Joshua Ford
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Abstract
This interview with Joshua Ford focuses on his personal two-year experience living and working in Mexico City. The interview explores Ford's work through the Fulbright scholarship, where he assisted Mexican entrepreneurs through Endeavor, a company that serves to connect Mexican entrepreneurs with powerful business mentors from across Mexico and the United States. Through the interview, Brandt continually questions what Ford found and believes to be necessary for Mexican entrepreneurs and start-ups to be successful. Through the lens of The North American Free Trade Agreement (NAFTA), the interviewer, Eric Brandt, attempts to figure out where and how Mexico could move beyond its industrial independence on the United States for jobs, and how Mexico could further promote local businesses to create in-house jobs to employ Mexican labor under Mexican management. Also, by examining NAFTA through an economical, entrepreneurial lens, Ford appeared to maintain a relatively positive opinion and outlook concerning NAFTA’s original goals and to-date accomplishments. Interestingly, Ford seemed to support Mexico's involvement in NAFTA, and even mentions that he believes NAFTA benefits Mexico more than it benefits the United States. His biggest concern with NAFTA was the American labor loss of bargaining power, followed closely by labor concerns within Mexico, that he then expands upon by saying he believes the creation of numerous jobs in Mexico potentially positively outweighs the negative labor and exploitative wage consequences. Ford seemed very proud of the Mexican entrepreneurs using NAFTA to help themselves grow, and seemed to favor NAFTA’s ability to promote trade within the United States and Mexico for all parties, though especially for small businesses.R0685_Audio.mp3
Transcript
Eric Brandt: This is Eric Brandt recording Joshua Ford on my NAFTA Oral History Project. Josh if you could just introduce yourself and give a tiny bit of background on who you are and your experience with Mexico and NAFTA.
Josh Ford: Sure, so my name is Josh Ford, I went to Mexico for the first time in 2009 for a class trip and then went and did a Fulbright year there, which was last year, so the 2012-2013 academic year. I was working fulltime for an entrepreneurial accelerator there and taking MBA classes at the local business school in Mexico City. So I got to kind of see first hand the business world and the effects that NAFTA has on the business world there.
EB: So what specifically were you doing with this startup, and how did you get involved?
JF: Sure, so actually my Fulbright scholarship was created after NAFTA was signed and the idea—so it’s the only Fulbright scholarship that is for business people, that want to go and work for business. So there are some PhD programs that study in business, but this was the only one where you are actually working in a business. So you work full time for a company and the Fulbright sets up all these different companies. Some of them are American companies operating in Mexico, and some companies are [server handed me my food and brief inaudible sentence] Mexican companies that obviously are operating in Mexico. If you receive this Fulbright, they will kind of go through a matching process where you interview with ones that you are interested in and kind of rank which ones you like and which ones that like you. So I was just matched up with this accelerator, and the accelerator is actually a US based accelerator that operates in different emerging countries, and so Mexico was just one of those countries.
EB: Why were you so interested in Mexico going into this?
JF: I think for me, a lot of it really does have to do with NAFTA but Mexico is a phenomenal place that is very strategic to the US. You know politically obviously [server brings Josh his food “You guys enjoy your meal alright…” “Thank you” “… if you guys need anything my name is Maui, just let me know” “OK Great, thank you” is heard] so, you know being so close to the United States and sharing a border that is thousands of miles long… but also from a business point of view, it is a huge market that is growing, a middle class that is growing. So not only are they able to provide us with goods at cheaper prices, but they are also a very solid market for us to sell to. You know they have a lot of consumers now, and really any big company that is operating internationally has to be operating in Mexico.
EB: So I guess right from the beginning you mentioned [the program] was created by NAFTA. Could you see the American influence within Mexico City from all aspects, or where did you see almost the American business connection most clearly, so to speak?
JF: Ya I mean I think, you know obviously America is probably the dominant country in terms of business in the world. And so like I said really any big company that you can think of operates in Mexico and has a very large presence, and so for example… kind of just a weird fun fact—Mexicans consume more Coca-Cola products than anywhere in the world per capita, so especially in a city like Mexico City that is so big, there are parts when you definitely feel like you are in America. There are all the American brands, and you go to the mall and its all American restaurants and TGIF and McDonalds and all that stuff. And so I think that has definitely skyrocketed since NAFTA. I think some of those things were there, but I think NAFTA has really promoted that more.
EB: Feel free to eat too. Cool, so you mentioned that you stayed in Mexico City, did you have, was your experience focused only in Mexico City, or were you able to compare situations in more rural communities?
JF: Ya that’s a good question. So, I had the opportunity to travel a lot, more for my own benefit than for work. That was part of the cultural aspect of the Fulbright of trying to really understand the country and all its different areas. So I think Mexico City obviously is the most, has the biggest influence from American side, just because it’s the capital city. I think Monterrey, in the north, is definitely, its kind of the manufacturing area, so a lot of factories are there from American companies, a lot of car companies. Actually there has been a trend recently to move things back to Mexico from Japan or China, especially China really because those prices and gas prices have increased really, so getting those products back from China costs more money, and labor costs have gone up in China. So now it’s almost cheaper and easier to manage to bring that back to Mexico.
EB: Would you say that ability to move back to Mexico is kind of a direct result of NAFTA because without free trade perhaps these businesses couldn’t go back from Southeast Asia?
JF: Ya for sure. I think free trade definitely helps that and keeps you know taxes and stuff like that really low on these companies. And ya, I would say if something else other than NAFTA was in place we might not be seeing that. But I think it’s a good thing for companies and certainly for Mexico
EB: So I was going to ask, do you think it’s a good thing that NAFTA allows companies to come back to Mexico, instead of outsourcing to Southeast Asia? I guess from a Mexican standpoint and from an American standpoint?
JF: Ya I mean I think from a Mexican standpoint it certainly does, it creates a lot of jobs and decent paying jobs and helps grow that middle class that they are trying to grow. I think from an American perspective you know you really want those jobs in America and not Mexico, but I do think at least from a business perspective, you know if I’m running a company and I want to make sure quality assurance or if something goes wrong, it’s so much easier to get to Mexico and I can fly to Mexico for the day and come back at night and I can go very easily, than jump across the world and have a 15 hour flight and be in a completely different time zone. So from that point of view its much much easier to operate out of Mexico.
EB: Ok, what about, I guess almost staying within the Asia comparison vein, do you think bringing factories back to Mexico has a better labor conditions than keeping them in Asia or do you think both of them are comparatively pretty terrible?
JF: Ya, I mean I’m certainly not an expert in this at all, so I can’t really honestly tell you that. But I think what I can tell you, I mean it depends on the company and all that, but again I think that are more stringent regulations in Mexico, and again it’s easier for me to go and see my factory than being somewhere in China or wherever it is. So I do think it’s probably better for workers in that regard and definitely more manageable from a business side.
EB: I’ll slow down so you can eat—
JF: —No you’re fine. Also I think culturally Mexico is much closer to us culturally than an Asian country would be. That really makes things easier, you know you don’t really have a lot of, you’re not in a completely different world when you are there. There are certainly some differences culturally, but at least from my perspective, and being in Asia as well, they are much more minor, and it makes it a lot easier.
EB: So I guess speaking of the culture differences, I’m not completely sure on this, but would want to say— a company creates a new factory in Mexico that was previously only in the US, is it run by American management in Mexico or do they hire Mexican management to run the company or factory?
