Doing Deals With Mexico

Transportation Summit: Trains, Planes, & Cars

Corrections or additions?

These stories by Kathleen McGinn Spring, Michele Alperin, and

David McDonough were prepared for the March 7, 2001 edition of U.S. 1

Newspaper. All rights reserved.

Different Leaders For Different Cultures

A high volume, low margin business needs to be intensely

focused on keeping costs down. A restaurant, for example, might

arrange

its salad bar so that high priced items are set in the middle,

creating

too great a stretch for less ambitious restaurant patrons, and

generates

greater profits. A life sciences business, on the other hand, needs

to think big and look toward the future. "We can’t save ourselves

to success," says Ben Dowell, vice president of the Center

for Leadership Development at Bristol-Myers Squibb.

Dowell, who spent much of the early part of his career working for

Pepsico, understands both types of business focus. And he knows that

each calls for a different kind of leader. He also knows that the

nature of a company’s product is not the only variable in determining

whether a certain individual will flourish in a leadership role there.

"In some companies, getting results is all that matters,"

Dowell says. In others — and he says his is such a company —

that attitude is a negative. "We want results," says Dowell,

"but getting results at any cost is not tolerated at Bristol-Myers

Squibb."

On Thursday, March 8, at 8:30 a.m. Dowell speaks on "Leaders

Developing

Leaders: Navigating Rough Waters" at the Princeton Chamber of

Commerce’s leadership seminar at the Nassau Club. Cost: $50. Call

609-520-1776.

Dowell holds a psychology degree from the University of Texas and

a PhD in industrial psychology from the University of Minnesota. He

joined Squibb a little over 12 years ago, just before it merged with

Bristol-Myers. He has been head of the Center for Leadership

Development

for five years. Before joining Squibb he worked in a number of

leadership

development and human resources roles for Pepsico and its

subsidiaries,

at one point spending 90 percent of his time traveling around the

world. "You see exotic places, but after a while, you just want

to be home," he says of that life. Now he lives in Lawrenceville

with his wife, Viki. Their daughter was married recently.

Leadership development centers like that at Bristol-Myers, which has

a staff of 18, are unusual in corporate America, Dowell says. And

while his company devotes a lot of resources to nurturing leaders,

he says the most important elements of the job are within the reach

of every business. The basics include:

Hire for your culture. In his chamber talk, Dowell plans

to discuss "the peer from Hell." At some point or other every

company has one — at least one. Dowell admits to hiring this

species

himself. And the problem nearly 100 percent of the time, he says,

does lie in the hiring. When he let a wildly unsuitable candidate

in the door, it was because he was so taken by the individual’s skill

that he neglected to look into the culture in which the person had

been working. "And he came from a pharmaceutical too," Dowell

says. The difference was that the candidate had been used to an

atmosphere

where "you were told what to do and you did it." Thus trained,

this particular "peer from Hell," failed to adapt to an

atmosphere

where initiative and personal judgment were valued.

Seek diversity. Bristol-Myers contains every sort of

diversity,

says Dowell. If the company finds it is missing a slice of the human

spectrum, he says, "we get it." Illustrating why he thinks

a diverse company covers every leadership base, Dowell talks about

a neighborhood birthday party he attended last week. "We were

playing a game — unscrambling words, matching faces and

names."

For each task, there was one person who made the greatest

contribution,

but no one made the most valuable contribution to more than one task.

Give continual feedback. "You don’t have to spend

money," Dowell says. "If you want a leader, ask him to lead,

and then give feedback and coaching." It’s the bicycle principle,

he says. All the workshops and classroom instruction in the world

won’t produce a great bicyclist, or even an adequate bicyclist. It’s

essential to get on a bike. And fall off. And try again. The same

thing goes for leadership. "You won’t be CEO of a $20 billion

corporation the first day," he says. "It’s a gradual

process."

At Bristol-Myers, performance partnerships have largely replaced

evaluations,

Dowell says. The goal has shifted from evaluating past performance

to encouraging strong future performance. Supervisors are to give

their charges feedback every single day, recognizing positive

performance

and pointing out areas for improvement.

It’s important for leaders in every organization to "create

a picture of where you’re trying to take things," Dowell says.

And that’s true whether the priority is to cut down on peeled shrimp

consumption at the salad bar or to be the first to find a cure for

cancer.

— Kathleen McGinn Spring

Top Of Page
Doing Deals With Mexico

Mexico, our next-door neighbor and NAFTA partner, serves

New Jersey businesses as both an export market and a production site.

To establish a foreign presence, a company usually begins by finding

an agent, then acquires a warehouse, moves on to contract

manufacturing

with a local firm, and finally builds its own plant. This process

takes three to four years with most countries, giving a business time

to feel its way. But in Mexico things move much faster. Businesses

quickly become aware of the advantages of doing business with Mexico

and move quickly.

Raul Gonzalez, deputy trade commissioner at the Trade Commission

of Mexico in New York, Beatrice Prati, partner at Feltman,

Karesh,

Major & Farbman, and Jonathan Plimpton of Church & Dwight speak

at International Business over Breakfast on Thursday, March 8, at

8 a.m. at Mercer County Community College’s Center for Global

Business.

