Take Eric Hofmann, founder and CEO of New Orleans-based Bric McMann, a manufacturer and distributor of beauty salon garments. After being burned by a textile manufacturer in China who supplied him with smocks that were not color-fast, he decided to source his textiles locally and have the garments sewn in Mexico. He had met a Mexican agent at a trade show in the United States who said he had just the site for his operation. Although Hofmann was gun shy of foreign agents, he decided to take the plunge.

"I shipped him my products, then began getting excuses as to why they were not being made," he said. "Meanwhile orders for the garments were rapidly coming in."

Hofmann decided he had better fly to Mexico and see what was going on. He soon found the garments were being produced in a run-down converted tortilla factory.

"When the products finally did show up, they reeked of corn," he recalled.

Rather than throw in the towel, however, Hofmann decided to work with his Mexican agent to find another manufacturing site. His partner claimed he knew another man who ran a maquiladora in Reynosa.

"He said he could give me a good product for a cheap price," he said. So Hofmann gave him $10,000 to start manufacturing the garments.

"I never saw my product," he admitted. "It turns out my partner was not as connected as I had thought."

Not giving up, Hofmann turned to Pakistan for textile sourcing, then Honduras for sewing. Finally he hit a home run and his business took off. Ultimately, however, he returned to Mexico because of its proximity to the United States. This time, he established a solid relationship with a Mexican contractor whose sole business was concentrating on Bric McMann.

Hofmann moved 300 sewing machines slated for the factory in Honduras to Mexico for contract sewing.

Today Bric McMann supplies smocks to beauty salons across the United States and is doing contract sewing for such companies as Levi Strauss, The Gap, J.C. Penny and Burger King.

"The key to success in Mexico is finding someone you can trust and then establishing a good relationship with that individual," Hofmann said.

Of course, when a company is considering a Mexican location it must first decide what region of the country will best suit its needs.

"Unless transportation, which is uneven across much of Mexico, is a key issue, opportunities exist throughout the country," said Frances Sanchez, director of PHH Mexico, a division of HFS Mobility Services. PHH Mexico has been a site selection consultant in Mexico for years. Executives taking a look at Mexico quickly learn that one region of the country is as different
as the East Coast of the United States is from the West Coast.

For example, Guadalajara, while not easily accessible by truck or train, offers good air connections. For this reason, high-tech companies like IBM, Motorola, Kodak, Hewlett-Packard and Lucent Technologies have set up operations here.

On the other hand, some firms choose to operate in cities along the U.S.-Mexican border, where products can be transported easily and quickly to the large consumer market in the United States. Lucent chose Reynosa for its telephone service and repair center for this reason. Other companies operate from the many maquiladoras ("twin plants") along the U.S.-Mexican border.

"The most aggressive industrial development and activity opportunities currently are found in Mexico's northern states," said Sanchez. "In Chihuahua, Mexico's largest state, for example, industrial parks and maquiladoras are strong."

The growth of plants locating in this region has skyrocketed.

"Tijuana has become so saturated, that there is zero unemployment," she asserts.

Harish Dadoo, a consultant who works closely with PHH Mobility Service, points out, however, these areas still offer huge industrial park and growth capacity.

"Incentives, which must be negotiated case-by-case, typically include a waiver of property or transfer taxes," he said. "Utilities, such as electricity, are provided and most parks have their own water supplies independent of the city's."

The state of Coahuila has been aggressive in attracting U.S. manufacturers. Coahuila offers added advantages: a choice between locating at the U.S.-Mexico border or in Mexico's interior.

Coahuila has a long tradition of serving the automotive industry, with two Chrysler plants and two General Motors facilities in Saltillo, the state capital, and Renault in La Laguna. Coahuila has also been an important location for textile and apparel manufacturing. Located there are Sara Lee, Hanes, Cone Mills, Dickies, Savane and Wrangler.

"One company, a subsidiary of a large U.S. denim jean manufacturer, cited work in Mexico as the best they had seen in all of their global plants," Dadoo said.

Key to working with Mexicans, however, is relationship building, Sanchez stresses.

"Mexicans want to know you first before they will do business with you," she said.