JF: Ya it really depends on the company. I think the general rule of thumb is that the person probably running the company or factory is going to be an American, or at least in the beginning is going to be an American while they transfer it over, or a Mexican with a lot of experience. I had, you know, had some contacts there that were Mexicans but had lived in the US. For example, one of my mentors was the CEO of IBM Mexico for a while, he’s retired now, and works as a professor now. But, he worked in the US for IBM for a long time, and kind of got sent back to Mexico to run it. So I think that’s another option. But generally all your other workers all the way down the line are going to be Mexican, or immigrants from other countries, but not American.
EB: And so, what is the benefit of hiring all Mexican workers in Mexico? Is it simply decreased labor costs or is there more to it?
JF: I think the biggest thing is decreased labor costs, you know comparatively to what the US is, and just the salary of wages are way lower. Probably some of the benefits are much lower and stuff like that. I think that’s really the primary area, the real benefit there.
EB: And because of NAFTA and these factories moving into Mexico, do you believe—again I’m not sure how experienced you are in this topic—but are these factories selling primarily back to the United States or are they reaching their fingertips out and selling into Mexican markets as well?
JF: Ya so it just depends on the company, all of them like I said… there is a very strong middle class now and a very strong wealthy class. You know your top 2 percent of Mexico now— the richest guy in the world is Mexican— so you have some people with real bargaining power. You know I remember when I was there, all of my coworkers had iPhones and IPads, so obviously things like that that are pretty expensive even here in the US, they are buying. I think what you don’t have is a mass market still because it’s still growing that middle class, but it’s growing and they still have millions of people in that market that can buy things. So I think you have both. It kind of depends on the products that you are making.
EB: So, I guess I’ll assume, from a GDP standpoint then, NAFTA and allowing these factories to go down to Mexico, hiring workers and creating more products and allowing more flow of cash, it seems like it’s relatively beneficial so to speak. If we put a scope on our vision and don’t look at the labor conditions, would you say over the past 10 years its done maybe what its hoped to do creating that inter-balance, or is it less appealing in reality than what it seems theoretically?
JF: No I think, that from a Mexican perspective it’s done a good job. I think if I was the president of Mexico I would certainly support this. I think it does increase GDP it brings businesses, it brings jobs, and I think that for the most part, again you said there are some labor issues in terms of that, but you know for them, so, well they can kind of crack down on that, and that’s what they should be doing—
EB: The government?
JF: The government, ya. I think sometimes what happens is the government is afraid to bite the hand that feeds it. So if they crack down on the labor and crack down too hard, they drive the companies out and you are gona have companies say, ‘you know what I just can't, I can't pour in this much money’ or ‘I can't allot to this safety standards or working conditions’, or whatever it is, and they will move to the next hot place. So we have seen that, companies do that, and it’s part of the reason they move out of China, the labor costs have increased and the move has been a little bit harder.
EB: Um, so what do you, I guess again I'm kind of touching on topics that you may not be as experienced in but that’s ok. What do you feel about the environmental consequences? So labor is one obviously, we see the labor dropping, and like we said they have to maintain, I guess you could think of it as a competitive advantage to other countries for these factories to be here. Do you think that the environmental and lack of regulation also plays into that as well? Cause that is something I’ve been a little concerned about with all these factories moving into unregulated Mexican areas.
JF: Ya for sure. Living In Mexico City for a year, it’s a horrific place for pollution. And its not all corporate pollution, you know it’s really old vehicles on the road, and the thing is they just have a different used car market then we do. They are much more creative with their cars, I mean they have environmental standards with new cars, but there’s just so many cars out there that people aren’t buying new cars. So you have cars that are 30 years old that have 30 year-old regulations on them that are crushing the environment. But you’re right you know, whenever you have a factory its going to lead to you know, I mean it doesn’t have to, but the cheap way to do it is its going to lead to pollution. Again its one of those things you want to crack down on, but you can't crack down too much because then they go to Honduras.
EB: So do you foresee I guess, we’ve mentioned, actually hit it a few times, going to different countries? Could you say that NAFTA keeps factories going to Mexico and creating labor for Mexico as opposed to creating other free trade agreements for other countries in Central America and South America? I'm not sure if that’s in the future for the American trade policy, but do you foresee America trying to strike a deal with Central and South American countries to try to expand this NAFTA benefit?
JF: Ya, I think the hard part is that for me at least I see it that, like we said its hard on the environmental stuff and labor conditions, but in terms of pure economics I think it’s a win for Mexico. I’m pretty convinced on that. In terms of whether it’s a win for America or not, I'm not sure. I do think that it would be beneficial that, and I'm sure—I’d be quite surprised if Honduras or Guatemala would not be interested in something like this from their point of view, I just don’t know if the US would be interested. And that’s not to say there are certainly benefits for the US as well, but I think it’s not as clear-cut, at least economically, the benefits for the US.
EB: What might negatives be of creating free trade?
JF: Well I think you lose protectionism of your own workforce [Some music in distance heard] you know if it’s all free trade and everything’s easy, then all the jobs are out of the United States cause your costs are just so much higher. That’s why I think especially within agriculture its just really really tough on folks in high agriculture areas like Florida, that are just being undercut by Mexican prices. That’s just a really tough you know, toss up there.
EB: So what sectors, you mentioned agriculture. What industrial sectors did you experience in Mexico City were most connected with America— agriculture specifically?
JF: No, I mean its definitely a big one, but certainly had a lot of industrial places like chemical things or cars essentially, a lot of really big car industries are there, some of them aren’t even all American. Like Volkswagen has a huge base there, but the thing is they are still selling to America. So they are from Germany, and it’s much easier to have a factory in Mexico to sell to their American consumers.
EB: So lets talk a little more about what you did specifically in Mexico. So what you did, if I understand correctly, helped new businesses grow and become a force in Mexico City.
JF: And not just Mexico, so essentially the way it works is— there is a selection process to be a part of the Endeavor, which is the company’s name’s portfolio. And the reason you want to be in the portfolio, a couple of reasons, one the brand name. So it’s like you are an Endeavor entrepreneur, so you are kind of like our good company, kind of like a quality check. The really smart business leaders have seen your company and believe in it, and its safe to invest in, and all that. The other thing is they gain access to really really top notch mentors. So the way it works, you apply; actually I was the first door they had to get through. I was the guy, I would say I think the company is growing or at a point of inflection. Most of our companies were newer but some were 25 year-old companies looking to change or get a new market.
EB: What type of metrics did you use to evaluate a company’s value?
