Photos Two examples ADC's Pat O'Brien More from MPR Main story: Minnesota-Mexico trade still short of potential "Fair trade" fans see the dark side of trade Your Voice Join the conversation with other MPR listeners in the News Forum.

	E-mail this page			Print this page

Direct investment: The other kind of trade
by Jeff Horwich, Minnesota Public Radio
June 18, 2004

Eden Prairie-based ADC Telecommunications and St. Paul-based Ecolab are two Minnesota companies with long-time production facilities in Mexico. (MPR Photos/Jeff Horwich)

One important aspect of trade is not reflected in Minnesota's export numbers to Mexico: "foreign direct investment" by Minnesota companies.

St. Paul, Minn. — Foreign direct investment refers to factories or other facilities owned or contracted by companies based in the U.S. Large companies are headquartered in Minnesota to a degree out of proportion with our population. So there is reason to believe Minnesota may have proportionately more foreign direct investment in Mexico -- and other countries -- than other states.

The economic contributions of foreign direct investment are more difficult to measure. Unlike exporting, it does not directly support jobs here. But the cost-savings and better access to foreign markets benefit Minnesota-based companies' bottom lines, bringing more money into the state. Some money goes to local owners and executives; some can be invested to expand Minnesota operations and add jobs.

In the northern Mexico cities of Juarez and Delicias, 2,100 Mexicans are at work for Eden Prairie-based ADC Telecommunications. Many polish the ends of tiny fiber optic cables, and then carefully glue on connectors.

	ADC's Pat O'Brien

This "very delicate process" requires skilled labor, says ADC Americas Region President Pat O'Brien. Whereas ADC's manufacturing facilities in the U.S. are highly automated to perform a task over and over, the human labor force in Mexico can adjust their routine to customize the products they are producing.

"It provides us an opportunity to get assembly labor at a reasonable price," O'Brien says. "We have continued to look at ways to find the low-cost manufacturing centers around the world that allow us to be a low-cost producer globally."

ADC has more employees in Mexico than in any of the 40 countries where it has facilities, including the United States. It used to have even more there -- four years ago the Mexican headcount was about 8,000. When the global telecom sector hit the skids in recent years, ADC cut its global and U.S. employment alike by about 75 percent. But O'Brien says the Mexico facilities are growing again, ready to serve rising demand for broadband and wireless communication in-country. ADC also recently purchased KRONE Group, a Denver-based company with facilities in Mexico City.

The federal government awards Trade Adjustment Assistance to workers in cases where it judges they have been displaced by trade. In 2002 and 2003, ADC workers in Minnetonka, LeSeuer and Shakopee were awarded trade assistance because of jobs ADC had moved to Mexico, or because imports from Mexico had rendered their jobs unnecessary. The federal government does not say how many workers were affected.

O'Brien says in general there has not been a migration of ADC jobs out of Minnesota to Mexico.

"We've continued to put those jobs where it makes sense," he says. "We've added jobs in Mexico where we've had a need for a given operation or skill, and we've added jobs in Minnesota where we've had a need for work here."

Though the Mexican labor force has seen significant flux, O'Brien says the jobs in its northern Mexico plants are high-quality.

"It is a very nice facility, well laid-out, well-lit. So it is in no way a sweatshop environment," he says.

O'Brien says part of the rationale for Mexico facilities is to be close to the Mexican market. This is also true of St. Paul-based Ecolab. Ecolab makes cleaning, pest control, and other products for the hospitality and food processing industries. As tourism and food processing have grown in Mexico, Ecolab has expanded its 40-year presence there.

Diane Watson, vice president of international business development, says Ecolab's Mexico sales grew from 15 million in 2000 to 28 million today. At present, Ecolab has 258 Mexican employees.

"Products are an important part of Ecolab. That is what we sell. But our support service is equally as important," Watson says. "You cannot 'service' from the United States. You have to have your feet on the street in the country. That's another reason why the local aspect is so important."

News Headlines

Related Subjects