Companies capitalize on Latin American markets
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Janine Bisaillon-Cary, executive director of the Maine International Trade Center, will lead a trade mission this fall to Mexico and Colombia, where she says rapidly growing economies hold new opportunities for Maine companies.
Three months after setting up an office in Bogota, Colombia, South Portland-based Allagash International is lining up what could be its biggest job yet in that South American country.
Last week, Allagash President and CEO Terry Ingram submitted a bid for a $200 million contract to build land-based oil rigs, which would be a first for the company that specializes in manufacturing valves and controls that go into oil rigs. Earlier this year, the company landed a $30 million contract to provide its equipment for work in Colombia and Venezuela. After nine years doing business there, Ingram says work in Latin America makes up around one-third of the company's business and could make up about 50% by the year's end.
But success there didn't come from just showing up.
"When you go (to Latin America), you have to have a three- or five-year business plan," Ingram says. "You can't think you're going to go there and on the first visit hit a home run."
That's his advice to other Maine companies looking to make inroads in Latin America aboard the Maine International Trade Center's first trade mission to Colombia and its second to Mexico this fall.
In Maine, Allagash is a poster child for finding ready markets in Latin America, but MITC Executive Director Janine Bisaillon-Cary says there are many burgeoning sectors in Mexico and Colombia where Maine companies stand to make a dollar.
"They're both growth markets right now and they both value U.S.-quality products," Bisaillon-Cary says.
That's what's driving Hussey Seating's growth in Mexico, where the Sanford-based seating company has landed a variety of small projects and two large soccer stadium projects in Guadalajara and Monterrey, each in excess of $4 million. Mexico is the company's largest export market, making up around 5% of its total business.
"They're pretty determined to raise the standard of living there and grow the economy," President and CEO Tim Hussey says.
Hussey notes that the country has been challenged by violence connected to drug cartels, but he sees greater potential for Mexico if those issues can be handled.
"From the people I talk to in Mexico, the drug and violence issues are still real, but in spite of that there are great things in the economy there," Hussey says. "If they can get (those issues) under control, there's more potential for that to grow."
Since the last time a Maine delegation made the trip to Mexico, Bisaillon-Cary says a lot has changed, inside the country and out.
"Mexico in 2001 — you're talking about a very different place," she says.
Recently, various manufacturers have found Mexico more attractive, driving demand there for products like automotive parts. Outside the country, Bisaillon-Cary says transportation options into Mexico have also improved. The ports of New Bedford, Mass., and Tuxpan, in the state of Veracruz, signed a sister port agreement last year, setting up greater cooperation between the ports that are a six-days journey apart.
Coated paper tops the list of Maine exports to both countries and a MITC report compiled for the trip identifies other opportunities in the two countries that have seen steady economic growth in the past three years (see sidebar).
Ingram attributes that growing opportunity in Colombia in part to political stability and the fastest per-capita economic growth in South America.
Despite rapid growth, Ingram says the way to begin doing business in Colombia — and other parts of Latin America — takes time and a different mindset.
"If they see that you've got one foot in the door and the other out, they're not going to do business with you," Ingram says. "People [in Latin America] do business a lot differently than we do and you have to earn their trust and friendship — it's not all about price."
Having Gov. Paul LePage along for the trip this fall, Ingram says, will help him strengthen relationships.
"That gives me more horsepower," Ingram says of the governor's presence. "We told them that we were going to come and now we're here."
Ingram says those relationships help his relatively small Maine company find the support to take on a $200 million project there.
"There's no way a small company in Maine can support a $200 million order, but when our customer understands our capabilities, they can figure out a plan and find the funding," Ingram says.
Ingram says his company will learn whether they won that bid around a month from now.
While Hussey does not plan to participate in the upcoming trade mission — he has the contacts and contracts his company needs there — he says the country is a "natural place to look to grow exports" given its geographic proximity.
In addition to exports, Bisaillon-Cary says the mission will also seek to attract foreign investment into Maine, in part by building on existing partnerships like that between Searsport-based GAC Chemical and Dalegip America Inc., the American offshoot of a Mexican pigment company based in the state of Querétaro.
"Mexico has been increasing its investment in the U.S. sizably over the last few years," Bisaillon-Cary says.
Forbes reported this week that Mexican investments in the U.S. were up 11% from 2011 to 2012, totaling $27.9 billion. Trade between Mexico and the U.S. totals over $1 billion daily, according to figures from MITC.
The trade mission schedule centers around trips to the capital cities of both countries, Mexico City and Bogota, from Oct. 27 to Nov. 2.
Find more information about the upcoming trade mission at mitc.com.
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