JF: So we really looked at obviously their revenue, but really the changing of revenue over the last three years, and their predicted revenue for the next two, and how they were going to get there. So sometimes we saw companies that had 0 dollars in revenue, but would be 20 million in two years, that’s a really big jump. Or we would have a company worth 75 million dollars that had revenues of 75, and thought they may be able to double that in 2 years because they were going to enter Peru or Uruguay or something. And then I would have meeting with the entrepreneur and get a feel of who they are and if they would be open for feedback. Then they kind of enter our process. They would have 7 meetings with our mentors. And our mentors, we have a network of 200 mentors in Mexico, and not all in Mexico City, so mentors in different places, but the majority and headquarters is in Mexico City, the Mexican headquarters. And so, they would have an hour long meeting with these mentors, and the mentors would generally be people who were the top at their companies. So the CEO of Wal-Mart Mexico was one, or the CEO of Starbucks Mexico was another, or a top consultant at Bain Mexico, and so most of them, almost all of them were Mexican business owners. A lot were US educated or worked in the US, like the head of Google Mexico was one of ours. So he worked for Google in San Francisco for a while and then came and set up their office down in Mexico City. So you get access to these people. You give your pitch, go through what you are trying to do, and they would help and give advice. So it doesn’t matter what industry you are in, we had everything from mobile app developers, to shrimp farmers, to a constructing company, to a cement making company, to really anything you could think of. So I was kind of helping them along this process. Then what happened was they go to a selection panel, so we have like three or four national selection panels in Mexico where they go and present in front of judges and they have to get a unanimous yes vote to go to the international level. Then there are 5 or 6 global entrepreneurial selection panels. Again needing 100% yes votes. We don’t have a set number or limit, like 3 out of 5 get it—100% could get it if they are all great. And at the international level they are up against everyone from Turkey, Argentina, Brazil, wherever you could think really, are sending entrepreneurs, and if they get selected, then they become part of the Endeavor brand. So the good thing about that was I got to see a lot of different companies. A lot of my companies operated in a lot of different countries but were Mexican owned or primarily operated. Some of them even the entrepreneurs lived in the US. I had one who lived in San Diego and he had shrimp farms right underneath San Diego in Mexico. Another guy lived in San Francisco and Silicon Valley, but spent time between there and Mexico City and kind of had his mentors in Mexico.
EB: What’s the main benefit of working with Endeavor? Getting the brand recognition? Or do they provide investments and consulting advice?
JF: So they provide consulting advice, and then also, so we don’t invest in them. But a lot of the mentors are investors and so they would get really good access to people that they may not be able to get through sending an e-mail or a call or knocking on their door to get. And the other thing is that if you are selected at the global level, you actually become part of the portfolio they get through the mentors, that we kind of choose for them to have them sit on their board of directors. So then they are actually there for, for forever I guess, or until they don’t want to or something happens. Then you have all of a sudden, you start a company two years ago with a friend from high school and you have the CEO of Google Mexico telling you what to do in the mobile app realm, that is a really awesome thing. They can provide great advice and obviously have great contacts in the business world to kind of open up new avenues for you.
EB: How many different firms were you exposed to throughout your time there? Hundreds, or tens?
JF: Well I worked very closely with 36 throughout the year, but in terms of how many I saw when I was filtering that first round probably hundreds; 150 or so that I looked at and at least had the conversation with. But spoke to and went through the whole process with 36 of them, and got to know them very well and saw their whole business plans, the good things and bad things and everything in between.
EB: Did you find any repetitive processes or patterns that the successful firms had going for them in terms of management style or industry, or anything correlating between them?
JF: No I mean, [waiter at restaurant offering more chips/salsa] so in terms of patterns not really, obviously there were some that resembled each other, but there was nothing I saw that in the 36 companies that was the definite thing that was going to happen, or if it was a different strategy that was happening. But, one thing that they certainly thought about was that they always thought about expansion. Like no one that was really there said ‘I just want to be in Mexico’ sometimes the expansion was south into Latin America, but I think everyone at some point wanted to go to the US to sell.
EB: And why? Why did they want to expand?
JF: Well with expansion comes more money I think. The US especially has consumers and bigger spending power that can buy things, and that is kind of like, also from a buying point that is how you know you’ve made it from a business perspective. When you are operating in the United States, that’s how you know you really made it.
EB: I'm not sure if you could see an direct effects but do you think that maybe from some level NAFTA had given these companies any more, any stronger ability to come to America, or do you think that wasn’t even in the picture?
JF: Ya I don’t know. It was certainly something that they didn’t talk about. Maybe it has and we just don’t know. But I think definitely, for example, one of them was a shrimp farmer [waiter returning with salsa and chips]…. Ya so for example we had this shrimp farmer again, who actually lived in San Diego, was Mexican born and raised but lived in San Diego. Spent the majority of his day in Mexico, he would come over the border and go to his farms and stuff like that and then he sold his shrimp to the United States, he didn’t sell at all in Mexico. Part of that is that they were a growing company and so they are still growing their farms. They are selling all the shrimp they have essentially so they couldn’t expand more now until the farm expands. They looked at it as, ‘I can sell my shrimp for more money in the United States than I can in Mexico.’ Some of the supply chains are a little more established in the US so the hard part is because they are already established they already have sources where they get shrimp so you have to make it either cheaper or better in some way. But they would kind of deal with, you know, the big grocery store to do it all, like they were providing all the shrimp for this California chain and all their stores in California. You did have some, I think in that case thats definitely a big thing for NAFTA—it’s being grown in Mexico and owned by Mexican company, but being sold without tariff, duty free in the US.
EB: I guess that kind of, I wanted to transition into this topic at some point, but looking forward and overcoming—so what I foresee as a lot of the negatives of NAFTA is labor conditions and decreased wage and huge companies going into Mexico and using their labor and land and taking advantage of it. I'm curious about what a maybe solution would be and if you think from your experience the solution is the new and upcoming opportunities to create new jobs and domestic sourcing for the labor, or if that is too small scale? Or what do you see going forward in terms of how to attack the problem?
JF: Ya I mean it’s a great question. I think, I think sometimes its helpful to have local companies because they understand local concerns and are more invested in Mexico and it’s not just a purely economic relationship where I just use you and not come back. And I think, but like what you said or alluded to, it is a little small scale. I mean there are certainly companies that are huge there, but I don’t see them competing with like a General Electric or a Coca-Cola. They are not going to be that big I don’t think, maybe eventually, but there won’t be enough of them.
EB: But in terms of just, you are creating jobs but still its beneficial to—
JF: So ya I think its still beneficial for these guys to come in and provide jobs. When you look at like manufacturing they are taking in somewhat rural areas or going to small cities and really providing jobs to folks. So in terms of the other part of the question about how do we, what are some things we can do to kinds of mitigate some of the concerns, I have to say I think its mostly on, ok its two-fold.
It’s on the Mexican government to kind of crack down on that, again as I said it’s a slippery slope, you crack down too much and get too hard, and you lose the businesses. But you know we are talking about people’s lives here too, so it’s important. And I think the other part is that companies, one of the really good things about all the transparency and the internet and twitter and all this stuff it’s become so big in these developing countries, these emerging economies, is that it’s not as hard to get something out. So if there are atrocious conditions in a factory, all it takes is a tweet with a photo, and if someone has a couple followers someone can broadcast that to the world, and in a matter of seconds can have millions of people looking at it.
EB: And do you think public opinion influences anything? Do you think if people are [inaudible] and sharing it on their Facebook page it actually has impact?
JF: Ya I mean I think you know it’s how you go about it, sometimes it works really great sometimes it doesn’t work at all. It kind of depends on how terrible is it, what the offence is. I think generally people get more riled up about labor conditions than they would about environmental stuff. That they may not care all that much about pollution because its harder to see how its affecting people, but if people were getting their hands chopped off in factories or something like that that would be much more alarming for people to look at.
EB: I guess the tough question that follow that is, is it almost worth it to create jobs at the expense of poor labor conditions, or is this something that we would look at eliminating NAFTA because labor conditions are too bad that the creation of jobs is not worth it?
