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An Export Dynamo In The Heart Of Mexico...


International Spotlight On Mexico

AN EXPORT DYNAMO IN THE HEART OF MEXICO...

Plotters of Mexico's export boom are hard at work in a former colonial palace that serves as headquarters for the state of Aguascalientes. There, Governor Otto Granados Roldn brushes up on Japanese phrases before his periodic trips to the Far East to woo auto-parts makers. The state's economic and trade development chief, Carlos Lozano de la Torre, charges around the capital with potential investors, pointing out the town's virtues: year-round spring weather, the hot mineral springs that gave the capital and state their names, and a workforce that hasn't staged a strike in 30 years. "With cities around the world competing like crazy for investment, we try to take good care of what we can get," he says.

Strategically located in Mexico's geographical center, the state of Aguascalientes is the country's third-smallest, but its economic clout is growing. Back in the 1980s, when Mexico was immersed in a foreign-debt crisis, Xerox Corp. built a factory, which now has 1,700 workers making copiers and fax machines. Nissan Motor Co. saw the area's potential and set up an aluminum foundry for engines. Today, following a $1.5 billion expansion, Nissan employs 5,000 in a 200-hectare industrial complex that exports 24,000 Altima engines each year to the U.S. and sends finished vehicles to Japan and 22 countries in Latin America and the Caribbean. Aguascalientes is just 590 km from Monterrey, 504 km from Mexico City, and 564 km from the Pacific port of Manzanillo. The state's export sales were up 49% last year, to $683 million. The area's economy grows at about 21/2 times the national rate.

The North American Free Trade Agreement is a real boon to places like Aguascalientes. The area is known for its textiles, embroidery, and sweaters. Izod Lacoste golf shirts and garments for GapKids and Dillard Department Stores Inc. are made here. Before NAFTA took effect, local manufacturers who exported sweaters to the U.S. had to deal with quotas and a 32% tariff. As of Jan. 1, 1994, there is no quota and zero tariff. To take advantage of the drop in tariffs, Governor Granados, a hard-charging protege of President Carlos Salinas de Gortari, is changing his industrial strategy: New businesses are allowed only if they offer real value-added employment, use the region's scarce water sparingly, and don't pollute. Also, with few exceptions, they must focus on exports and decentralize new jobs.

"In the next phase of its economic transformation, Mexico has to put a much bigger emphasis on exports," the governor argues. "We would like to become a kind of Singapore of Latin America." Last year, he turned down a major Mexican textile company's request to set up a factory that would have employed 8,800 workers in the state capital. Instead he's looking for many smaller, high-tech companies so that he can spread good jobs around the state. And he openly courts auto-parts makers. When Granados became governor two years ago, four Japanese makers of car components were in Aguascalientes. Today, seven are in operation, and four more are planned. With an additional three or four, he figures, Nissan's supply circle will be complete. The motor industry accounts for one-third of Aguascalientes' economy, and the goal is for it to produce 40% of its exports.

...IS FAST TURNING

MORE COSMOPOLITAN

Aguascalientes is one of several Spanish colonial cities in north-central Mexico that thrived on silver mining from the 16th to the 18th centuries. Nowadays, the city's population of 600,000 more than doubles each spring, as visitors from around the country flock to its San Marcos fair, the biggest in all of Mexico. For three weeks in April and May, the city is transformed--with bullfights, cockfights, rodeos, and fireworks.

Aguascalientes inhabitants are proud of their traditional fair. But they're also proud of the new Kmart, Price Club de Mexico, and Sam's Wholesale Club stores under construction, and they flock on weekends to movies at a Cinemark multiplex that opened in April. They can munch on American burgers or visit several of the Japanese restaurants that have sprung up, thanks to Nissan.

Like much of Mexico, Aguascalientes is caught up in rapid change. Just how rapid is demonstrated by a state official, who pauses at a stoplight to plug his laptop computer into his cellular phone to call up data. "We can't afford to fall behind," he says. "There are lots of other countries out there chasing the same investment dollars we are."EDITED BY JOHN E. PLUENNEKE By Geri Smith in Aguascalientes


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