every piece of motherboard at Jabil is traceable by computer from anywhere in the world.
We heard from the former Mexican ambassador to India, who said that globalization is forcing Mexico to stamp out corruption. What about Latin America’s age-old vice, lack of punctuality?
Companies are forcing employees to stamp out the old culture. Besides, American college students sleeping in until 3:30 p.m. on springbreak can’t really say much for their own punctuality. Mexico may be a playground for overzealous U.S. college students during spring break, but while we’re passing out on the beach, they’re working.