JF: Ya I don’t know, that’s the million dollar question, and I don’t know. Personally I don’t know how widespread the labor issues are. If it’s a rule of thumb, if American companies have horrible labor conditions, or is this one or two companies. So I guess I'm not as familiar with that and how widespread is the problem. But I think it’s who you are, you know who is the signing party. At some point some company can say ‘ya, we don’t have great labor conditions, but these folks were unemployed and jobless.’ So it may be tough and they may have to stand on their feet for 12 hours with no break, but at least they have food on the table now, and they didn’t have that before NAFTA came in. So there is a point to be made in that regard, to say that these companies are creating jobs. Some people look at these companies as exploiting workers but at the end of the day these workers have these jobs because they need to support their families and if there were other jobs they would take those. The fact is there aren’t other jobs for all people.
EB: Good point, so when I was in Mexico we saw a lot of these smaller cities, perhaps this is anecdotal but say with 300-500 residents that have nothing to do. The women and children, the men had emigrated to the United States, the women and children would feed their family and go to school and do nothing else. They tried to implement these small projects. In one of the places they had a worm farm they tried to grow which didn’t necessarily take off the ground at all, but do you think that smaller, I guess another question is, do you think smaller projects in smaller communities would help? Or is bringing in a large factory 20 miles away that could source jobs for all of these communities would be...? And again that’s a hard depending question—
JF: Ya its tough, it kind of depends on the company and how it works. I think in terms of labor conditions obviously a smaller company probably has a grasp on it a little better. But, ya so it’s really dependent on the situation, I think the hard part is that, you know if Coca-Cola decided to move into an area, or if General Motors decides to open a plant in Guanajuato, they are employing everybody, and everyone is going to have a job and it’s going to work out great in terms of that part. And so I think it’s a lot easier for a big company to come in and kinda like make a bigger splash in the water [some loud background noise from outside].
EB: So if we look into the future now, hypothetically now in 10 years when all these factories have moved into Mexico do you think that NAFTA and free trade will still be necessary to incentivize companies to come in? Or do you think that once they are already in, if you reinstate trade tariffs if they would stay? Or if they would just evacuate a say ‘sunk cost to the factory, forget about it,’ or would they try to make it work now that they invested millions of dollars?
JF: Ya it’s tricky, it’s kind of what we are seeing now even in this move from Asia to Mexico. They opened up factories in China, and they say ‘in the long term it’s better for me to come back here.’ So I think you have the exact same thing, with the trade situation, ‘how much am I gona get taxed on this?’ How much harder is it now, is it worth it to go to another country with a sunk cost and leave whatever I did, or should I stick it out a little bit longer? And the answer would be different by industry.
EB: Another question, maybe this is a little unrelated to what we were talking about before, but NAFTA encourages tons of industries to move into Mexico to create factories for jobs there, and yet at the exact same time we see increased numbers of immigration to the United States. Where do you think that plays in? If factories are going down and creating jobs, why is there the need to come to the United States, are they simply not creating enough? Or is the United States that illusion of a better life that has a bigger pull?
JF: Ya I mean I think, I still think that anywhere in the world where I’ve been, from Africa to Asia to Europe, not Europe as much, but any emerging area, like Latin America, the dream, and where you make it, is in America and the United States. You always have that kind of dream. It’s where you have hope and we still drive things culturally. I mean the movies of the world are from Hollywood; music of the world is from United States. And like McDonalds and Coca-Cola make these brands that operate in all these different countries. I do think that, I mean the other thing is that the wages are more in the United States if I work in a factory in Monterey Mexico, I would be making, and I have no idea what the prices are really, but lets say I make $3 and hour, in the states the least is $7.15, so you make double, more than double, I don’t know the actual numbers there, but I could work the same and get double and send that back. The thing that people forget is the cost of living is so much higher. So when you are eating and living somewhere it’s tough. Or if you need insurance or go to the doctor or whatever, those are all things that really add up, and people don’t realize that yes you make more money, but you spend so much more money. I think that’s why you see so many people that go to the United States but don’t bring their families because they can't support their families. Then you have the whole immigration part. But I don’t think it would be any more of a benefit to move family from Mexico to the United States to work the exact same job.
EB: It might even be easier to just stay—
JF: Instead of having to learn the language and worry about legal status and all that stuff, but I mean it depends and I don’t think there are enough jobs. But people also say there aren’t enough jobs in the US. It just kind of depends on your skill level and what you are willing to do.
EB: I guess from an overall arching standpoint, in other interviews I’ve had people may have been more against NAFTA where you almost recognize the need so to speak of what NAFTA is creating. Would you say, this is kind of a direct question, but that you support NAFTA’s efforts and moving factories into Mexico and what its been doing for Mexico in terms of an overall benefit?
JF: Ya I mean I think part of my background and my perspective is based in business so it’s not as much in the environmental and labor side, even though those are caused by business. I look at it in much more of an economic argument, and ya I can say if I were the president of Mexico I would sign NAFTA. I don’t know where I would be on the other side, if I was Barack Obama, would I sign or not? Because it certainly gets us cheaper goods from more competition, so it’s good for consumers. The issue is that you lose the protection of your American workers and that’s something we need to be careful with going forward. But from a Mexican perspective going forward, I think it’s a good thing.
EB: So you mention it’s not as good for America, Bill Clinton signed it into law in ’94, why do you think he was a proponent of it, did he foresee something else?
JF: Well I mean, the thing that is good about free trade partnership in Canada, Mexico, and the United States, is you have three really big economies and they are neighbors, and they pretty much operate through, pretty well together, we are allies. Generally, it’s better for competition, and better for business people, as a business its better for you. I would say as a CEO of a company you are generally for free trade because it opens up new markets for you, brings down your costs; that part of it is great. Again it’s the American factory worker, the American farmer that is not off very good. That maybe the food on the table is going to be a little cheaper, but their jobs are gone, and they just can't operate against being undercut by 40% by Mexican prices, so those folks are really against it. That’s why I think it’s much stricter on the American side. But you look at a company like BlackBerry, it’s a Canadian owned company, they manufactured everything in Mexico, and sold everything in the US so when you look at big success stories, BlackBerry, one of the biggest, a Canadian company owned and operated in Canada, manufacturing in Mexico, and selling to consumers in the United States; that is kind of what a lot of NAFTA people say this is how its supposed to work, and its working. Who knows if BlackBerry would be as big as it was without that.
EB: So I guess as kind of a final question to wrap it up, what do you, what would you recommend for the next 10 years into the future, maybe even 50 in terms of maintaining free trade and growing grassroots in Mexico, moving industries. Do you have an overall idea of what should happen or would be the best for a mutually beneficial arrangement?
