On the Road
>>We’re underappreciating our neighbor to the west. Just trying to get to Mexico from Sarasota makes it clear why this bustling market of 103 million dropped to No. 11 on the list of Florida’s trade partners in the first quarter of this year. Even though the Mexican-born population of Sarasota-Bradenton is closing in on the 10 percent mark, I had to fly 550 miles north to Charlotte, N.C., before heading south again on a nonstop flight to Mexico City.
>>Our white-spot-on-the-map problem with Mexico starts with the fact that we have no clue even about the people who live just blocks away from us. One example: Until recently, I had never heard of Nahuatzen. But it just happens that a cluster of at least a few hundred people in Sarasota hail from that town of 25,000 in the chilly highlands of the central state of Michoacán.
Why should we care?
Trade and investment starts with people. Granted, the people who leave Nahuatzen to work in Florida are carpenters, furniture makers and cattle handlers, not MBAs and venture investors. And this agriculture-based town founded by Chichimeca Indians centuries ago—one-third of the population speaks Nahuatl—isn’t exactly prosperous. Women outnumber men because many fathers and sons toil in the big cities or the United States. One in every 10 households receives remittance payments from family members in the United States. Corn, wheat and potatoes are being grown on tiny, steep plots—all of which has been reduced to subsistence level as cheap U.S. and Canadian imports are putting small farmers out of business. The biggest local employer, the Tanin Iretécha S.A. solid waste recycling plant, provides 200 jobs. Twenty percent of households don’t have running water, none have drainage, and although there are public primary and secondary schools in town, half of the adult population hasn’t finished elementary school.
But Nahuatzen, not far from famous Lake Patzcuaro, is a gorgeous place yet to be discovered by outsiders. While not used to visiting gringos, the people are extremely friendly and eager to improve their lot. Nahuatzen, located at an altitude of 6,000 to 9,000 feet, translates as “the place where it freezes.” You’ll never forget the magical mist over the pine forest of Mount Guaxán. The rustic perfume of fresh air mixed with wood fire stays engraved in your memory, as does the hearty local food. Trekking in the volcanic highlands is a thrill. And while you’re in Nahuatzen, check out some of the artisans who make beautiful wood furniture and textiles.
Just be aware that there’s only one guesthouse whose major luxury is intermittently available hot water. The only way to get there is by second-class bus from Patzcuaro or from Mexico’s avocado capital, Uruapan. So if you want to leave the beaten track during your next Mexico trip, don’t expect creature comfort. Talk to locals before you go. I’d be happy to put you in touch with people who live right here in Sarasota.
>>Then there’s the hyperactive urban, industrial Mexico.
The Big Monster that is Mexico City has put on a gentler face since the late 1990s. Spending a Sunday in the capital during rainy season gives you the illusion that the 16 million population giant has lost some of its ugliest traits. Catalytic converters, a First World public transportation system and the shutdown of an oil refinery have had some impact on air quality. In the morning and after rain showers, you can now gaze at the distant snowcaps of mounts Iztaccihuatl and Popocatépetl through only a slight haze. On Sundays, the majestic Paseo de la Reforma is full of bicyclists and pedestrians, as hundreds of cops and civilian city employees make sure cars won’t go there and—gasp—scold drivers who block pedestrian and bicycle crossings. Street vendors on the usually overcrowded sidewalks are few and far between on weekends. And Sunday morning subway tickets still cost only the equivalent of 20 cents a pop.
>>It looks like the Chinese competition is knocking out northern Mexico’s sprawling, barely two decades old maquiladora industry—those duty- and tariff-free factories on the Mexican-U.S. border. Nobody is really mourning the industry’s premature death; these outbound-only manufacturing plants pay miserable wages and contribute preciously little lasting to the local economy. The north-central city of Aguascalientes, for example, lost half of its maquiladora manufacturers over the past five years, without witnessing a major drop in activity. But it seems local economic developers are able to successfully replace maquiladora jobs with tourism and call centers.
At the same time, NAFTA continues to turn Mexico into Detroit South. A ride along Mexico’s main industrial corridor from the capital north is even more impressive than a decade ago: The cream of the crop of multinational corporations all have cutting-edge plants here. We’re talking about full-blown manufacturing plants, most of which require a network of just-in-time suppliers set up nearby.
Some of the north-central states and cities have made big strides since my last visits. Querétaro, Guanajuato, Aguascalientes and Guadalajara show signs of middle-class prosperity, thanks to manufacturing, tourism and the inflow of remittance dollars from Mexicans working in the United States. Modest, suburban townhome-style developments are sprouting on the hills surrounding most of these cities. BMWs, Hummers, Mercedes and Jaguars now abound in the big cities.
