Three weeks ago, Dave Zinn had just one tiny distributor selling Pepin Manufacturing’s medical goods in Mexico.
Results were not exciting. But a recent trade mission to Mexico changed all that.
Zinn, vice president of sales for the nearly $10 million Lake City company, scored seven new Mexican distributors as a result of the trip. With that he hopes to gain $1 million in export orders.
The Council of Great Lakes Governors organized the trip, setting up meetings between Midwest manufacturers like Pepin and established product distributors in Mexico City and Guadalajara.
“It was just a gold mine of opportunity for us,” Zinn said. “Before we got into exporting, we were losing sales and were cutting jobs. But since we added exporting, we not only hired the workers back, we just added a second shift. So exporting is critical. I think anyone in manufacturing who doesn’t at least explore that possibility in Mexico is missing an opportunity.”
Gov. Mark Dayton believes in the opportunity as well, and this summer he will lead Minnesota’s first trade delegation to Mexico in 15 years. Minnesota companies interested in the trade mission need to apply before April 17 with the Minnesota Department of Trade and Economic Development.
The focus on Mexico is well-deserved, Dayton said in announcing the trade mission earlier this month.
Minnesota exports to Mexico surged 52 percent to $2.24 billion last year, beating out China to become the state’s largest international trading partner behind Canada. To put that growth in perspective, consider that Minnesota farmers and factories exported just $342 million in goods to Mexico as recently as 2003.
Mexico already buys large volumes of corn, pork, turkey, auto parts, machinery and electrical components from Minnesota. Orders are growing for oil, solar and other energy products and medical devices. Plus, there is a keen interest in products used to treat diabetes, Mexican consulate officials said.
“There is an excitement in the air with this growth of exports to Mexico,” said Kathleen Motzenbecker, the executive director of the Minnesota Trade Office, who just returned from a pre-mission trip to Mexico two weeks ago. “For people who know about the opportunities there, they are on it. For those who don’t know, they’re surprised. My goal is to publicize this trade mission statewide. We’d love to see participation from across the state and … [from] small and large manufacturers and ag firms.”
International behemoths such as 3M, H.B. Fuller, St. Jude Medical, Medtronic, Ecolab, Valspar, Cargill and C.H. Robinson already have either factories or longtime trading partners in Mexico. Richfield-based Best Buy has stores across Mexico City. Medina-based Polaris Industries opened a factory in Monterrey, Mexico, in 2011 and expanded it in 2013.
In contrast, many small Minnesota manufacturers and service firms don’t have any relationships there and don’t know where to start. This trade mission could help them, Motzenbecker said. Once selected, delegates will get a primer on Mexican business culture, taxes and transportation logistics. They will also visit factories, distributors, politicians and economic development boosters in two of Mexico’s key cities.
That sounds great to John Herou. “We can use all the help we can get,” said the founder of E-ride Industries, a maker of electric utility vehicles in Princeton, Minn.
His 18-employee factory recently hired its first export consultant in Mexico.
Herou received the consultant’s first progress report on March 10 and liked what he saw. Now he’s considering joining Gov. Dayton’s trade mission so he can learn more “and make some sales. We’d like to see $3 million to $5 million a year in sales from there in a couple years,” Herou said.
His sturdy E-ride vehicles zip up to 35 miles an hour and cost $20,000 to $38,000 each. The target audience is universities, factories, cities and maintenance operators. Two weeks ago, two Mexican companies asked Herou’s consultant for quotes for six vehicles.
“That I liked. There is opportunity,” he said.
Mexican officials are similarly excited by the prospects Minnesota offers. Texas is traditionally Mexico’s largest trading partner in the United States. But there is room for others.
“We were very surprised and happy to see the level of growth in 2014 in Minnesota and would hope that it will continue,” said Alberto Fierro Garza, the Mexican consul in St. Paul. “I doubt that it will continue at the same percentages, but we think that there are lots of opportunities that have not been explored.”
Fierro Garza said he is convinced that as part of NAFTA, “Mexico can still do a lot more trade with Minnesota. There are a lot of supply chain elements that could come from Mexico. … We are a lot closer than China. And Mexican businesspeople are very used to doing business with Americans.”
Dayton says the trade mission should result in new jobs across Minnesota.
“The goal of this trade mission will be to establish and build relationships that help Minnesota companies and producers increase their exports to Mexico, and in doing so, create more jobs here at home,” Dayton said.
Motzenbecker said this summer’s trade mission could generate new exports from Minnesota to companies that have never done business with the state before. But the trip could also increase exports of parts and components from Minnesota firms to U.S. companies that have factories in Mexico.
The opportunity for growth “is a combination of exports from Minnesota and from U.S. businesses already in Mexico. You cannot exclude one from the other. There is more and more cross-border collaboration on products,” said Motzenbecker.