JF: in terms of free trade I don’t necessarily have a clear plan there, but I do think that you have to look at Mexico as more of a market, in terms of they are not just a place for cheaper goods or cheaper labor, but a real market for us to sell to as well. As a company you are being stupid to not be operating in Mexico in some capacity. Not just manufacturing but selling your stuff there. And I think the way to do that is to invest in companies and entrepreneurs… that as the middle class continues to grow these entrepreneurs will be successful as they have a market to sell to. And I think you really look at it and you see, especially what I was doing last year, these are the kinds of jobs Mexico needs and the kind of good jobs that are going to be created. And I think the key is then how do you figure out, one of the things I saw, is even though a lot of these are entrepreneurs are creative people a lot of them are just taking copies of things that exist in the US and putting it in Mexico. Taking uber cars that you can rent a black SUV in the city, why not bring it to Mexico? Or, we have this in the US why not bring it to Mexico? I think the next step is the next twitter, or whatever that is. Not a replica that is in the United States; that is the big jump. So what I saw at least is a majority of my projects were copies or replicas of something that already existed. So how do we get people to really think or be creative? The next Apple Company to come out of Mexico or any emerging market. I think its just making sure you have investments and have people, you know a lot of people that are founders come from somewhere else, even in United States because they have money and access to capital and consumers and mentors and all. So how do you keep that local? That’s the question to ask and answer. Hopefully they can answer it.
EB: Ok well I appreciate your time, thanks so much for coming out. [Interruption by waiter] I appreciate it again and hope you have a great day.
JF: Thanks.
Josh Ford: Sure, so my name is Josh Ford, I went to Mexico for the first time in 2009 for a class trip and then went and did a Fulbright year there, which was last year, so the 2012-2013 academic year. I was working fulltime for an entrepreneurial accelerator there and taking MBA classes at the local business school in Mexico City. So I got to kind of see first hand the business world and the effects that NAFTA has on the business world there.
EB: So what specifically were you doing with this startup, and how did you get involved?
JF: Sure, so actually my Fulbright scholarship was created after NAFTA was signed and the idea—so it’s the only Fulbright scholarship that is for business people, that want to go and work for business. So there are some PhD programs that study in business, but this was the only one where you are actually working in a business. So you work full time for a company and the Fulbright sets up all these different companies. Some of them are American companies operating in Mexico, and some companies are [server handed me my food and brief inaudible sentence] Mexican companies that obviously are operating in Mexico. If you receive this Fulbright, they will kind of go through a matching process where you interview with ones that you are interested in and kind of rank which ones you like and which ones that like you. So I was just matched up with this accelerator, and the accelerator is actually a US based accelerator that operates in different emerging countries, and so Mexico was just one of those countries.
EB: Why were you so interested in Mexico going into this?
JF: I think for me, a lot of it really does have to do with NAFTA but Mexico is a phenomenal place that is very strategic to the US. You know politically obviously [server brings Josh his food “You guys enjoy your meal alright…” “Thank you” “… if you guys need anything my name is Maui, just let me know” “OK Great, thank you” is heard] so, you know being so close to the United States and sharing a border that is thousands of miles long… but also from a business point of view, it is a huge market that is growing, a middle class that is growing. So not only are they able to provide us with goods at cheaper prices, but they are also a very solid market for us to sell to. You know they have a lot of consumers now, and really any big company that is operating internationally has to be operating in Mexico.
EB: So I guess right from the beginning you mentioned [the program] was created by NAFTA. Could you see the American influence within Mexico City from all aspects, or where did you see almost the American business connection most clearly, so to speak?
JF: Ya I mean I think, you know obviously America is probably the dominant country in terms of business in the world. And so like I said really any big company that you can think of operates in Mexico and has a very large presence, and so for example… kind of just a weird fun fact—Mexicans consume more Coca-Cola products than anywhere in the world per capita, so especially in a city like Mexico City that is so big, there are parts when you definitely feel like you are in America. There are all the American brands, and you go to the mall and its all American restaurants and TGIF and McDonalds and all that stuff. And so I think that has definitely skyrocketed since NAFTA. I think some of those things were there, but I think NAFTA has really promoted that more.
EB: Feel free to eat too. Cool, so you mentioned that you stayed in Mexico City, did you have, was your experience focused only in Mexico City, or were you able to compare situations in more rural communities?
JF: Ya that’s a good question. So, I had the opportunity to travel a lot, more for my own benefit than for work. That was part of the cultural aspect of the Fulbright of trying to really understand the country and all its different areas. So I think Mexico City obviously is the most, has the biggest influence from American side, just because it’s the capital city. I think Monterrey, in the north, is definitely, its kind of the manufacturing area, so a lot of factories are there from American companies, a lot of car companies. Actually there has been a trend recently to move things back to Mexico from Japan or China, especially China really because those prices and gas prices have increased really, so getting those products back from China costs more money, and labor costs have gone up in China. So now it’s almost cheaper and easier to manage to bring that back to Mexico.
EB: Would you say that ability to move back to Mexico is kind of a direct result of NAFTA because without free trade perhaps these businesses couldn’t go back from Southeast Asia?
JF: Ya for sure. I think free trade definitely helps that and keeps you know taxes and stuff like that really low on these companies. And ya, I would say if something else other than NAFTA was in place we might not be seeing that. But I think it’s a good thing for companies and certainly for Mexico
EB: So I was going to ask, do you think it’s a good thing that NAFTA allows companies to come back to Mexico, instead of outsourcing to Southeast Asia? I guess from a Mexican standpoint and from an American standpoint?
JF: Ya I mean I think from a Mexican standpoint it certainly does, it creates a lot of jobs and decent paying jobs and helps grow that middle class that they are trying to grow. I think from an American perspective you know you really want those jobs in America and not Mexico, but I do think at least from a business perspective, you know if I’m running a company and I want to make sure quality assurance or if something goes wrong, it’s so much easier to get to Mexico and I can fly to Mexico for the day and come back at night and I can go very easily, than jump across the world and have a 15 hour flight and be in a completely different time zone. So from that point of view its much much easier to operate out of Mexico.
EB: Ok, what about, I guess almost staying within the Asia comparison vein, do you think bringing factories back to Mexico has a better labor conditions than keeping them in Asia or do you think both of them are comparatively pretty terrible?
JF: Ya, I mean I’m certainly not an expert in this at all, so I can’t really honestly tell you that. But I think what I can tell you, I mean it depends on the company and all that, but again I think that are more stringent regulations in Mexico, and again it’s easier for me to go and see my factory than being somewhere in China or wherever it is. So I do think it’s probably better for workers in that regard and definitely more manageable from a business side.
EB: I’ll slow down so you can eat—
JF: —No you’re fine. Also I think culturally Mexico is much closer to us culturally than an Asian country would be. That really makes things easier, you know you don’t really have a lot of, you’re not in a completely different world when you are there. There are certainly some differences culturally, but at least from my perspective, and being in Asia as well, they are much more minor, and it makes it a lot easier.
EB: So I guess speaking of the culture differences, I’m not completely sure on this, but would want to say— a company creates a new factory in Mexico that was previously only in the US, is it run by American management in Mexico or do they hire Mexican management to run the company or factory?
JF: Ya it really depends on the company. I think the general rule of thumb is that the person probably running the company or factory is going to be an American, or at least in the beginning is going to be an American while they transfer it over, or a Mexican with a lot of experience. I had, you know, had some contacts there that were Mexicans but had lived in the US. For example, one of my mentors was the CEO of IBM Mexico for a while, he’s retired now, and works as a professor now. But, he worked in the US for IBM for a long time, and kind of got sent back to Mexico to run it. So I think that’s another option. But generally all your other workers all the way down the line are going to be Mexican, or immigrants from other countries, but not American.
EB: And so, what is the benefit of hiring all Mexican workers in Mexico? Is it simply decreased labor costs or is there more to it?
JF: I think the biggest thing is decreased labor costs, you know comparatively to what the US is, and just the salary of wages are way lower. Probably some of the benefits are much lower and stuff like that. I think that’s really the primary area, the real benefit there.
