China Losing Manufacturing Appeal as US Companies Turn to Mexico

A new international bridge to Mexico is set to open October 2009 in the South Texas city of Mission, Texas. The Anzalduas International Bridge, a $168-million joint project between the United States and Mexico, will be one of the newest and largest border crossings in the country, and will directly connect Mission with Reynosa, Tamaulipas – a Mexican city known for advanced manufacturing and import/export operations.

Since the passing of NAFTA, Mexico has stepped up as a major competitor to China for cost-effective manufacturing. The main reason: lower transportation costs.

Compared to China and other manufacturing hubs, Mexico offers better access to the domestic and North American markets. A shorter, faster and cheaper transportation route to move products and supplies by truck, rather than over thousands of miles by ship, rail, and truck combined.

In South Texas, specifically the Mission metro area, eight international bridges connect the area with the industrial border communities of Reynosa, Matamoros and Monterrey, Mexico — some of the largest Mexican cities dealing with maquiladoras, importing/exporting goods, and vehicle traffic.

This relationship has made Mission and its sister cities an important industrial manufacturing corridor. Sharyland Business Park in Mission is in a Foreign Trade Zone (FTZ) – a “free port” allowing materials and finished goods to be imported or re-exported without payment of customs duties.

Area leaders have also been keen to other infrastructure planning on this side of the border. A new six-lane expressway now connects Mission with its sister cities. Interstate Highway I-69, another major artery of transportation, will soon connect trade routes from Mexico and Latin America to the United States and Canada. The Anzalduas Bridge will directly connect to I-69 – facilitating trade operations between the two countries.

“In the past, when the market softens in the U.S., we have always seen an increase in companies looking at our area as a way to reduce their costs and be more competitive,” said Pat Townsend, President of Mission Economic Development Authority.
This is evident in the number of companies that have visited the region. Companies like Black and Decker, Panasonic, and ALPS Automotive are attracted to the area for its low cost of living, career opportunities and location. Every day, more companies are finding and relocating here.

IBISWorld Announces High-Growth Sectors For Entrepreneurs & Investors

There is still money to be made despite the economic climate according to industry research firm IBISWorld. The company identified the leading start-up opportunities for entrepreneurs and investors to potentially make a profit in 2009 and beyond. The high-growth sectors are identified below:

 

 

1. Landscaping Services

Revenue forecast 2011 onwards.	Average annual growth of 4.5 percent from
Start-up costs	$1k – $100k+ start up costs, with the upper end relating to the purchase of equipment.

 

The aging population is driving demand in the landscaping sector, which is also benefiting from businesses, government and time-poor households outsourcing landscaping services.

Landscaping is an attractive start-up proposition because of low barriers to entry, as well as low initial capital requirements. “Many people can commence operations with equipment they already own, and there is no need for a formal office or additional staff,” noted Toon van Beeck, senior analyst with IBISWorld.

However competition is heating up for newer players to stand out, as established enterprises firmly plant their feet in the industry. All in all, strong growth will return around 2011, when income levels are expected to recover and job insecurity subsides. In order to stay competitive, investments—such as in earth-moving equipment-will likely be required, invariably driving up the cost to enter the industry.

 

2. Tutoring, Test Preparation, Driving Schools & Other Education

Revenue forecast 2011 onwards.	Average growth of 2.1 percent per year from
Start-up costs	$4K – $75K start up costs, with the upper end relating to purchasing an existing tutoring business/operation from an established location

 

The popularity of online tutoring services is on the rise as families increasingly value low-cost, convenient applications they can use from home. Technology continues to evolve its way into the mainstream, and students are quickly adopting this integration into such online services. Growing consumer acceptance of tutoring and exam-preparation services is also moving this area forward. Online tutorial services were once relatively uncommon, however now they are an accepted – even sought-after – part of the education sector.

“In the current market we may also see people looking to expand their product offering to include relatively simple, short courses such as in first-aid and self-defence,” van Beeck predicts.

The initial cost of establishing a business in this industry is low, with most operators being able to rent premises on an “as-required” basis. There is also minimal need for capital expenditure on specialized equipment for tutoring and exam-preparation providers, apart from computers or other technological training resources. Competition in this evolving industry is currently moderate.

 

3. Fashion Design Services

Revenue forecast 2013 onwards.	Annualized industry growth of 6.3 percent to
Start-up costs	$5k – $30k

 

While entrants require innovative design and creativity, demand for industry services from growing international markets, like China, will support this area in the long-run despite the current economic situation of 2009.