Keld Hansen, the center’s director, will moderate the

discussion.

Call 609-586-4800, ext. 3639 or E-mail hansenk@mccc.edu.

The advantages Mexico offers to New Jersey businesses include a

contiguous

location and significantly lower labor costs. "In Mexico, there

is such a dramatic difference in labor costs, it quickly makes

financial

sense to establish your own plants," says Hansen. "You pay

less for a day’s work in Mexico than for an hour’s work here."

Another advantage is the absence of tariffs. The main purpose of the

1994 NAFTA agreement was to lower tariffs among the three signers:

Mexico, the United States, and Canada. Today Mexico is a partner in

10 free trade agreements covering 31 countries. Before these

agreements

came into force, manufacturers in Mexico had to figure an additional

20 to 30 percent in product costs for customs duties. With the

reduction

of tariffs, exporting and importing between signatories is far easier.

"Exports to Mexico from New Jersey, in dollars, have doubled since

1994," says Hansen.

To certify to the U.S. and Canadian governments that an export was

indeed produced in a NAFTA region, companies operating in Mexico must

obtain a certificate of origin from Mexico’s Ministry of the Economy.

For a product to be certified, a specified percentage of total product

costs, including labor and raw materials, must be incurred in Mexico.

The percentage varies by economic sector. When importing industrial

goods into Mexico from a country that is not a free trade partner,

a company pays customs duties for importing, but the Mexican

government

returns the import duties if the Mexican firm exports the product

to a free trade partner.

State governments in Mexico offer varying incentives for industrial

investment. In Guadalajara, in the Mexican state of Jalisco, which

is a center for the Mexican electronics industry, the state government

pays for training of electronics employees for a period of time. Some

states provide land for building a factory. Others offer access to

risk capital through development banks or tax incentives to help

establish

new industrial plants.

Despite the advantages of establishing a presence in Mexico,

businesses

need to proceed carefully:

Weigh Mexico’s economic conditions. Reviewing economic

conditions is an important first step in deciding whether to import

or invest. Gonzalez says that Mexico is now in a very good place

economically,

"because we have had a democratic election, and the transition

team has done a good job with the economic area." He foresees

no economic problems and says that exports are growing. Talking about

the potential impact on Mexico of a slowing U.S. economy, he explains

that Mexico’s free trade agreements release it from dependence on

the United States. "We are exporting and taking advantage of free

trade agreements to diversify," says Gonzalez. "We are making

an effort not to be dependent on only one economy."

Hire an intermediary. Working with a local consultant

to ease the way through the procedures required by the Mexican

bureaucracy

is a good idea, though Gonzales says the Mexican government is trying

to expedite the business processes.

Select a geographical area where your industry is already

concentrated . Once it decides to invest in Mexico, a business

should

locate a new plant in an existing industrial center in order to take

advantage of the existing network of suppliers and ensure that the

area has the necessary infrastructure for characteristic industrial

processes. For example, for the textile and apparel sector, there

must be sufficient water available for getting the dye into the

fabric.

The states of Puebla and Tlaxcala offer plentiful water resources

as well as networks of suppliers.

Make use of the Internet. Use websites to gather

information

about municipalities (www.inegi.gob.mx), business enterprises

(www.secofi-siem.gob.mx),

the Economic Information Bank

(www.dgcnesyp.inegi.gob.mx/bie.html-ssi),

the competitiveness of each state (www.itesm.mx), manufacturing

(www.canacintra.org.mx),

and foreign investment guidelines and industrial costs

(www.bancomext.com).

Gonzalez earned his bachelor’s degree in international affairs

at the National Autonomous University of Mexico. He has also studied

international finance, international negotiation, and economics. In

1989 he joined the Foreign Trade Bank of Mexico, where he worked as

assistant to the president of foreign trade promotion and helped

design

strategies to help Mexican exporters access different markets. He

was appointed deputy trade commissioner of Mexico in New York in 1998

and is currently responsible for attracting foreign investment into

Mexico as well as overseeing the textile and apparel, leather, and

pharmaceutical products sectors.

Once a business establishes itself in Mexico, as in any foreign

country,

it will encounter cultural differences. Gonzalez tells of businesses

lunches where representatives of different companies may spend two

to three hours negotiating in a restaurant. But long lunches may be

a small price to pay to get a piece of New Jersey’s exports to Mexico,

which in 1999 totaled $913 million.

— Michele Alperin

Top Of Page
Transportation Summit: Trains, Planes, & Cars

The teleconference has become old-fashioned now that

the virtual conference is a reality. For the first time in its

history,

the American Society for Public Administration is offering virtual

attendance to its three-day 62nd National Conference, beginning on

Saturday, March 10, at the Rutgers campus in Newark.

"For those who want the knowledge, but not the travel," the

conference brochure states, "the 25 best papers presented will

be available on-line, as well as highlights of the main conference

events and any-time participation 24 hours a day for a two-week period

during and after the conference."

