Mexicans Are Seeing and Seizing Big Opportunities
Now that Mexico’s election is over and confidence about its future is running high, it’s a good idea to look for a window or two on the Mexican economy. And Americans with long experience here and the Mexican president of one of the country’s most prestigious universities offer a few.
When Adolf Horn Jr. retired from the U.S. foreign service here in 1963, he suggested to Mexican business friends that they invest in an ice cream business, modeled on chains such as Baskin-Robbins that Horn knew from the United States. Horn, then 52, saw himself keeping active as marketing consultant to such a business.
But in 1963, Mexican investors were unwilling to back such a new idea. So Horn and his wife, Lena Bingham, started the business themselves, naming it Helados Bing, using the Spanish word for ice cream and part of her last name. The formula was simple: good ice cream, sold through walk-up windows from small, clean stores with bright pink, white and green decor.
And the business succeeded. By 1983, Helados Bing had grown to 14 stores, employing 200, and had introduced ideas about marketing and attractive retail premises to Mexico. Horn had declined offers from major firms, including Coca-Cola, to buy the little company.
But that’s only the first part of the story. In 1983, Horn sold Helados Bing because Bingham was ill with cancer. (She died in 1991.) He didn’t sell to a big company, he explains, “but to a Mexican entrepreneur, Jose Luis Gonzalez, who had graduated from Monterrey Tech and worked with Coca-Cola.”
Horn has kept an office at Helados Bing’s small, white headquarters over one of its stores here in leafy, sprawling Guadalajara, as Gonzalez has expanded the chain to 340 stores by franchising throughout Mexico.
Gonzalez has also bought out Mexican competitors--who arose in imitation of Helados Bing’s success--and become the agent for Baskin-Robbins, which now is spreading franchises in Mexico.
How quickly entrepreneurship has sprouted! In the span of a single generation, Mexican business people have been transformed from a reluctant, skeptical breed to risk takers eager to own a business franchise. Small business is red hot in Mexico despite an utter lack of low-cost credit.
“There’s a lot of talent in this country,” says Horn, who works actively with the American Chamber of Commerce in Mexico. “The future of this place will be superb; in four years we’ll look back and marvel at all that has been accomplished.”
Rafael Rangel-Sostmann, president of the Institute of Technology and Higher Education of Monterrey, looks at Mexico through a different window and is more restrained: “Mexico is supposed to be creating 1 million jobs a year, and we are not doing that.”
Rangel, 53, heads a remarkable institution. The Monterrey Tech, as most people call it, was founded in 1943 by Eugenio Garza Sada, patriarch of a family that started a brewery in Monterrey and went on to build some of Mexico’s largest companies, including the glassmaker Vitro, which owns the U.S. firm Anchor Hocking.
Garza Sada, who was killed by terrorists in 1973, wanted a Mexican school modeled on his own alma mater, Massachusetts Institute of Technology. His brainchild has grown into something considerably larger, however. Today, Monterrey Tech educates 65,000 students on 26 campuses in 25 cities throughout Mexico and has affiliations with more than a dozen U.S. universities, including UCLA and the universities of Texas, Rice and Stanford.
For decades, the school trained managers for Mexico’s big companies. But now that focus must change.
“Most of our students are going to become entrepreneurs of relatively small businesses,” says Rangel, who holds a doctorate in computer engineering from the University of Wisconsin. A recent survey showed that 49% of Monterrey Tech graduates--including Jose Luis Gonzalez, the man who bought Helados Bing--own their own businesses.
“But education is not enough,” says Rangel. “Look at Russia and Cuba--their education is good but they remain poor.” Specific training is needed, he says, especially in Mexico, a young country where 25 million people are in school but only 1 million get formal vocational training and another million get higher education.
The solution is to train Mexico’s small companies “as first-class suppliers to global industry,” Rangel says. He notes that the AC Delco division of General Motors is working with local suppliers of catalytic converters. Vitro of Monterrey has a program to train small supplier firms. C.A. Spalding, a Philadelphia tool and die maker, is working with small firms in Guadalajara to make dies for auto parts.
For its part, Monterrey Tech has opened a school of computer science and a school of environmental quality and engineering.
“Opportunities are very large,” says Rangel. “Mexico is still a country lacking a lot of industrialization and needing many services.”
In the election aftermath, all eyes turned to the Mexico Stock Exchange, where prices rose on Monday, then fell back on Tuesday as traders took profits. But short-term focus can be confusing. Rangel is talking about real business opportunity, of the kind Adolf Horn saw in Mexico 30 years ago. Horn, at 83, still sees marvels being accomplished, and the difference today is that Mexican entrepreneurs agree with him.
* MARKET BEAT: Tom Petruno takes a look at Latin stocks. D3