“I know politics are pretty crazy, narcos are all over the place, and corruption is everywhere,” an executive of a large German heavy-equipment manufacturer told me. “But business in Mexico is better than ever.”
>>While some Mexican states and cities are making big strides and investing in infrastructure, the laissez-faire federal government often looks like a deadbeat dad. Even the World Bank is scolding the Mexican government for not spending enough on infrastructure. It’s not primarily for lack of funds. First and foremost, the free-market governments of the past two decades have been dead-set to shrink the state and hand major functions over to large corporations. This leaves big voids in Mexicans’ lives.
One example: Getting from Mexico City to Querétaro, a charming colonial city and dynamic industrial center just 130 miles to the north, still takes a three-hour bus ride with one of three or four major bus companies owned by large Mexican holding companies. Most experts agree that a network of fast commuter trains to nearby cities could help Mexico shrink the hydrocephalus that is its capital. The sad reality is, in a matter of months and with little investment, the state could start offering passenger service that would cut the ride to one-and-half hours. But such a project was almost completed and then mothballed seven years ago, a victim of fundamentalist market-only and surplus-budget policies. Just before the national railroad company was privatized a decade ago, construction on a new railroad station had begun in Mexico City; the tracks were improved to allow speeds of up to 120 miles per hour, and electric posts were set up all the way to Querétaro. Yet all that’s running on those fine tracks today are slow, rumbling cargo trains and diesel engines operated by a subsidiary of Kansas City Southern Industries, which has no interest whatsoever in shuttling people. The bus companies rejected a government offer to get into the passenger rail business.
>>Most Mexicans see politics and elections as a game rigged by the wealthy and powerful few. It’s not difficult even for a visitor to stumble upon all kinds of corruption. There’s the owner of the license and car of our taxi driver in Querétaro, for instance. According to the driver, the retired freestyle wrestler received 10 taxi licenses from a local politician for some favor. All the wrestler had to do to secure a cozy, low-risk existence was buy 10 cars and charge his driver-contractors $40 a day. Within not much more than one year his investment paid off, almost all the revenues beyond that is sheer profit.
Not surprisingly, in such an environment you find all kinds of political mobilizations, ranging from striking teachers and Social Security workers to relocated street vendors and supporters of a left-wing presidential candidate who says the 2006 election was stolen from him.
While Outside In toured Mexico, protesters in southern Oaxaca were throwing rocks at riot cops and torched vehicles and a hotel; days before the rioting, someone blew up three gas pipelines in central Mexico. It’s safe to say that the Mexican public rejects such acts. At the same time, though, you don’t have to dig deep to find understanding for citizens running amok.
>>During a relaxing two-day stopover in San Miguel de Allende, Outside In was hosted by a dear friend from Sarasota. Mary Elmendorf, retired anthropologist, CARE executive, World Bank consultant and widow of John Elmendorf (the first president of New College), is an institution in San Miguel. She first came to the central Mexican town in 1941, leading a group of prep school art students from New England eager to learn from famous Mexican muralists and the skilled craftspeople in town. When she returned a year later, she spent $50 to buy a modest cottage on a steep slope just outside the town gates, which she has since expanded to a charming three-floor labyrinth. Mary’s “treehouse,” her haunt during Sarasota’s hot summer months, is now surrounded by posh colonial-style mansions.
For some reason, you find one of the best selections of Cuban cigars and rum in San Miguel, the town with the highest gringo density anywhere in Mexico. This colonial-style artist city is going real estate nuts, even though there’s no international airport or significant body of water nearby. Now that foreigners are allowed to hold title to Mexican real estate, U.S. mortgage companies are getting into the act.
>>Talking about dynamic Mexico: cement giant Cementos Mexicanos SA de CV, also known as Cemex, is taking advantage of a dip in U.S. construction to become the world’s largest construction supply company. After nine months of negotiations, the Monterrey-based corporation got a deal to take over more than 90 percent of Australian competitor Rinker for $14.2 billion. This brings some movement into Florida’s cement market. In April, the U.S. Justice Department told Cemex it must sell 39 Rinker facilities in Florida and Arizona to a single buyer if it wants to proceed with a takeover. Whoever the buyer is, it will become an option for builders in Sarasota-Bradenton.
Johannes Werner is a Sarasota-based business journalist who has worked in Europe, Mexico, the Caribbean and the United States. He is the editor of Cuba Trade & Investment News and hosts the Florida-Caribe radio show on WSLR 96.5 FM.