EB: And because of NAFTA and these factories moving into Mexico, do you believe—again I’m not sure how experienced you are in this topic—but are these factories selling primarily back to the United States or are they reaching their fingertips out and selling into Mexican markets as well?
JF: Ya so it just depends on the company, all of them like I said… there is a very strong middle class now and a very strong wealthy class. You know your top 2 percent of Mexico now— the richest guy in the world is Mexican— so you have some people with real bargaining power. You know I remember when I was there, all of my coworkers had iPhones and IPads, so obviously things like that that are pretty expensive even here in the US, they are buying. I think what you don’t have is a mass market still because it’s still growing that middle class, but it’s growing and they still have millions of people in that market that can buy things. So I think you have both. It kind of depends on the products that you are making.
EB: So, I guess I’ll assume, from a GDP standpoint then, NAFTA and allowing these factories to go down to Mexico, hiring workers and creating more products and allowing more flow of cash, it seems like it’s relatively beneficial so to speak. If we put a scope on our vision and don’t look at the labor conditions, would you say over the past 10 years its done maybe what its hoped to do creating that inter-balance, or is it less appealing in reality than what it seems theoretically?
JF: No I think, that from a Mexican perspective it’s done a good job. I think if I was the president of Mexico I would certainly support this. I think it does increase GDP it brings businesses, it brings jobs, and I think that for the most part, again you said there are some labor issues in terms of that, but you know for them, so, well they can kind of crack down on that, and that’s what they should be doing—
EB: The government?
JF: The government, ya. I think sometimes what happens is the government is afraid to bite the hand that feeds it. So if they crack down on the labor and crack down too hard, they drive the companies out and you are gona have companies say, ‘you know what I just can't, I can't pour in this much money’ or ‘I can't allot to this safety standards or working conditions’, or whatever it is, and they will move to the next hot place. So we have seen that, companies do that, and it’s part of the reason they move out of China, the labor costs have increased and the move has been a little bit harder.
EB: Um, so what do you, I guess again I'm kind of touching on topics that you may not be as experienced in but that’s ok. What do you feel about the environmental consequences? So labor is one obviously, we see the labor dropping, and like we said they have to maintain, I guess you could think of it as a competitive advantage to other countries for these factories to be here. Do you think that the environmental and lack of regulation also plays into that as well? Cause that is something I’ve been a little concerned about with all these factories moving into unregulated Mexican areas.
JF: Ya for sure. Living In Mexico City for a year, it’s a horrific place for pollution. And its not all corporate pollution, you know it’s really old vehicles on the road, and the thing is they just have a different used car market then we do. They are much more creative with their cars, I mean they have environmental standards with new cars, but there’s just so many cars out there that people aren’t buying new cars. So you have cars that are 30 years old that have 30 year-old regulations on them that are crushing the environment. But you’re right you know, whenever you have a factory its going to lead to you know, I mean it doesn’t have to, but the cheap way to do it is its going to lead to pollution. Again its one of those things you want to crack down on, but you can't crack down too much because then they go to Honduras.
EB: So do you foresee I guess, we’ve mentioned, actually hit it a few times, going to different countries? Could you say that NAFTA keeps factories going to Mexico and creating labor for Mexico as opposed to creating other free trade agreements for other countries in Central America and South America? I'm not sure if that’s in the future for the American trade policy, but do you foresee America trying to strike a deal with Central and South American countries to try to expand this NAFTA benefit?
JF: Ya, I think the hard part is that for me at least I see it that, like we said its hard on the environmental stuff and labor conditions, but in terms of pure economics I think it’s a win for Mexico. I’m pretty convinced on that. In terms of whether it’s a win for America or not, I'm not sure. I do think that it would be beneficial that, and I'm sure—I’d be quite surprised if Honduras or Guatemala would not be interested in something like this from their point of view, I just don’t know if the US would be interested. And that’s not to say there are certainly benefits for the US as well, but I think it’s not as clear-cut, at least economically, the benefits for the US.
EB: What might negatives be of creating free trade?
JF: Well I think you lose protectionism of your own workforce [Some music in distance heard] you know if it’s all free trade and everything’s easy, then all the jobs are out of the United States cause your costs are just so much higher. That’s why I think especially within agriculture its just really really tough on folks in high agriculture areas like Florida, that are just being undercut by Mexican prices. That’s just a really tough you know, toss up there.
EB: So what sectors, you mentioned agriculture. What industrial sectors did you experience in Mexico City were most connected with America— agriculture specifically?
JF: No, I mean its definitely a big one, but certainly had a lot of industrial places like chemical things or cars essentially, a lot of really big car industries are there, some of them aren’t even all American. Like Volkswagen has a huge base there, but the thing is they are still selling to America. So they are from Germany, and it’s much easier to have a factory in Mexico to sell to their American consumers.
EB: So lets talk a little more about what you did specifically in Mexico. So what you did, if I understand correctly, helped new businesses grow and become a force in Mexico City.
JF: And not just Mexico, so essentially the way it works is— there is a selection process to be a part of the Endeavor, which is the company’s name’s portfolio. And the reason you want to be in the portfolio, a couple of reasons, one the brand name. So it’s like you are an Endeavor entrepreneur, so you are kind of like our good company, kind of like a quality check. The really smart business leaders have seen your company and believe in it, and its safe to invest in, and all that. The other thing is they gain access to really really top notch mentors. So the way it works, you apply; actually I was the first door they had to get through. I was the guy, I would say I think the company is growing or at a point of inflection. Most of our companies were newer but some were 25 year-old companies looking to change or get a new market.
EB: What type of metrics did you use to evaluate a company’s value?
JF: So we really looked at obviously their revenue, but really the changing of revenue over the last three years, and their predicted revenue for the next two, and how they were going to get there. So sometimes we saw companies that had 0 dollars in revenue, but would be 20 million in two years, that’s a really big jump. Or we would have a company worth 75 million dollars that had revenues of 75, and thought they may be able to double that in 2 years because they were going to enter Peru or Uruguay or something. And then I would have meeting with the entrepreneur and get a feel of who they are and if they would be open for feedback. Then they kind of enter our process. They would have 7 meetings with our mentors. And our mentors, we have a network of 200 mentors in Mexico, and not all in Mexico City, so mentors in different places, but the majority and headquarters is in Mexico City, the Mexican headquarters. And so, they would have an hour long meeting with these mentors, and the mentors would generally be people who were the top at their companies. So the CEO of Wal-Mart Mexico was one, or the CEO of Starbucks Mexico was another, or a top consultant at Bain Mexico, and so most of them, almost all of them were Mexican business owners. A lot were US educated or worked in the US, like the head of Google Mexico was one of ours. So he worked for Google in San Francisco for a while and then came and set up their office down in Mexico City. So you get access to these people. You give your pitch, go through what you are trying to do, and they would help and give advice. So it doesn’t matter what industry you are in, we had everything from mobile app developers, to shrimp farmers, to a constructing company, to a cement making company, to really anything you could think of. So I was kind of helping them along this process. Then what happened was they go to a selection panel, so we have like three or four national selection panels in Mexico where they go and present in front of judges and they have to get a unanimous yes vote to go to the international level. Then there are 5 or 6 global entrepreneurial selection panels. Again needing 100% yes votes. We don’t have a set number or limit, like 3 out of 5 get it—100% could get it if they are all great. And at the international level they are up against everyone from Turkey, Argentina, Brazil, wherever you could think really, are sending entrepreneurs, and if they get selected, then they become part of the Endeavor brand. So the good thing about that was I got to see a lot of different companies. A lot of my companies operated in a lot of different countries but were Mexican owned or primarily operated. Some of them even the entrepreneurs lived in the US. I had one who lived in San Diego and he had shrimp farms right underneath San Diego in Mexico. Another guy lived in San Francisco and Silicon Valley, but spent time between there and Mexico City and kind of had his mentors in Mexico.
