The Environmental Technologies Initiative in Mexico: building a competitive edge for U.S. industry

Business America, April, 1996 by Eric Fredell

It's been two years in the making, required herculean efforts at coordination within the U.S. Government, and had to weather a major currency devaluation, but the Environmental Technology Initiative in Mexico has emerged as a flagship program for U.S. ET firms and it is beginning to show results.

The Initiative was launched less than two years ago with two key actions:

* In July 1994, the U.S. Commercial Service placed Sean Kelley, a commercial officer dedicated to the environmental technology sector, in the Embassy in Mexico City. This was the first time such a specialist was appointed.

* In October 1994, the Environmental Trade Working Group (ETWG) released its Environmental Technologies Export Market Plan for Mexico, also a first. The Plan provides an overview of the market, a review of key players, an analysis of the competition, and information on government resources.

These two actions provided U.S. environmental technology firms with two critical resources that had been lacking in the market and the tools needed to navigate the Mexican bureaucracy, identify real opportunities, and to compete for those opportunities.

However, only months after launching the Mexico Initiative, the peso devaluation of December 1994 drastically altered market conditions there. Responding to the new situation, the Commerce Department worked with industry to develop new initiatives focused on positioning U.S. firms for the market's eventual return. These initiatives complemented ongoing activities, such as market research, trade missions, and training.

Targeting the Water and Wastewater Market

For example, with U.S. firms struggling to maintain a competitive foothold in the water sector, Commerce organized a three-day workshop focused on Water Utility Revenue Management and Compliance in September 1995. More than 20 Mexican municipalities and 25 U.S. companies participated in the event.

The workshop focused on building contacts and relation ships and sharing information to help position U.S. firms to win future business opportunities. The workshop also focused on developing strategies for managing water resources more effectively at the municipal level by applying U.S. technologies.

The event included a half-day session on financing issues to help firms and municipalities understand how they can work together to finance-water and wastewater projects. U.S. firms and the Mexican municipalities responded positively to the event and many firms indicated that the workshop produced solid leads for follow-up.

A second initiative, also launched to fill a gap identified by U.S. environmental firms, focused on the complex area of financing (see related article, page 33). The study assesses the various financial resources that are available to U.S. environmental firms operating in Mexico, identifies key hurdles that affect financing opportunities, and provides strategies for overcoming those hurdles. The study is accompanied by a Financing Handbook that identifies specific sources of capital financing and provides key information to help guide U.S. firms to appropriate financing resources.

Finally, the International Trade Administration's Office of Environmental Technologies Exports sponsored three workshops for U.S. firms on how to do business with the Border Environment Cooperation Commission (BECC) and the North American Development Bank (NADBank). The two institutions were created in 1994 to develop environmental infrastructure in the U.S.

Mexico border region. The workshops--held in Texas, Arizona, and California--were designed to introduce U.S. firms to the institutions, environmental needs in the border region, and procedures for preparing project proposals. More than 100 firms participated in the first three workshops.

Market Research

The Commercial Service conducted extensive market research in 1995 on key segments of the Mexican environmental market. This research has been especially important and timely as U.S. firms have been forced to revise their Mexico strategies in light of the peso devaluation. These studies are now available on the National Trade Data Bank.

In conjunction with the Water Utility Revenue Management and Compliance workshop and the Ecologia Trade Exhibition (November 1995), the U.S. Commercial Service in Mexico has commissioned a study of environmental opportunities among 12 Mexican municipalities, and a second study of selected municipalities along the border. This research will also provide insights into the procurement process to help U.S. firms bidding on municipal-level projects.

Public-Private Partnerships

The Department of Commerce has supported U.S. exporters in Mexico by creating public-private partnerships, where the government and the private sector work together to achieve mutual economic, environmental, and technology goals.

Under the International Trade Administration's Market Development Cooperator Program, the Commerce Department is working with the International Environmental Business and Technology Institute of Boston to create an on-line information service--Enviro Tech On-Line--which will provide firms with extensive information on: the Mexican environmental market, including trends and regulations; U.S. environmental companies, their products and services designed to help match environmental problems with technology solutions; and project opportunities.