Santa Ana Center Will Foster Trade With Mexico
Underlining attempts to spur small business in his own country and forge links with companies in California, Mexican President Vicente Fox is scheduled to open an International Business Center in Santa Ana on Thursday.
The center will house representatives of six of Mexico’s 32 states. Santa Ana officials hope that eventually all 32 states will have offices at the center, along with U.S. companies and service agencies specializing in financing and facilitating foreign trade.
Santa Ana is providing office space at nominal rents because the city of 317,000 has a large base of small to medium-sized companies that could benefit from trade opportunities.
On the other side, Fox pledged in his campaign for Mexico’s presidency to encourage small companies as a way to spur economic development.
The Santa Ana center could provide a place for contacts and instruction in trade financing and techniques for the small companies of Santa Ana and even smaller firms in Mexico.
Trade already is growing between Mexico and Southern California. Orange County exported $1.7 billion worth of goods to Mexico in 1999, the last year for which official figures are available. Six Southern California counties, including San Diego County, exported a total of almost $6 billion in goods.
But there are many hurdles for small companies in the big world of global transactions. If Santa Ana’s business center can attract experts in finance, law and other disciplines, it can perform a real service for many of the city’s 14,700 businesses.
Ajax Boiler Inc. is a good example of the opportunities and the hurdles. A Santa Ana company with 120 employees and just more than $10 million in sales, Ajax makes a full range of heating equipment, from industrial boilers to hot-water heaters for hotel rooms and other commercial sites.
Too small to have a sales force of its own, Ajax sells its machinery through manufacturers’ representatives across the U.S. and Canada. For Mexico, Ajax works through reps in San Diego and in Guadalajara.
But Mexico presents risks that other locales do not. Financing of transactions is not as secure because sellers of equipment or subcontractors cannot put liens on projects if they don’t get paid. Such recourse liens are routine business in the U.S. and Canada but not yet in Mexico pending reform of that country’s legal system.
Financing also is a problem for Mexican companies because there is little credit for small firms in the country--a failing that Fox has promised to remedy.
Still, business is “looking up at this time” for Ajax, says Bill Clements, director of sales and marketing. “Our rep in Guadalajara may close on some orders, and a lot of inquiries elsewhere are turning into orders,” Clements says.
New Horizons Computer Learning Centers Inc., which is headquartered in Santa Ana and has 280 franchised locations, sees the growth of its business these days outside the United States, where countries and companies are adapting to the software and Internet systems of modern industry.
“We sell knowledge,” says Francisco Perez, the Santa Ana-based director of franchise support. And there is a growing market for the training systems and sales techniques that New Horizons--with $142 million in annual revenues--provides to its franchisees.
“We’re up to 116 centers around the world, including five in Mexico that have opened in the last few years,” Perez explains. Chile and Colombia stand out in Latin America for their support of information technology training for their work forces, he says.
Not all Santa Ana companies are small. Calavo Growers of California, a cooperative of 1,600 growers of avocados, had sales last year of $226 million. It is a sophisticated, 77-year-old California company that years ago decided to set up a packing operation in Mexico in addition to its main packing plants in Temecula and Santa Paula.
Calavo now has a packing plant in Uruapan, in Michoacan state, from which it exports to Japan and Europe because the fruit is cheaper in Mexico. Calavo could teach lessons to the small firms at the new international business center.
Santa Ana Mayor Miguel A. Pulido’s efforts to get local companies involved in foreign trade look to all the world’s markets for opportunity. Orange County, after all, exports more than $9 billion in goods and services to the world these days.
But Pulido, who grew up in Mexico City, made a special effort to attract the Mexican states to the business center for obvious reasons. Mexico is Orange County’s largest trading partner, and 60% of Santa Ana’s people these days are immigrants, mostly from Mexico.
The city has been in economic development for more than 20 years, explains Patricia Nunn, economic development manager. It was designated one of California’s first Enterprise Zones in 1993, which means that companies in the city get tax credits for investment in machinery and equipment and a tax credit of as much as $29,250 a year for each qualifying employee they hire.
Still, some of Santa Ana’s small businesses, run by immigrants, don’t take advantage of the benefits coming to them because they don’t really understand the programs.
Thus, in Santa Ana and elsewhere in Southern California, economic development involves a lot of outreach. And that’s why the International Business Center is “a good idea for both sides,” says Carlos Valderrama, foreign-trade specialist at Carlsmith Ball Whitman, a Los Angeles law firm. “Companies in the Latino communities don’t do enough networking and often don’t understand the opportunities in foreign trade.”
That could change fast once “celebrities” such as Fox start publicizing the business. Larry Aguilar, vice president of business development for Rugged Portable Systems, hopes to make a contact at Fox’s ribbon cutting this week that can introduce him to Mexico’s state oil company, Pemex.
Aguilar’s firm, a defense contractor, makes computers and laptops that can withstand battlefield or oil field conditions. He already sells to Texaco, so Aguilar figures Pemex should be a natural customer.
It’s that kind of initiative that Santa Ana’s business center, and other cities’ economic development efforts, hope to encourage.
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James Flanigan can be reached at jim.flanigan@latimes.com.
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Neighborly Exchange
Mexico’s exports to the U.S. amounted to more than $110 billion in 1999 and have continued upward. Southern California, meanwhile, exported almost $6 billion worth of goods and services to Mexico that year.
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County Exports to Mexico Los Angeles $2.9 billion Orange 1.7 billion San Diego 914 million Riverside/San Bernardino 234 million Ventura 52 million
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Sources: U.S. Census Bureau, Los Angeles Economic Development Corp. Chapman University