EB: What’s the main benefit of working with Endeavor? Getting the brand recognition? Or do they provide investments and consulting advice?
JF: So they provide consulting advice, and then also, so we don’t invest in them. But a lot of the mentors are investors and so they would get really good access to people that they may not be able to get through sending an e-mail or a call or knocking on their door to get. And the other thing is that if you are selected at the global level, you actually become part of the portfolio they get through the mentors, that we kind of choose for them to have them sit on their board of directors. So then they are actually there for, for forever I guess, or until they don’t want to or something happens. Then you have all of a sudden, you start a company two years ago with a friend from high school and you have the CEO of Google Mexico telling you what to do in the mobile app realm, that is a really awesome thing. They can provide great advice and obviously have great contacts in the business world to kind of open up new avenues for you.
EB: How many different firms were you exposed to throughout your time there? Hundreds, or tens?
JF: Well I worked very closely with 36 throughout the year, but in terms of how many I saw when I was filtering that first round probably hundreds; 150 or so that I looked at and at least had the conversation with. But spoke to and went through the whole process with 36 of them, and got to know them very well and saw their whole business plans, the good things and bad things and everything in between.
EB: Did you find any repetitive processes or patterns that the successful firms had going for them in terms of management style or industry, or anything correlating between them?
JF: No I mean, [waiter at restaurant offering more chips/salsa] so in terms of patterns not really, obviously there were some that resembled each other, but there was nothing I saw that in the 36 companies that was the definite thing that was going to happen, or if it was a different strategy that was happening. But, one thing that they certainly thought about was that they always thought about expansion. Like no one that was really there said ‘I just want to be in Mexico’ sometimes the expansion was south into Latin America, but I think everyone at some point wanted to go to the US to sell.
EB: And why? Why did they want to expand?
JF: Well with expansion comes more money I think. The US especially has consumers and bigger spending power that can buy things, and that is kind of like, also from a buying point that is how you know you’ve made it from a business perspective. When you are operating in the United States, that’s how you know you really made it.
EB: I'm not sure if you could see an direct effects but do you think that maybe from some level NAFTA had given these companies any more, any stronger ability to come to America, or do you think that wasn’t even in the picture?
JF: Ya I don’t know. It was certainly something that they didn’t talk about. Maybe it has and we just don’t know. But I think definitely, for example, one of them was a shrimp farmer [waiter returning with salsa and chips]…. Ya so for example we had this shrimp farmer again, who actually lived in San Diego, was Mexican born and raised but lived in San Diego. Spent the majority of his day in Mexico, he would come over the border and go to his farms and stuff like that and then he sold his shrimp to the United States, he didn’t sell at all in Mexico. Part of that is that they were a growing company and so they are still growing their farms. They are selling all the shrimp they have essentially so they couldn’t expand more now until the farm expands. They looked at it as, ‘I can sell my shrimp for more money in the United States than I can in Mexico.’ Some of the supply chains are a little more established in the US so the hard part is because they are already established they already have sources where they get shrimp so you have to make it either cheaper or better in some way. But they would kind of deal with, you know, the big grocery store to do it all, like they were providing all the shrimp for this California chain and all their stores in California. You did have some, I think in that case thats definitely a big thing for NAFTA—it’s being grown in Mexico and owned by Mexican company, but being sold without tariff, duty free in the US.
EB: I guess that kind of, I wanted to transition into this topic at some point, but looking forward and overcoming—so what I foresee as a lot of the negatives of NAFTA is labor conditions and decreased wage and huge companies going into Mexico and using their labor and land and taking advantage of it. I'm curious about what a maybe solution would be and if you think from your experience the solution is the new and upcoming opportunities to create new jobs and domestic sourcing for the labor, or if that is too small scale? Or what do you see going forward in terms of how to attack the problem?
JF: Ya I mean it’s a great question. I think, I think sometimes its helpful to have local companies because they understand local concerns and are more invested in Mexico and it’s not just a purely economic relationship where I just use you and not come back. And I think, but like what you said or alluded to, it is a little small scale. I mean there are certainly companies that are huge there, but I don’t see them competing with like a General Electric or a Coca-Cola. They are not going to be that big I don’t think, maybe eventually, but there won’t be enough of them.
EB: But in terms of just, you are creating jobs but still its beneficial to—
JF: So ya I think its still beneficial for these guys to come in and provide jobs. When you look at like manufacturing they are taking in somewhat rural areas or going to small cities and really providing jobs to folks. So in terms of the other part of the question about how do we, what are some things we can do to kinds of mitigate some of the concerns, I have to say I think its mostly on, ok its two-fold.
It’s on the Mexican government to kind of crack down on that, again as I said it’s a slippery slope, you crack down too much and get too hard, and you lose the businesses. But you know we are talking about people’s lives here too, so it’s important. And I think the other part is that companies, one of the really good things about all the transparency and the internet and twitter and all this stuff it’s become so big in these developing countries, these emerging economies, is that it’s not as hard to get something out. So if there are atrocious conditions in a factory, all it takes is a tweet with a photo, and if someone has a couple followers someone can broadcast that to the world, and in a matter of seconds can have millions of people looking at it.
EB: And do you think public opinion influences anything? Do you think if people are [inaudible] and sharing it on their Facebook page it actually has impact?
JF: Ya I mean I think you know it’s how you go about it, sometimes it works really great sometimes it doesn’t work at all. It kind of depends on how terrible is it, what the offence is. I think generally people get more riled up about labor conditions than they would about environmental stuff. That they may not care all that much about pollution because its harder to see how its affecting people, but if people were getting their hands chopped off in factories or something like that that would be much more alarming for people to look at.
EB: I guess the tough question that follow that is, is it almost worth it to create jobs at the expense of poor labor conditions, or is this something that we would look at eliminating NAFTA because labor conditions are too bad that the creation of jobs is not worth it?
JF: Ya I don’t know, that’s the million dollar question, and I don’t know. Personally I don’t know how widespread the labor issues are. If it’s a rule of thumb, if American companies have horrible labor conditions, or is this one or two companies. So I guess I'm not as familiar with that and how widespread is the problem. But I think it’s who you are, you know who is the signing party. At some point some company can say ‘ya, we don’t have great labor conditions, but these folks were unemployed and jobless.’ So it may be tough and they may have to stand on their feet for 12 hours with no break, but at least they have food on the table now, and they didn’t have that before NAFTA came in. So there is a point to be made in that regard, to say that these companies are creating jobs. Some people look at these companies as exploiting workers but at the end of the day these workers have these jobs because they need to support their families and if there were other jobs they would take those. The fact is there aren’t other jobs for all people.
