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A Big Opportunity?
February 18, 2008

Bev and I spent last week at the Pueblo Bonito Resort at Emerald Bay in Mazatlan, Mexico.  I fell in love with the city.  It reminded me of the cities on the Mediteranean.  You can't beat 82 and sunny, either.



Mazatlan is a city of 400,000 plus, very Mexican, much less touristy than Cabo San Lucas and cheaper.  You can employ a housekeeper, a cook and a gardener all for $30 a month.  No wonder Mexicans want to come to the U.S. and American expats are moving to Mexico. 

Our first evening, we took the 20-minute shuttle from our resort into town.  We then hopped on a bus for the historical section whose heart is the Plaza Machado ringed by restaurants like Pedro y Lola. Las Brasas and  Te Amo Lucys.

 

When the bus made a left turn away from the Sea of Cortez we became concerned.  We learned we were on the wrong bus.  A very nice senora riding with her two children, who spoke very little English, said to get off with her at her next stop and she would see to it that we got on the right bus.  She and I communicated as best we could.  Her husband is an illegal alien living in Maryland who sends her $200 every Tuesday.  She wants to join him, but can’t get the necessary paperwork.  He has been living in the U.S. for two years and she can afford to be a stay-at-home mom.  

I checked the yellow pages for interior designers and found a total of five.  With all the Americans moving in, that’s a pretty low number.  Most Americans buy American furniture in Arizona and have it shipped down to Mazatlan.  There doesn’t appear to be a retail outlet in the city that sells American made furniture.  That may change because of the North American Free Trade Agreement (NAFTA).  Currently, virtually all Mexican products enter the United States duty-free.

NAFTA gradually reduced and eliminated tariffs on goods entering Mexico. Based on 1990 Mexican import data, 18 percent of U.S. products will enter Mexico duty-free immediately. Another 8 percent of the tariffs will be phased out over 5 years (1998), 24 percent phased out over 10 years (2003) and 50 percent over a modified 10-year staging period.

The Federal Reserve Bank of Dallas in a report on Texas and NAFTA found:

Industries with statistically significant gains in exports to Mexico as a result of NAFTA were rubber and miscellaneous plastic products (79 percent), printing and publishing (78 percent), textile mill products (75 percent), petroleum and coal products (69 percent), leather and leather products (71 percent) and electronic equipment (49 percent). Significant declines were found in lumber and wood products (89 percent) and furniture and fixtures (75 percent).

ISW Online wrote in NAFTA: 10 Years After

… U.S. furniture exports exports to Canada climbed by only 15%, from $449 million to $516 million between 1993 and 2002. U.S. furniture exports to Mexico declined by 9% from $111 million to $102 million.

Two big reasons for the decline in U.S. furniture exports may have been the strong dollar, which peaked in 2002 and the big increase in Chinese exports to the U.S.

”Its furniture exports to the United States have skyrocketed more than 1,500% from $276 million in 1993 to $4.27 billion in 2002.”  

The dollar has fallen over 37% since its peak.  I’m wondering, are we going to see a surge of interest in U.S. furniture exports due to Americans moving to Mexico and their interest in American furniture? 

Maybe, we ought to set up a furniture store in Mazatlan modeled after our business here.

Thoughts??? Email them to me at landfair3554@comcast.net.

Posted by Mike Landfair on February 18, 2008 | Comments (0)