Licenciado Oswaldo Perez Mendivil
Negotiating for the Survival of Mexico’s Maquiladora System
There is a problem experienced by Mexicans of all ages. The global economy is changing and changing like never before. It is a situation very difficult to anticipate and also almost impossible to understand. A few years back, Mexico is a haven for investors specially those companies that originated from the United States. What is there not to like? Everything that an American investor need can be found in this country.
First of all, the proximity of the Mexico to the United States of America is a very great advantage over other nations competing for a business partnership for Americans. There is no sense in crossing the Atlantic if one can find a suitable place for business operation just across the border. Mexico can even be reached on foot if someone just wants to. Just look at the current immigration problem that plagued the US. Thousands of illegal immigrants cross the border every year and just look at how easy to access the land of opportunity. But that is another story.
Now the tides has turned and since the WTO was signed opening member nations ports and airports to entry of the cheapest product available in the global market, the world was suddenly turned upside down. Industrial nations like the US, Japan, Korea and those in the EU are scrambling to look for places or nations where they could put up a very cost efficient operation. And the bad news is that Asian countries are taking advantage of this need. Now, with over a billion Chinese and many hundreds of millions of Asians scattered across many nations in the Far East and South East Asia, Mexico is in big trouble.
Now, companies are busy setting up shop in these Asian countries. The major US companies can attest to the sound judgment of transferring manufacturing operations in the Orient and this is specially true with their experience in China. And there is no sign that labor in China will become very expensive soon.
The government of Vicente Fox of Mexico is doing its best to counter this trend of losing investors by the hundreds. The mass exodus of investors is a serious threat to the economy. Something must be done and must do it fast.
To give a clear view of what is at stake and the factors that are involved in enticing investors. An interaction with a future investor called ADI – maker of dolls and toys – will come visit Mexico. And the Mexican government has prepared a team of process officers that will meet with representatives of ADI in order to convince them to choose Mexico over an Asian nation as a place of manufacturing operations. One of the member of this process team is Licenciado Oswaldo Perez Mendivil.
Licenciado Perez is in his 40s. He is married with two children. His son, the youngest child is stuying at a private high school in San Diego while his daughter is studying Marine Biology in the University of San Diego. Immediately one will notice that Licenciado Perez is not the typical Mexican peasant. He is somewhat Americanized. In fact he loves to follow the exploits of Tiger Woods and very interested in the PGA tour.
Yet still, Licenciado Perez is still a full-blooded Mexican and he will have to explain to the guests the difference between American and Mexican cultures that thought there are differences this will not be a source of misunderstanding. In fact, Licenciado Perez will use all that he has learned about negotiation and leadership to persuade the Americans that the cultural differences can serve to compliment the strengths and weakness of American culture. In this partnership there will be less weakness as there will be more strength when the best of both cultures can be combined.
Licenciado Perez strength lies in his being trained in the University of San Diego. This means that he knows how to speak English, a great advantage because the Americans could not speak Spanish. This relays the impression that he is working very hard for this relationship to work. The second thing about being a graduate of an American University makes Licenciado Perez so well accustomed to the ways of Americans. The only problem is that one cannot be sure if the American team is as sensitive as the Mexicans with regards to being culturally flexible.
Licenciado Perez has primed himself not only as a process officer but also as an effective negotiator. No one leaves the table without the Mexicans getting a favorable deal. So Licenciado Perez tried to remember what he has learned in university regarding clinching a deal. And what went on his mind would probably be a great advice from the master negotiator himself, Leigh Steinberg who was quoted as saying:
We all negotiate. But many of us still have a fundamental fear of negotiation. That fear can make us act meek and obsequious – which means that we are likely to end up with our goals unmet. Or it can make us behave aggressively and angrily – which could break down the discussion altogether. (qtd. in Webber, 1998).
So Licenciado is trying not to blow it. He will do his best to convince the Americans but he also knew that the only that they will stay is to address their concern. So his primary strategy is to make the Americans realize that 1) they can save money; 2) Mexico is just like the US in terms of the kinds of problems they face; and finally 3) the Mexican people are great workers if you just allow to understand how they function culturally speaking.
With regards to the first one the distance of the US border from Mexico specially the cities and towns near the border is just a stone’s throw away. Compare that to the factories in China where logically US companies have to either use Fedex or UPS and other air freight services or they could chose ships via the seas. Either way the cost of freight is just too much in the long run. That is not to mention the time factor that could be wasted in the weeks that will be needed for travel.
With regards to the second aspect of the negotiations, Licenciado Perez must be able to convince the Americans that Mexico is just like America and there is no need to exaggerate what is reality in terms of crime rate and other social problems. In other words, Licenciado Perez will have to say that trouble is everywhere and danger is something that is not unique to Mexico.
With regards to the fourth one, Licenciado Perez will have to make the argument that in the maliquidoras that will be build most of the workers that will be hired are women. This is just an advantage for the ADI since women are known to be good at doing things that require precision. And everybody knows that ADI is producing dolls and not machines so who else can be a great fit to this enterprise if not the women employees. The women of Mexico are raring to work and it is such a great source of fulfillment for them, not to mention the need for extra income in the family.
Licenciado Perez at this point is well to remember that this is not a search and destroy mission. He is not intent to humiliate the American team and his goal is to build them up and make something that is beneficial for both parties (Steinberg, as qtd. in Webber, 1998).
Finally, Licenciado Perez will have to alter the perception of the Americans regarding Mexican workers that they are not lazy and in fact they can be made to work longer and harder than their American counterparts. He will just have to put it on the table that Mexicans believe that there is more to work than merely working (Schmidt, 1991).
In the end it will be about being honest. So after the Americans leave for the border. Licenciado Perez will have to negotiate again but this time with his fellow Mexicans, specially to the officials and even to the President. He will have to convince them to expedite the various programs they have discussed that will help in enticing foreign investors. And lastly, that they will have to work harder to fulfill what was promised in the negotiation table.
Schmidt, Stuart. “Organizational Life: There is More to Work Than Working.” Interfaces. 1991.
Webber, Allan. “How to Get Them to Show You the Money.” Fast Company Magazine, November 1998.