Election Day near, Mexico-U.S. business partners praise trade, ties

"Everyone is entitled to their own opinion, but we all have to deal with certain realities," said Alicia Kerber, Mexico's Consul General in Philadelphia.

The diplomat was one of several speakers, before a house of businesspeople who jammed a luncheon trade discussion at the Duane Morris law firm, who stressed the value of understanding the real two-way nature of the U.S.-Mexico business relationship, without directly mentioning the pressure against that relationship from Republican Presidential candidate Donald Trump, or the campaign trade skepticism of Democratic rival Hillary Clinton.

The trade treaty (NAFTA) that unites the U.S., Canada and Mexico has created a "deep-rooted economic integration" and "one of the best and most secure environments for business" in the world in our countries, in competition with China, Europe, India and other more-populous rivals, Kerber added.

Millions of jobs and competitive consumer and industrial prices in all three countries depend on open trade and investment; so let's keep the region "capable of seizing the economic opportunities of the future," Kerber urged.

The three countries, together, are a match for European and Asian trading blocs, said Ken Smith Ramos, director of trade and NAFTA for Mexico's economic ministry. Mexico's younger population is an asset for companies across the region: "We are graduating more engineers per year than the United States," and putting them to work in research and development and manufacturing centers in cities like Guadalajara (software), Monterey (manufacturing) and aerospace (Queretaro),  he told the crowd.

City Councilman David Oh asked the Mexicans if they support the Trans-Pacific Partnership, a trade deal among the U.S., Japan, Australia, Mexico, Canada and other U.S.-friendly countries, which the Obama administration is backing -- despite opposition from Trump and Clinton -- as a way of uniting U.S. allies to compete with China.

If TPP fails, China is likely to "fill the vacant space," Mexico's Smith Ramos warned. "Chile and Peru already have China as their Number One trading partner." TPP could still go forward without the U.S., but it would be "much less attractive," he concluded.

Mexico is Pennsylvania's second-largest national trading partner, after Canada, with around $4 billion worth of goods and services moving each way every year -- and more expected with the opening of direct shipping service between Philadelphia and Vera Cruz on Mexico's Atlantic Coast, said David Briel, head of Pennsylvania's trade development office.

Ocean shipping is a lot cheaper than trucking through Texas, where cargoes have to be changed between U.S. and Mexico trucks. But Philadelphia port professionals and shipping executives warned there aren't yet enough ocean-going cargoes between the ports to justify expanding that trade.

A few Mexican manufacturers are addressing the gap by investing in the northeast U.S. At least 96 Mexican companies together employ more than 6,000 Pennsylvanians -- close to half of them at Bimbo, the world's largest bakery owner, which makes Stroehmann's bread, Entenmann's and Sara Lee cakes and dozens more U.S. brands, and has its U.S.-Canada headquarters at Horsham, Briel noted.

A Mexican-owned Bimbo supplier, Verdant Foods, recently opened a factory in Lancaster to make the Middle Eastern spread, tahini, "of all things," Briel added. The list of Mexican companies investing in Pa. is still far behind those from Europe and Asia, but it's rising fast, alongside China and India, he said.

Bimbo Bakeries, sponsor of the Philadelphia Union pro soccer team, was started in Mexico in 1946 by three young entrepreneurs who pooled their funds to buy a set of modern bakery equipment in the U.S., said Martin Zapata, VP-Operations for Bimbo Bakeries USA.

"This very small bakery in Mexico City has grown over a journey of 70 years into the largest baking company in the world," he told the group. Sales were nearly $14 billion in 22 countries last year.

Bimbo began exporting "nostalgic" bread brands to Mexicans in Califoria in 1997. It purchased California and Texas bakeries in the next two years, and spread its brands through the southern U.S.

In 2009, during the recession, Bimbo saw its opportunity to bust out of historically Spanish-speaking U.S. markets and bought a string of U.S. brands and plants, moving its U.S. headquarters to Horsham. (Soon after it became name sponsor of the Philadelphia Union soccer team.)

"We now have 58 (U.S.) bakeries, operated by 21,000 associates," Zapata added. Bimbo employs 138,000 worldwide.

"What our story shows, everying is about believing," Zapata went on. "And creating. We strongly believe the opportunities are here. We are hiring young heroes at our companies. We came here because we have the dream to grow in the U.S. and really transform the baking industry." 

Tom Forkin of Camden-based Magnetic Metals offered a complementary vision: the U.S. company that fights falling world prices by expanding to low-wage Mexico.

A U.S. military supplier since early in World War II, Magnetic makes electronic parts for ground-fault circuit interrupters and other devices. With plants in Camden and Anaheim, Calif., "we wanted a value-added propsition in Mexico," where labor and some other costs are cheaper, Forkin noted.

He advised finding legal counsel expert in U.S.-Mexico business intricacies, which can help a manufacturer "do a lot of things you thought you couldn't."

Magnetic opened its first maquiladora (Mexican building and workers, U.S.-owned equipment) at Juarez-El Paso in 2009 and later moved to a larger site in Nogales. "We're there now, in a 25,000 square foot facility," Forkin said.

The products meet U.S. military specifications, just like the company's U.S.-built parts."We've hired hundreds of people who otherwise wouldn't have had the opportunity," and that's made it possible to keep Magnetic's U.S. operations growing, too, Forkin concluded.