The beginning stages of any new fashion business will be challenging, but for the short-run IBISWorld expects a shift in designer focus towards producing fashionable yet affordable clothing, as budget-conscious consumers drive overall prices down.

IBISWorld anticipates an industry-wide recovery in the second half of 2010, with growth to ensue as consumer confidence is restored and fashionable clothing becomes more affordable. And while the sector has low-levels of concentration, competition is high and is increasing.

van Beeck advises new entrants to differentiate their services based on creative skills, quality, and witty self-marketing rather than through advertisement.

“In recent years, smaller, independent designers have been sprouting like never before and this has given the industry the ability to move forward despite the retail sector taking a big hit. This year won’t be easy, but we anticipate strong growth will return to the market and since entry barriers and start-up costs are relatively low – along with the growing popularity of online retail – we believe this industry warrants inclusion in the list,” said van Beeck.

 

4. Community Food Services

Revenue forecast 2011 onwards.	Annualized industry growth of 6.9 percent until
Start-up costs	$500- $1,000 initial capital outlay, including gas and food supply

 

Historically high un-employment rates, combined with mass displacement and foreclosures, have seen a rapid rise in the need for emergency food supplies and community based food services. For new entrants, this $5.3 billion industry provides some profitable opportunities. Characterized by low barriers to entry, minimal capital requirements, and excellent growth prospects until 2011, community food services are both a noble and lucrative industry to enter amidst the gloom.

 

5. Vocational Rehabilitation Services

Revenue forecast 2013 onwards.	Annualized industry growth of 6.2 percent to
Start-up costs	$500- $1,000 initial capital outlay, including gas and food supply

 

Rising unemployment and displaced professionals will spur demand for vocational rehabilitation services this year, as the workforce becomes starkly competitive with the increasing amount of Americans vying for work.

“Getting people back to work will be a key priority for the government, so this industry will enjoy strong federal support for at least another year or so. Demand for industry services will be strongest in the regions most affected by the subprime crisis, particularly Calif. and Fla.,” advised van Beeck.

The recession will drive demand for training and return-to-work programs, and although the level of capital intensity is relatively low and industry assistance is high, it is a tougher field to penetrate than some of the other start-up options on this list. Industry contacts and counselling skills are particularly important.

 

6. eCommerce & Online Auctions

Revenue forecast 2013 onwards.	Annualized industry growth of 12.1 percent per
Start-up costs	Online retailing start up costs at $12k to $260k

 

Americans are becoming thrifty with their wallets, and with the Internet offering an array of providers for every conceivable need, consumers are better able to research and compare more inexpensive options offering the greatest value.

This industry’s phenomenal growth is expected to continue for the next few years, facilitated by relatively low operating costs that lead to higher profit margins for operators.

Technologically, the industry continues to evolve and improve. Secure payment systems such as PayPal and effective web-based self-service solutions are improving business-to-consumer relations while boosting confidence and convenience regarding online shopping.

“This industry has low entry barriers and the cost of purchasing, establishing, and maintaining a website is very low, making it an encouraging prospect for new entrants. However, people considering setting up shop in this field are advised to consider that the costs of establishing, and maintaining a more advanced e-commerce site – with enhanced functionality and features – is much more significant. Setting up and maintaining databases can require hefty initial capital investment, and maintenance costs are of course ongoing,” van Beeck added.

 

7. Automobile Towing

Revenue forecast 2014 onwards.	Annualized industry growth of 2.7 percent to
Start-up costs	$20,000 – $75,000 initial capital outlay

 

As consumers are cutting back on expenditures with their vehicles and putting off repairs, the number of breakdowns and volume of motorists needing emergency roadside assistance will increase, spurring demand for maintenance and servicing. Over the long-run, ageing fleets and high traffic volumes will invariably support the need for towing services, as commuters who opted to use public transport during tough economic times move back behind the wheel once the economic climate improves.

Further more, independent contractors are often able to provide better response times if they maintain a larger fleet of tow vehicles that can service a wider area. Public and private entities often find it more cost-effective to contract for services on a per-tow or per-repair basis, rather than maintaining a fleet of vehicles with the staff to operate them. This is becoming an even more attractive alternative, as the public and private sector attempt to reduce secondary labor costs – such as health insurance and pensions.

New entrants to the industry must become accredited by the state roads or transport authority, and pay regular license fees (combined cost of around $3000), as well as complying with regulations including driver log books and environmental stipulations. The cost of a tow truck ranges from as low as $20,000 for a used vehicle, to around $60,000, and operators also need to invest in tracking and communications.

