Mel Ladezma has toiled in the trenches of Mexico a long time, and he has the scars to show for it. In 1994, Ladezma, the marketing VP for Boca Raton-based Florida Aquastore, was poised to close as much as $50 million in sales of products that Mexico needs: massive tanks -- up to 4 million gallons -- for drinking water and wastewater. When the peso crumbled, so did the deals. "We walked away with nothing," he recalls.
Last year, Ladezma schlepped exhibits of his products to six trade shows in Mexico. Nothing came of them. Last November, Aquastore bid on a Mexican government project, a wastewater tank in Monterrey. After factoring in an 11% duty on the tank plus the cost of hiring a Mexican partner (required of all foreign bidders), Aquastore's bid wasn't even in the running. A Mexican firm got the job.
Daunted but not defeated, Ladezma will travel in July with Gov. Jeb Bush (the governor's wife, Columba, is a native of Mexico) and dozens of Florida business leaders on a trade mission to Mexico City. The trip is being touted as an opportunity to grow Florida's share of the Mexican market: Mexico is the nation's No. 2 trading partner, but Florida's slice is only 1% of the pie, or $826 million last year. "Florida has failed to take advantage of NAFTA opportunities," says Manuel Mencia, vice president for international trade at Enterprise Florida, which is coordinating the trip. "Mexicans don't see Florida as a major business center."
Bruised from his own experience, Ladezma, whose firm does 80% of its business abroad, says it won't be easy, NAFTA notwithstanding. "We have a very hostile environment in Mexico." What amounts to a "hostile environment?" Michael Gordon, a University of Florida law professor who has observed Mexico's legal system since the 1960s, describes a dense, often impenetrable thicket of bureaucracy and corruption. Although old laws requiring 51% Mexican ownership of foreign investments are gone, many restrictions remain. Foreign investors still must navigate a dizzying array of ministries, and government officials at all levels still have their hands out.
"Government corruption is the No. 1 problem," Gordon says, echoing Ladezma's opinion that bureaucracy and corruption in Mexico are possibly worse than anywhere else he's done business in Latin America. Gordon says many government jobs in customs and other agencies pay little because it's expected the officials will receive bribes. Sometimes, the payments demanded are "mind-boggling."
In the country's worst-ever corruption scandal, the older brother of former President Carlos Salinas de Gortari was convicted in January of murdering a political rival and sentenced to 50 years in prison. Raul Salinas de Gortari had been charged with ordering the 1994 murder of Jose Francisco Ruiz Massieu, a leading member of the ruling party and his former brother-in-law. Raul Salinas was also convicted of using fake documents to help hide more than $140 million in U.S. and European banks.
On a far smaller scale, Aquastore has felt the corruption firsthand. The company won a $2 million contract with a Chrysler plant in Toluca, Mexico, but a shipment of Aquastore's products was held up several weeks at the border, and its crew was delayed 10 days by Mexican Customs officials demanding one document after another. "At the border, you get all kinds of questions and innuendos" suggestive of bribes, Ladezma says. "We're not in the business of doing that."
For Florida, there are also problems of history and geography; due to proximity and cultural links to Mexico, Texas and California are lightyears ahead of Florida in their business ties south of the border. Air connections between Florida and most areas of Mexico can't rival the air and road links between Mexico and Texas.
But Gordon, Mencia and others see opportunities in Mexico's Yucat?n peninsula, which lies just a short flight from Florida. For example: Lightweight products could be manufactured cheaply in the Yucat?n and exported by air to Florida. Or, Gordon says, cooperative agricultural ventures might be worth exploring, such as applying to farms in Mexico techniques developed in Florida for growing better tomatoes or citrus fruit.
Enterprise Florida also sees potential in a host of Mexican industries, including telecommunications, computers, pollution control, food processing, security equipment, aviation, oil and gas machinery, building products and medical equipment. Jacksonville-based medical equipment company Imagination Medical is heading to Mexico this summer with a patented machine that converts biomedical waste to non-hazardous material. Sales director Gary Burdette would like to land a distribution or licensing agreement in Mexico. The trade mission trip will cost the company about $4,000. For that price, "you need to come away with some qualified candidates," Burdette says.
Aquastore will be there, too. Ladezma would love to find some business and political contacts who have the connections to help him score public-sector contracts in Mexico. "We have fought the battles and lost most of them," he says. "But we're still fighting."
