Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, January 12, 1995 TAG: 9501130031
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
Like chiles rellenos among a roomful of diners, Mexico's three-week-old economic crisis has affected exporters from the Roanoke region in a variety of ways; it's going down easier for some than for others.
In general, however, the region's exporters continue to believe Mexico will remain a potentially profitable market for their goods and services over the long run.
One of those harder hit is Pulaski Furniture Corp., which has halted all shipments to Mexico. The loss of business will not create major problems, but the company had a good sales volume south of the border and wants the business to grow, said sales manager Randy Chrisley.
Chrisley said he had just returned from the Dallas furniture market where practically no Mexican buyers had shown up. Some Mexican dealers have refused delivery of furniture shipments, Chrisley said, and his company decided to hold off on others until the economic situation settles down.
"I don't know where it's going to end up, but neither do the Mexicans," he said.
Mexico's economic problems, evident in steep losses in the value of the peso and large trade deficits, emerged as a public crisis Dec. 20. Since then, the Mexican currency has lost 40 percent of its value and the Mexican stock market has dropped by 21 percent.
John Huddle, an international trade lawyer in Roanoke, said exporting companies are expecting sales to Mexico to drop because of the crisis. Western Virginia companies, whose business with Mexico mostly involves exporting goods, are better off than companies that have invested in Mexican factories or formed joint ventures with Mexican companies, he said.
The crisis may be providing a hard lesson to some regional companies, said Huddle, who is also chairman of the World Trade Alliance of the Blue Ridge. The crisis, he said, will show exporters that they need to structure their trade agreements to protect against currency fluctuations and to have export sales backed by irrevocable letters of credit, preferably through U.S. banks.
Charlie Brenner, assistant vice president for marketing for Norfolk Southern Corp., said the railroad's shipments to and from Mexico were starting to rise just as Mexico's economy fell into chaos. NS had just shipped a test load of coal to Mexico for the first time, he said.
NS did about $30 million in Mexican trade hauls last year, mostly of automobiles and auto parts. Two-fifths of the shipments, which were up slightly from 1993, were northbound, and three-fifths were headed south.
"As it stands right now, we're not changing our plans or expecting any adverse effects" from the Mexican crisis, Brenner said.
The railroad hopes to double its business to Mexico in four or five years, he said.
General Electric Co.'s Industrial Drive Systems division, which operates two plants in Salem, also wants to increase its business to Mexico, but needs a stable Mexican economy to do that.
"Sales to Mexico are currently only a small, but growing, piece of our overall business - so the current situation does not have a major impact on us," Tom Brock, vice president of GE Drive Systems, said.
Medeco Security Locks Inc. of Salem, which exports to customers all over the globe, established an exclusive distributor in Mexico about a year ago but expects no serious chills from that country's financial flu. "I think we managed to get our ducks in a row early enough," said Peter Burrows, director of international operations.
Although most people are expecting a slowdown in Mexican trade, Burrows noted that in an economic crisis like Mexico's, crime can become more of a problem. "People are still going to lock things up," he said.
by CNB