 

8. Video Game Retail

Revenue forecast 2014 onwards.	Annualized industry growth of 11.4 percent to
Start-up costs	$200,000+ initial capital outlay, primarily including the cost of a shop front, stock and supplies

 

As a growth industry, video game retailing is a viable and lucrative business option in the current climate, as video games console a growing number of consumers spending more time at home. With low barriers to entry and modest initial capital requirements, this industry is well suited for potential entrants. Further, the ability to secure contracts from game wholesalers is relatively easy to facilitate, and the only barrier for new entrants is the cost of securing stock for initial sale.

 

9. Elderly & Disabled Services

Revenue forecast 2013 onwards.	Annualized industry growth of 7.1 percent to
Start-up costs	$200k – $1 million+
$200k would be the absolute lowest – new entrants need to be willing to invest in nursing staff (who will need to work 24 hours), as well as considerable amounts of medical equipment and mobility-assistance machines, among other expenses, driving up costs. This can be recouped fairly swift as long as occupancy is high enough, but any entrant would need to be cashed-up or willing to borrow heavily in a tight credit market.

 

Growth and demand is steadily rising in this field, and it is a trend IBISWorld expects to continue for the foreseeable future, as the baby boomer generation approaches retirement age – spurring renewed demand like never before for age-specific services.

“This is supported by the fact that establishment growth is considerably stronger among non-employers, with annualized growth of 8.3 percent over the current period, as opposed to 3.3 percent among employers,” explained van Beeck. Government grants could be drawn upon to establish new industry entities – bringing down start-up costs – which are still significant since operators need to invest in and often modify premises, hire qualified nursing and auxiliary staff, and seek specialized medical equipment.

“Rising federal government funding, the rise of age-related issues, and an emphasis on caring for people with disabilities (such as the New Freedom Initiative), make this industry highly prospective. Entry barriers are low, and tax concessions and rebates are available for non-profit organizations. Currently, 86 percent of industry players operate without having to pay taxes – a significant incentive.

Oil a hot commodity with investors

Prospects for the oil market are looking good, according to industry analysts. Although high prices have caused consumers to use less fuel, the market is continuing to rise thanks to the growing demand from emerging markets like China, the world’s second-largest consumer of energy. Oil prices have gained more than 30 percent this year, breaking $60 a barrel during trading last Tuesday in New York. According to an Energy Department report issued May 6th, US crude supplies rose 605, 000 barrels to $375.3 million, the highest it’s been since 1990.

The oil market is certainly ahead of itself, despite a continual decline in total fuel-demand. Meanwhile, major independent oil companies have halted exploration budgets and cut back on planned capital expenditures, waiting for a rebound. The latest U.S. employment data is suggesting the economic slump is bottoming out, all of which means that if and when demand for oil rebounds, a surge in supply will ensue.

The growing consensus among industry analysts is that we can anticipate seeing stocks propel even higher. But, “The question is not if, but how fast? How much?” says Oppenheimer analyst Fadel Gheit. Given the current economic conditions, it may seem counterintuitive to go bullish on oil prices. But investors are betting that as the economy gets better, the commodity market for oil is a lucrative place to be.

Mina Kimes, of Fortune magazine, gives her two cents on which companies to bet on:

One tried-and-true approach to betting on oil is to buy the biggest, most stable company in the sector. That, of course, is Exxon Mobil (XOM, Fortune 500), which, with $477 billion in revenues, is by far the largest of the supermajors and has the best return on equity. But many oil investors aren’t wild about the stock at its current price. While Exxon is the largest holding in T. Rowe Price’s $2.9 billion commodity-focused New Era Fund, manager Charles Ober says the stock, though ultrasafe, isn’t worth its premium over its peers. Exxon has a P/E ratio of 8, the highest of the majors. Plus, Exxon’s very size and stability mean that it probably won’t rise as much as its smaller rivals if there’s a strong move up in crude. “Right now, I’d rather have something that’s more levered to the price of oil,” says Ober.

Where should you look beyond Exxon? With future capacity in short supply, the best way to pick winners, analysts say, is to focus on the few companies that are positioned to sharply increase production. And among the oil giants, the company with the brightest outlook is Chevron (CVX, Fortune 500). Barclays estimates that Chevron will increase production by 2.7% annually through 2012, the best rate among the super majors. “Right now, Chevron has more resource opportunity than they’ve had in a long time,” says J.P. Morgan analyst Michael LaMotte, who expects the company to work deals to get access to new reserves in countries like Iraq and Brazil. With a P/E of 6, Chevron is also cheaper than Exxon, and its dividend yield of 3.8% is nearly twice that of its bigger rival.