EB: Good point, so when I was in Mexico we saw a lot of these smaller cities, perhaps this is anecdotal but say with 300-500 residents that have nothing to do. The women and children, the men had emigrated to the United States, the women and children would feed their family and go to school and do nothing else. They tried to implement these small projects. In one of the places they had a worm farm they tried to grow which didn’t necessarily take off the ground at all, but do you think that smaller, I guess another question is, do you think smaller projects in smaller communities would help? Or is bringing in a large factory 20 miles away that could source jobs for all of these communities would be...? And again that’s a hard depending question—
JF: Ya its tough, it kind of depends on the company and how it works. I think in terms of labor conditions obviously a smaller company probably has a grasp on it a little better. But, ya so it’s really dependent on the situation, I think the hard part is that, you know if Coca-Cola decided to move into an area, or if General Motors decides to open a plant in Guanajuato, they are employing everybody, and everyone is going to have a job and it’s going to work out great in terms of that part. And so I think it’s a lot easier for a big company to come in and kinda like make a bigger splash in the water [some loud background noise from outside].
EB: So if we look into the future now, hypothetically now in 10 years when all these factories have moved into Mexico do you think that NAFTA and free trade will still be necessary to incentivize companies to come in? Or do you think that once they are already in, if you reinstate trade tariffs if they would stay? Or if they would just evacuate a say ‘sunk cost to the factory, forget about it,’ or would they try to make it work now that they invested millions of dollars?
JF: Ya it’s tricky, it’s kind of what we are seeing now even in this move from Asia to Mexico. They opened up factories in China, and they say ‘in the long term it’s better for me to come back here.’ So I think you have the exact same thing, with the trade situation, ‘how much am I gona get taxed on this?’ How much harder is it now, is it worth it to go to another country with a sunk cost and leave whatever I did, or should I stick it out a little bit longer? And the answer would be different by industry.
EB: Another question, maybe this is a little unrelated to what we were talking about before, but NAFTA encourages tons of industries to move into Mexico to create factories for jobs there, and yet at the exact same time we see increased numbers of immigration to the United States. Where do you think that plays in? If factories are going down and creating jobs, why is there the need to come to the United States, are they simply not creating enough? Or is the United States that illusion of a better life that has a bigger pull?
JF: Ya I mean I think, I still think that anywhere in the world where I’ve been, from Africa to Asia to Europe, not Europe as much, but any emerging area, like Latin America, the dream, and where you make it, is in America and the United States. You always have that kind of dream. It’s where you have hope and we still drive things culturally. I mean the movies of the world are from Hollywood; music of the world is from United States. And like McDonalds and Coca-Cola make these brands that operate in all these different countries. I do think that, I mean the other thing is that the wages are more in the United States if I work in a factory in Monterey Mexico, I would be making, and I have no idea what the prices are really, but lets say I make $3 and hour, in the states the least is $7.15, so you make double, more than double, I don’t know the actual numbers there, but I could work the same and get double and send that back. The thing that people forget is the cost of living is so much higher. So when you are eating and living somewhere it’s tough. Or if you need insurance or go to the doctor or whatever, those are all things that really add up, and people don’t realize that yes you make more money, but you spend so much more money. I think that’s why you see so many people that go to the United States but don’t bring their families because they can't support their families. Then you have the whole immigration part. But I don’t think it would be any more of a benefit to move family from Mexico to the United States to work the exact same job.
EB: It might even be easier to just stay—
JF: Instead of having to learn the language and worry about legal status and all that stuff, but I mean it depends and I don’t think there are enough jobs. But people also say there aren’t enough jobs in the US. It just kind of depends on your skill level and what you are willing to do.
EB: I guess from an overall arching standpoint, in other interviews I’ve had people may have been more against NAFTA where you almost recognize the need so to speak of what NAFTA is creating. Would you say, this is kind of a direct question, but that you support NAFTA’s efforts and moving factories into Mexico and what its been doing for Mexico in terms of an overall benefit?
JF: Ya I mean I think part of my background and my perspective is based in business so it’s not as much in the environmental and labor side, even though those are caused by business. I look at it in much more of an economic argument, and ya I can say if I were the president of Mexico I would sign NAFTA. I don’t know where I would be on the other side, if I was Barack Obama, would I sign or not? Because it certainly gets us cheaper goods from more competition, so it’s good for consumers. The issue is that you lose the protection of your American workers and that’s something we need to be careful with going forward. But from a Mexican perspective going forward, I think it’s a good thing.
EB: So you mention it’s not as good for America, Bill Clinton signed it into law in ’94, why do you think he was a proponent of it, did he foresee something else?
JF: Well I mean, the thing that is good about free trade partnership in Canada, Mexico, and the United States, is you have three really big economies and they are neighbors, and they pretty much operate through, pretty well together, we are allies. Generally, it’s better for competition, and better for business people, as a business its better for you. I would say as a CEO of a company you are generally for free trade because it opens up new markets for you, brings down your costs; that part of it is great. Again it’s the American factory worker, the American farmer that is not off very good. That maybe the food on the table is going to be a little cheaper, but their jobs are gone, and they just can't operate against being undercut by 40% by Mexican prices, so those folks are really against it. That’s why I think it’s much stricter on the American side. But you look at a company like BlackBerry, it’s a Canadian owned company, they manufactured everything in Mexico, and sold everything in the US so when you look at big success stories, BlackBerry, one of the biggest, a Canadian company owned and operated in Canada, manufacturing in Mexico, and selling to consumers in the United States; that is kind of what a lot of NAFTA people say this is how its supposed to work, and its working. Who knows if BlackBerry would be as big as it was without that.
EB: So I guess as kind of a final question to wrap it up, what do you, what would you recommend for the next 10 years into the future, maybe even 50 in terms of maintaining free trade and growing grassroots in Mexico, moving industries. Do you have an overall idea of what should happen or would be the best for a mutually beneficial arrangement?
JF: in terms of free trade I don’t necessarily have a clear plan there, but I do think that you have to look at Mexico as more of a market, in terms of they are not just a place for cheaper goods or cheaper labor, but a real market for us to sell to as well. As a company you are being stupid to not be operating in Mexico in some capacity. Not just manufacturing but selling your stuff there. And I think the way to do that is to invest in companies and entrepreneurs… that as the middle class continues to grow these entrepreneurs will be successful as they have a market to sell to. And I think you really look at it and you see, especially what I was doing last year, these are the kinds of jobs Mexico needs and the kind of good jobs that are going to be created. And I think the key is then how do you figure out, one of the things I saw, is even though a lot of these are entrepreneurs are creative people a lot of them are just taking copies of things that exist in the US and putting it in Mexico. Taking uber cars that you can rent a black SUV in the city, why not bring it to Mexico? Or, we have this in the US why not bring it to Mexico? I think the next step is the next twitter, or whatever that is. Not a replica that is in the United States; that is the big jump. So what I saw at least is a majority of my projects were copies or replicas of something that already existed. So how do we get people to really think or be creative? The next Apple Company to come out of Mexico or any emerging market. I think its just making sure you have investments and have people, you know a lot of people that are founders come from somewhere else, even in United States because they have money and access to capital and consumers and mentors and all. So how do you keep that local? That’s the question to ask and answer. Hopefully they can answer it.
EB: Ok well I appreciate your time, thanks so much for coming out. [Interruption by waiter] I appreciate it again and hope you have a great day.
JF: Thanks.
