International exports seen as key to Arizona’s economic future
TEMPE – Blades turned out by JWB Manufacturing wind up in wire cutters and strippers, carpentry tools and precision machinery.
Many of its products head to buyers in the Mexican state of Sonora as well as 11 other countries beyond the U.S., accounting for about 40 percent of owner Jeff Barth’s business.
Barth sees international trade, particularly with Mexico, growing for Arizona firms in coming years.
“The opportunities in Mexico are going to continue to come, and if we aren’t on board, building relationships, they will pass us by,” he said.
According to the International Trade Administration, part of the U.S. Department of Commerce, Arizona’s exports of merchandise to Mexico totaled $19.4 billion in 2013. That makes Arizona the nation’s fifth-largest exporter to Mexico, trailing only Texas, California, Michigan and Illinois.
About a third of Arizona’s exports to Mexico are machinery, computer and electronic products, electrical equipment and appliances, and about a quarter of manufacturing jobs in the state depend on exports, the agency said.
Eric Nielsen, Arizona director for the U.S. Commercial Service, the trade promotion arm of the International Trade Administration, notes that Mexico is projected to have the world’s fifth-largest economy by 2050 and that the U.S. already enjoys a productive trade relationship with its neighbor to the south.
“Mexico’s got quite the future ahead,” he said.
To Phoenix Mayor Greg Stanton, international trade is a key to expanding his city’s economy. He featured it in his State of the City address earlier this year.
“Phoenix will double exports to Mexico in the next five years, and we will double our exports across the globe in the next 10 years,” he said.
Stanton has already attempted to form relationships in Mexico by leading eight trade missions since taking office in 2011.
He’s expanding on those efforts by developing a partnership between Phoenix and the state to open a trade office in Mexico City within the next few months. City and state officials expect Mexico to open trade office in Phoenix by the end of the year.
In making trips to Hermosillo and Nogales, Sonora, to promote JWB Manufacturing, Barth said he’s learned the value of face time and relationships to Mexican business leaders.
“Building a relationship is more important in Mexico than it is building a relationship in the United States,” he said.
Hank Marshall, acting director of the city of Phoenix’s Economic Development Department, said increasing trade with Mexico will create jobs in Arizona by tapping into that nation’s growing economy, making the state more relevant and competitive in the global marketplace.
He noted that Mexico boasts a fast-growing base of technical skills and a growing middle class.
“Mexico is moving up on the food chain,” he said.
Arizona already operates a trade office in Hermosillo, Sonora, an area which the state already knows well, according to Marshall. Expanding Arizona’s reach to Mexico City will increase opportunities, he said.
“It’s where you go to forge relationships,” he said.
Todd Sanders, president and CEO of the Greater Phoenix Chamber of Commerce, said Mexico City is important because of the Fortune 500 companies based there.
“They’re huge,” he said. “That’s where the power center is.”
He noted that in order to double exports to Mexico, Phoenix will have to keep its focus on trade through efforts such as the Mexico City office.
Sanders said the payoff here is jobs and a diversified economy.
“It’s important we don’t take our eye off that ball,” he said.
He noted that it is especially necessary to focus on building relationships, especially after the closure of Arizona’s trade office in 2011, which he said eliminated a lot of opportunity.
Sanders said Arizona has faced challenges in its relationship with Mexico due to SB 1070, the harsh immigration law enacted in 2010. But the years since have seen improvement, he said, noting that his most recent trade mission was the first time since 2010 that no one mentioned the law.
“We’ve moved past that now, which is obviously a good thing for Arizona,” he said.