A pair of mid-majors also offer robust growth prospects. According to Barclays, Hess (HES, Fortune 500) will increase its production capacity by an average of 2.4% a year through 2012. But J.P. Morgan’s LaMotte believes the company’s holdings in Brazil and West Africa give it the potential to far surpass that estimate. “When you look at exploration upside, Hess has considerably more than any other company,” he says. Marathon Oil (MRO, Fortune 500), which Barclays expects to boost production by a robust 4.3% this year, is a particular favorite of Ed Maran, the manager of the $2.1 billion Thornburg Value Fund. “It’s trading far too cheap relative to the value of its assets,” says Maran.

But perhaps the most impressive growth story in the oil world belongs to Petróleo Brasileiro (PBR), or Petrobras, the giant Brazilian oil company based in Rio de Janeiro. Over the past two years the company has announced three deepwater discoveries that are potential mega-fields. While they’ll take years to develop, they have vast potential. “If you look across all the companies you can buy as an oil investor, there’s only a handful of companies that can grow organically, and we like Petrobras the most,” says Cheng of Barclays. He also points out that while new investors have flocked to the company’s common stock, they have largely ignored its preferred shares, which currently trade at a significant discount. If you’re going to play the oil rebound, you might as well start from the lowest point possible.

The Added Bump in the Economy for Pregnant Women

As times are quickly changing, and the economy evolving, women may need to re-think the way they dress for work when they are pregnant. That is the advice of image consultant Maureen Costello, principal of Image Launch in Chicago. She assists clients with their professional image in a variety of business situations, and coaches them on dining and business etiquette. Ms. Costello advises employees of some of the nation’s largest companies through her seminars.

When dressing for the office, Ms. Costello recommends staying away from form fitting maternity clothes that have been the trend in recent years. The introduction of lycra-based fabrics, coupled with a general increase of body exposure in the office, have changed the way pregnant women dress for work. Many of the maternity clothes of late display the woman’s growing belly, growing chest and the all-defining umblicous as it pops out.

Ms. Costello’s advice in this period of business history is to downplay the pregnancy. This is the time to dress in maternity clothes that do not scream “I am pregnant!” to her co-workers and clients. “Things that were perceived to be okay in business one month ago, may not be in alignment today. For example, a client function held in a warm weather resort location is less apt to get approval now. At bonus time, a boss who pulls up in a new corvette can expect a different reaction from co-workers than he might have just a few months ago.” Dressing for work is no different. “Employers are looking to trim staff and increase efficiencies, and these decisions are made behind closed doors.” In these times, the less you make of your pregnancy the better.

Frances Keating worked as a Learning and Development Manager for a large bank during most of her pregnancy. Ms. Keating says, “I agree that a woman who is pregnant in the workplace should down play their pregnancy. I was not a fan of having people notice my growing belly. Actually, I rather enjoyed the comments from individuals that stated, ‘I can not even tell that you are pregnant.’ It wasn’t until I was pushing six months that people began to notice the pouch. I preferred to wear clothes that hid my pregnancy simply because I did not want people in the workplace to focus on my stomach, but to focus on what I was saying, especially when I spoke in front of a large group. No one ever conveyed any particular expectation of my maternity wardrobe and I made sure to continue to look as professional as possible.”

Ms. Costello also advises pregnant women to be aware of other subtleties. If a woman typically wears dark suits to work everyday, but now only wears floral; her employers may take notice of the behavior change. Conversely a woman who took great pride in her appearance, but is now “muddling through” may also be sending out the wrong message.

Adrienne Stachura, who is seven months pregnant, and works as a Consignment Coordinator for a large electronic interconnect supplier company says, “I believe it is even more important now- a- days to look pulled together and business appropriate while pregnant at the work place. The last thing I want to convey to my employer during this economy is that my pregnancy will hinder my image at work. We as women must prove we can balance family, careers, and still look polished while pregnant.”

According to Ms. Costello, a frequent problem for pregnant women has often been finding a website or store to find professional maternity clothing. While there are many large retail stores and small boutiques that sell maternity clothes, Matriarch Maternity is one of the few stores to primarily focus on the professional mother- to- be. Seeking alternative clothing sources to build your comfort and confidence will be worth the effort during this transition phase.

While “looking the part” may seem like one more thing to add to a woman’s list who is working through her pregnancy, the long term impact on your career is worth the extra effort. Maintaining consistency with your over-all image should be your guide as you navigate your pregnancy in the office. The idea of transparency with discretion will go a long way with the added bump in your immediate future.