The ability to tune in without traveling has its irony, for one of

the key sessions of the Conference will have as its subject

"Transportation

Policy and Administration in the New Century," moderated by

Jeremy

F. Plant, professor of Public Administration & Public Policy at

Penn State in Harrisburg.

"I’ll be kind of the swing man," says Plant. "Three people

are giving papers; I’m preparing a talk entitled `The big questions

of transportation policy’."

So what are those big questions? "One issue is that we are moving

from a focus in transportation on building capacity to more of a

performance

orientation. Mobility is still the obvious performance criteria but

economic efficiency and contributions to rational land use have become

real considerations, rather than just counting up the number of roads

we build or rail lines or bridges we build. In that sense, things

are going well. Economists who tally up the aggregate costs of

transportation

as a cost item in the economy have said that costs are going down

a little bit."

Plant also identifies other areas of discussion for the conference:

What is the effectiveness of the trucking industry?

"That

leads to questions about competition, not just between modes of

transportation,

but between different uses of the same mode, such as between truckers

and commuters. The whole `just in time delivery angle’ of American

industry has changed trucking quite a bit. Lots of times they’re

competing

for space with commuters, because they have the same goal. It used

to be that the trucks could show up in the middle of the night and

get out of everyone’s way. Now trucks are our moving warehouses, which

has contributed to a lot of efficiency but has had secondary effects."

What is the railroad’s place in freight hauling? "I’m

a railroad buff, but the railroads show an inability to change old

management practices, and they just don’t seem to be doing as well.

They had a great run in the early 1990s and everyone in the investment

world thought it would continue to be strong. But the break-up of

Conrail has led, at least in the east, to lower stock prices, and

in turn, less capital to do things.

"Really, truckers are the ones that can do everything now and

the railroads are going to be the specialists’ group; it’s the

opposite

of the 1940s when the railroads were the prime haulers. If you look

at the configuration of the railroad industry, it clearly hasn’t

shaken

out yet. Everyone thought for a long time that eventually there would

be two competitive national rail systems but then, after NAFTA, the

Canadian railroads became very active in North America. Canadian

National

has particularly become a big player, and Canadian Pacific is the

largest rail user of Philadelphia."

Where is passenger service headed? "AMTRAK is on

probation

right now. Clearly, we’re not going to abandon the Northeast corridor.

If AMTRAK can’t make a go of it, someone else will. It’s very

difficult

to see success except for a few corridors in passenger service. I

don’t know why. It’s not for lack of use. There have been a few

success

stories. The new corridor service to Boston is quite successful. But

people don’t seem to use railroads for long-haul passenger service

the way they did in the ’30s and ’40s, what with airplanes and with

interstate highways."

What about air travel? "The whole question of airport

expansion, that’s another big area. If you look at improvement in

that area since 1960 in the United States, it’s pretty bad. We just

have not kept up. It raises issues of environment, land use, and

quality

of life issues."

What can we do about highways in areas like the Princeton

corridor? "One question would be, is there a market for toll

roads that would help pay for use in high growth areas? The issue

that has gotten the most attention in the last quarter century or

so is somehow trying to figure out how we can make the suburbs more

livable — what will lead to reduced traffic congestion and greater

highway safety. Every time you enhance capacity of transportation,

you accelerate the process of suburbanization."

What about light rail? "People are certainly looking

at light rail as an alternative. We went from the late ’20s to the

early ’60s without building any significant urban rail system. Since

then, we’ve seen a resurrection of light rail. They are easy to build

efficiently, often on an existing right of way, and require much less

equipment than heavy rail systems. Pittsburgh hopes to fund a trial

rail using the magnetic levitation system."

Is there a transportation system model that we in the

United

States should be looking at? "A lot of people are looking more

at Europe, and the developed areas of the Far East to see what has

worked there that we could incorporate. The general affluence of

postwar

Europe, and their concern with making livable communities and small

distances has led to a lot of innovation. Germany has explored

dedicated

bike and pedestrian paths in trying to make urban areas almost

auto-free.

Of course, it’s hard to see that working in Philadelphia…We ‘re

still stuck with the car."

Any predictions for the future? "I think we will see

some political changes. The last Federal surface transportation bill

(the 1998 Transportation Efficiency Act for the 21st Century) was

one of the great last true pork barrel bills, very heavily

Congressionally

directed by Pennsylvania congressman Bud Shuster, chairman of the

Transportation and Infrastructure committee." (The Almanac of

American Politics 2000 notes: "Members who went along with him

got $15 million in projects for their districts, more in the case

of committee members; those who didn’t go along got little or

nothing.")

Continues Plant: "You are going to see public policy focus on

how states can work with metropolitan planning organizations to bring

transportation more and more into environmental and land use type

of issues. I’m somewhat optimistic that we can move fairly rationally

towards seeing that transportation is a means, not an end within

itself.

But it’s not going to be easy. The arithmetic is simple: we’re not

building roads any more and yet every year we have far more cars

registered

and significant increase in truck traffic. People commute longer

distances,

the population is increasing. Something has to give."

— David McDonough


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