France: Show Me the Francs
A Miami company eyeing new business opportunities in France got an unexpected call from the French government. Evans Environmental & Geological Science (EE&G) specializes in managing and removing asbestos, the building material whose tiny particles have been linked to lung cancer. France, home to countless old buildings, is up to its gargoyles in asbestos, the stuff of fire-proofing, acoustic tile and insulation. Recently a new French law mandated -- as U.S. law already does -- that buildings must be asbestos-free. Overnight, France became an asbestos-removal bonanza.
Enter Invest in France, a job-creation agency funded by the French government. Unaware of EE&G's interest in opening up shop in Paris, the agency contacted EE&G last year and found receptive ears. Invest in France offered free tips on French taxes, labor laws and other critical issues, such as financing. "They acted as a business consultant," says Tim Gipe, president of EE&G. Last fall the company opened a consulting office and lab in Palaiseau, a Paris suburb, where it has created 10 jobs so far.
France is in some ways a tough sell to businesses -- the nation has 11.5% unemployment, one of the highest jobless rates in Europe, and a reputation for unfriendly tax and labor laws. But Invest in France sees great potential in Florida and is intensifying its recruiting here because so many Florida companies already have international operations or ambitions. So the agency scours the Internet, financial publications and top-company lists compiled by business journals and investment banks, identifying companies that might be looking across the Atlantic already.
"Our pitch is: If a company's strategy is to do something in Europe, they should take a look at France," says Bruno Tatéossian, the agency's Houston-based director for the southeastern U.S. His agency will suggest sites and point out government financial incentives available to companies that do research and development, train French citizens or hire minimum-wage employees. In some parts of the country with particularly high levels of unemployment, there are cash incentives for opening factories.
Still, tax and labor laws there can be a shock to Florida firms. For one thing, the costs of healthcare, unemployment insurance and retirement -- what Tatéossian calls the "social tax" -- run as much as 45% on top of an employee's base salary. Firing an employee is far harder in France than here, and not every firm can qualify for government incentives; EE&G, for one, did not.
Then there are the cultural differences, some of which, Gipe has found, make the French the French. "Our biggest challenge there has been productivity," he says. The firm's French employees have a fondness, for example, for long, leisurely lunches savored with good wine. "You can't just tell them, 'Don't do that,'" he says. While the company's asbestos analysts in Miami can process 50 samples a day in the lab, their French counterparts average only 20.
Still, the company is hardly regretting its Paris expansion. Right now, the going price for asbestos removal in France runs three to four times as much as here. And the asbestos law there is so new that relatively few companies are licensed to do the difficult work. All in all, the math isn't so bad. "The French market," says Gipe, "is phenomenal."
Last year, Ladezma schlepped exhibits of his products to six trade shows in Mexico. Nothing came of them. Last November, Aquastore bid on a Mexican government project, a wastewater tank in Monterrey. After factoring in an 11% duty on the tank plus the cost of hiring a Mexican partner (required of all foreign bidders), Aquastore's bid wasn't even in the running. A Mexican firm got the job.
Daunted but not defeated, Ladezma will travel in July with Gov. Jeb Bush (the governor's wife, Columba, is a native of Mexico) and dozens of Florida business leaders on a trade mission to Mexico City. The trip is being touted as an opportunity to grow Florida's share of the Mexican market: Mexico is the nation's No. 2 trading partner, but Florida's slice is only 1% of the pie, or $826 million last year. "Florida has failed to take advantage of NAFTA opportunities," says Manuel Mencia, vice president for international trade at Enterprise Florida, which is coordinating the trip. "Mexicans don't see Florida as a major business center."
Bruised from his own experience, Ladezma, whose firm does 80% of its business abroad, says it won't be easy, NAFTA notwithstanding. "We have a very hostile environment in Mexico." What amounts to a "hostile environment?" Michael Gordon, a University of Florida law professor who has observed Mexico's legal system since the 1960s, describes a dense, often impenetrable thicket of bureaucracy and corruption. Although old laws requiring 51% Mexican ownership of foreign investments are gone, many restrictions remain. Foreign investors still must navigate a dizzying array of ministries, and government officials at all levels still have their hands out.
"Government corruption is the No. 1 problem," Gordon says, echoing Ladezma's opinion that bureaucracy and corruption in Mexico are possibly worse than anywhere else he's done business in Latin America. Gordon says many government jobs in customs and other agencies pay little because it's expected the officials will receive bribes. Sometimes, the payments demanded are "mind-boggling."
In the country's worst-ever corruption scandal, the older brother of former President Carlos Salinas de Gortari was convicted in January of murdering a political rival and sentenced to 50 years in prison. Raul Salinas de Gortari had been charged with ordering the 1994 murder of Jose Francisco Ruiz Massieu, a leading member of the ruling party and his former brother-in-law. Raul Salinas was also convicted of using fake documents to help hide more than $140 million in U.S. and European banks.
