Businesses in Cochise County and Southern Arizona have the opportunity to boost profits by exporting to the maquiladoras of Mexico, but many don’t know how to get started.

In an effort to boost export sales in Arizona, the U.S. Commercial Service, part of the U.S. Department of Commerce, took 50 business owners and sales agents down to Nogales, Sonora, on Tuesday and gave them a primer in how to sell to the maquiladoras of Mexico.

A maquiladora, or maquila, is a manufacturing factory that imports materials and equipment on a duty-free basis for assembly or manufacturing and then re-exports the assembled product usually back to the country of origin.

According to Fernando Sandoval of Bordertec Inc. and an external consultant of the U.S. Department of Commerce, the 243 maquilas in Sonora alone purchase approximately $2 billion worth of components and raw materials every year.

“There are major opportunities to export products to these companies,” Sandoval said.

Craig Collins, a senior account manager with DRG Technologies in Safford, Ariz., found those opportunities and ran with them.

“We had been in business for more than 20 years and have never had anyone bring business from Nogales up to us, so we were going to have to go get it ourselves,” Collins said.

Collins also said while it helps to learn Spanish, it isn’t necessarily a prerequisite to doing business in Sonora.

“I had an engineer tell me he would like it more if he could practice his English on me than for me to practice my Spanish on him,” he said. “When they learn English they can move up in their company.”

Since beginning his sales calls to Mexico, Collins said he is making four times what he used to.

“Sonora’s maquiladora sector is a strong target for Arizona businesses because it’s part of the broader Mexican export-oriented manufacturing sector,” said Eric Nielsen, director of the Arizona U.S. Export Assistance Center. “It is the single largest industrial market in Latin America.”
To get started in doing business in Mexico a businessperson must be cleared with Mexican immigration.

The long and short of it is an FM-3 visa. This visa enables a person to go back and forth between countries for one year and is renewable annually four times. The FM-3 visa is required in Mexico to sign legally binding contracts or open bank accounts.

An FM-3 visa costs around $220 for the initial application and a little less than $200 per renewal.

Taking the group through the process a shipment would travel, the first stop was at the Mexican Customs office.

Alberto Gomez Bravo, director of customs for the City of Nogales, Sonora, gave the group a tour of the facility and explained the process shipments go through.

“All merchandise from the U.S. is first scanned by a gamma ray machine to certify that what you declare you have is actually in the truck,” said Gomez with Sandoval interpreting. “This is also to prevent weapons from coming into the country.”

The shipping paperwork is scanned and confirmed through the home office in Mexico City. That information is then kept on file with the home office for 10 years. The main office will transmit back an all clear on the initial paperwork. At that point, customs officials will conduct a random search of trucks.

“For the first random selection, around 10 percent of all trucks coming in will be searched,” Gomez said. “Of those searched, 10 percent will be searched again by an independent third party contractor. This is to give everything more credibility.”

Gomez noted that if your shipment gets the green light, you will be through customs in a matter of minutes. If it gets a red light, the shipment could be held up for as much as three hours.

Shipments containing shoes, clothing, food, toys and some chemicals are more likely to be searched than others Gomez said.

It is also important to keep in mind shipments going into Mexico from the United States must change trucks if the shipment is going beyond 21 kilometers (13 miles) of the border.

“The box trailer may go further into Mexico, but the truck must change,” Gomez said. “So you don’t need to unload the entire shipment and load it onto another trailer.”

However, Gomez said shipments destined to go to maquiladoras are less likely to be checked, and the process is usually much simpler and quicker.
All raw materials, parts and machinery are imported into Mexico on a temporary basis duty free for up to 18 months. This can be renewed indefinitely for machinery; raw materials and parts must leave the country as finished goods on a first-in, first-out basis during the 18-month period.

It may be easier to sell and export products to a shelter company than to individual maquiladoras.

A shelter program is a contractual relationship that gives an outside company the ability to establish its own operation in Mexico quickly and efficiently.

The shelter provider is a company that is an established, legal and working identity in Mexico. The provider takes in a client under its umbrella, gets it started quickly without the hassles associated in starting an operation.
“We currently have 24 clients under our shelter program,” said Richard Rubin, co-owner of Javid LLC.

“People really are surprised when they come down and see what there is in Mexico. Most people just think it is a third-world country, which some areas may be, but the plants are state of the art and the level of cleanliness and sophistication cannot be understated.”