In these difficult times, in the middle of a pandemic, companies are trying to figure out how to survive. Some companies are looking to expand their customer base by selling in other markets, with Mexico being one of the most important targets.
However, exporting usually takes more than coming up with an informal plan and hoping it comes together.
With this in mind, local economic development officials invited Kevin O’Shea, vice president of international trade with the Arizona Commerce Authority (ACA), to share steps on how companies can explore export opportunities in Mexico.
The Greater Yuma Economic Development Corp., in collaboration with 4FrontED, the Greater Yuma Port Authority and OPRODE, an economic development organization in San Luis Rio Colorado, Sonora, have been holding a series of webinars to promote the megaregion as a great place to do business.
O’Shea’s presentation, titled “Exporting Your Products and Services to Mexico” and held Wednesday, was part of the series. He focused on ways businesses can “boost your sales and expand your buyer base (by) exporting your products and services to Mexico.”
Arizona has three trade offices in Mexico, with the Mexico City location opened for several years. In the past 12 months, the state opened two more locations, with offices in Chihuahua and Guanajuato.
Staffed by Mexico trade specialists, their primary duty is to find export opportunities for Arizona companies in the Mexico market, not merely in Mexico City, Chihuahua or Guanajuato, but throughout Mexico.
To help guide Arizona companies, ACA offers trade and export assistance services, including market research.
“If you’re an Arizona company and you’re looking to the Mexico market as a potential market to sell to, our teams can determine for you if there’s a demand for your product or service, or if you have some sort of competitive advantage that will make you attractive in that market,” O’Shea said.
The agency will also help businesses find a sales channel partner in Mexico, such as distributors, sales representatives, end buyers and end users.
It also helps with business-to-business and business-to-government in-country matching with sales channel partners and buyers.
ACA does this in a variety of ways, one of which is participating in trade events, with many held in the 4FrontedEd region and megaregion, which includes Sonora and Baja California.
The agency will take businesses to trade shows, expos and missions, some of which center on the industries of aerospace, security, mining technology and software, health care technology and medical devices, advanced manufacturing, and agricultural technology.
“Trade missions for us are very low on pomp, very low on circumstance, very high on doing business,” O’Shea noted.
ACA accompanies Arizona businesses to trade shows in Mexico and schedules one-on-one meetings so the Arizona companies can meet potential partners and buyers that have already expressed interest in doing business.
“We have a very strong commitment to the Arizona-Mexico relationship, including the Arizona-Mexico trade relationship,” O’Shea said.
The agency also helps Arizona companies develop strategic plans for exporting to Mexico “if you’re an Arizona company, and if you’re not, we would welcome you here in Arizona to participate in our economy,” he added.
One of the business programs offered is the 60-day ExporTech boot camp. O’Shea noted that some companies are already exporting but looking to grow their business while some are looking to start exporting. At the end of the program, these companies will have put together an export plan with the help of an export expert coach. Sessions include six to 10 companies, with no competitors within a cohort.
At the end of the boot camp, “we don’t leave companies with a plan and no opportunity to export.” The agency helps companies put their plan into action with go-to-market financial assistance and initiatives.
Many of the companies that graduate from the program are the companies that ACA takes to Mexico for the one-on-one business meetings.
Another program is the Arizona State Trade Expansion Program, known as AZSTEP. While the other programs are for any size company, the AZSTEP program is specific to small businesses.
This program helps Arizona small businesses to grow their revenues and diversify their buyer base by selling their products and services to customers outside the United States.
Funded largely by the federal government via the Small Business Administration, with matching dollars from the state, the program enables ACA to take companies to Mexico trade shows and purchase booth space. Last year, for example, the agency took 13 companies to an aerospace trade show in Mexico City and purchased booth space for all of the businesses.
The program enables a small business to get into a market at a major event that is otherwise quite an expensive proposition. One of the companies that the agency took is the Yuma company InsulTech, which manufactures interior insulation products that could work in the aerospace sector.
“Many of the companies that we’re working with in the AZSTEP program that are focused on Mexico, they derive a significant percentage of their sales not just from international but specifically from their sales to Mexico,” O’Shea said.
“For Arizona companies, the Mexico market is a significant percentage of their revenues, particularly companies in the mining sectors, advanced manufacturing sector and companies in the aerospace sector,” he added.
Through the trade offices in Mexico, the agency has a partnership with the Mexican aerospace sector and works with the industry to fill supply chain gaps.
“Mexico has a very dynamic aerospace sector,” O’Shea said.
Companies like Insultech in Yuma have opportunities to participate in that supply chain and strengthen that whole cross-border aerospace supply chain, he noted.
There is no enrollment fee to participate in the AZSTEP. To learn more about AZSTEP and to enroll in the program, contact O’Shea at firstname.lastname@example.org.
The recently implemented United States Mexico Canada Agreement, which replaced NAFTA, has “bolstered the confidence” of companies that the “relationship is solid” between the U.S., Mexico and Canada, O’Shea said.
The agreement lays out “very clear rules in the game” and “even during the whole negotiation of the USMCA, when companies in Arizona were concerned about how it would unfold, it didn’t slow them down in terms of their work with Mexico. They’re very confident in their relationship with Mexico and their opportunities in Mexico,” he added.
O’Shea believes the agreement will strengthen the supply chains and provide more opportunities for Arizona companies to participate, for instance, in the automotive supply chain.
“Interestingly, Arizona has become, to the surprise of some, a player in the automotive industry,” in particular the electric vehicle industry.
The proximity to Mexico and the relationship between Arizona and Sonora, which is an important player in the automotive industry, is the reason Lucid Motors is constructing a manufacturing facility in Casa Gande.
O’Shea has also been getting more inquiries, especially in the past six months, from Arizona companies that have their manufacturing done in China who are looking to move their manufacturing to North America. Some are considering doing some of the manufacturing in Arizona and some in Mexico.
Although, with the pandemic, most of the activity has gone virtual, the ACA trade teams have never been busier. “That’s probably shocking to some,” O’Shea said.
For more information on how the Arizona Commerce Authority can help with export plans, contact O’Shea at email@example.com.