On a far smaller scale, Aquastore has felt the corruption firsthand. The company won a $2 million contract with a Chrysler plant in Toluca, Mexico, but a shipment of Aquastore's products was held up several weeks at the border, and its crew was delayed 10 days by Mexican Customs officials demanding one document after another. "At the border, you get all kinds of questions and innuendos" suggestive of bribes, Ladezma says. "We're not in the business of doing that."
For Florida, there are also problems of history and geography; due to proximity and cultural links to Mexico, Texas and California are lightyears ahead of Florida in their business ties south of the border. Air connections between Florida and most areas of Mexico can't rival the air and road links between Mexico and Texas.
But Gordon, Mencia and others see opportunities in Mexico's Yucat?n peninsula, which lies just a short flight from Florida. For example: Lightweight products could be manufactured cheaply in the Yucat?n and exported by air to Florida. Or, Gordon says, cooperative agricultural ventures might be worth exploring, such as applying to farms in Mexico techniques developed in Florida for growing better tomatoes or citrus fruit.
Enterprise Florida also sees potential in a host of Mexican industries, including telecommunications, computers, pollution control, food processing, security equipment, aviation, oil and gas machinery, building products and medical equipment. Jacksonville-based medical equipment company Imagination Medical is heading to Mexico this summer with a patented machine that converts biomedical waste to non-hazardous material. Sales director Gary Burdette would like to land a distribution or licensing agreement in Mexico. The trade mission trip will cost the company about $4,000. For that price, "you need to come away with some qualified candidates," Burdette says.
Aquastore will be there, too. Ladezma would love to find some business and political contacts who have the connections to help him score public-sector contracts in Mexico. "We have fought the battles and lost most of them," he says. "But we're still fighting."
France: Show Me the Francs
A Miami company eyeing new business opportunities in France got an unexpected call from the French government. Evans Environmental & Geological Science (EE&G) specializes in managing and removing asbestos, the building material whose tiny particles have been linked to lung cancer. France, home to countless old buildings, is up to its gargoyles in asbestos, the stuff of fire-proofing, acoustic tile and insulation. Recently a new French law mandated -- as U.S. law already does -- that buildings must be asbestos-free. Overnight, France became an asbestos-removal bonanza.
Enter Invest in France, a job-creation agency funded by the French government. Unaware of EE&G's interest in opening up shop in Paris, the agency contacted EE&G last year and found receptive ears. Invest in France offered free tips on French taxes, labor laws and other critical issues, such as financing. "They acted as a business consultant," says Tim Gipe, president of EE&G. Last fall the company opened a consulting office and lab in Palaiseau, a Paris suburb, where it has created 10 jobs so far.
France is in some ways a tough sell to businesses -- the nation has 11.5% unemployment, one of the highest jobless rates in Europe, and a reputation for unfriendly tax and labor laws. But Invest in France sees great potential in Florida and is intensifying its recruiting here because so many Florida companies already have international operations or ambitions. So the agency scours the Internet, financial publications and top-company lists compiled by business journals and investment banks, identifying companies that might be looking across the Atlantic already.
"Our pitch is: If a company's strategy is to do something in Europe, they should take a look at France," says Bruno Tatéossian, the agency's Houston-based director for the southeastern U.S. His agency will suggest sites and point out government financial incentives available to companies that do research and development, train French citizens or hire minimum-wage employees. In some parts of the country with particularly high levels of unemployment, there are cash incentives for opening factories.
Still, tax and labor laws there can be a shock to Florida firms. For one thing, the costs of healthcare, unemployment insurance and retirement -- what Tatéossian calls the "social tax" -- run as much as 45% on top of an employee's base salary. Firing an employee is far harder in France than here, and not every firm can qualify for government incentives; EE&G, for one, did not.
Then there are the cultural differences, some of which, Gipe has found, make the French the French. "Our biggest challenge there has been productivity," he says. The firm's French employees have a fondness, for example, for long, leisurely lunches savored with good wine. "You can't just tell them, 'Don't do that,'" he says. While the company's asbestos analysts in Miami can process 50 samples a day in the lab, their French counterparts average only 20.
Still, the company is hardly regretting its Paris expansion. Right now, the going price for asbestos removal in France runs three to four times as much as here. And the asbestos law there is so new that relatively few companies are licensed to do the difficult work. All in all, the math isn't so bad. "The French market," says Gipe, "is phenomenal."