GE has developed a specific business unit to take care of non-Mexican companies operating in Mexico under Maquila (IMMEX) programs. As opposed to U.S. and domestic banks, GE likes to invest in manufacturing assets and leverages on Mexican assets without asking for additional collateral in the U.S.
Alfredo Espino is GE's Senior Sales Manager V.P for International Finance. He explained the application range of specialized services that GE has developed to meet the needs of the maquiladora industry.
"We provide custom solutions," he said, "which can be a combination of products such as operating or capital leases or term loans for financing new or used machinery and equipment. Other solutions include factoring facilities for account receivables (generated in Mexico), as well as financing for technology (computers, servers, telecomm), and fleet services for corporate and service vehicles."
GE Capital has been very successful providing financial solutions to the Maquiladora Industry. In this way, Mr. Espino explained that their success is based on the business consultancy GE Capital provides for every deal. "We have developed enough business intelligence on the Maquila industry, tax and customs legislation and so we can use it for leverage when advising our customers. They value dealing with a partner which understands their needs."
"We tailor-make every product to our customer's specific needs," Espino continued. "We are proud to service from small organic produce growers to top 'Fortune EMS 100 companies with very complex and sophisticated equipment that is often transferred to other manufacturing facilities around the world. We strive to service each one of our customers with the same passion and level of detail. So, whatever structure the U.S. Corporate might have in mind it is executed in Mexico."
The current situation of the Maquiladora Industry financial services in Mexico shows that Mexican banks go after Maquila companies with an appetite to service their checking accounts, money transfers, currency exchange or payroll services. But on the other hand, they are shy about lending money due to the fact that these companies run on very low operating margins. Income in most of the cases is sent upstream to the corporate offices, or they are small start-up facilities running equipment formerly used at the Parent Company. This is something that generally is not attractive collateral for any standard bank.
GE's approach is totally different. GE looks at the credit worthiness (track record, market, experience and profile) of the Parent Company and funds the Mexican operation based upon that confidence.
From this perspective, Alfredo Espino is looking at the future of financial services for this important industry. "We are seeing a lot of activity on the M&A business," he pointed out, "including financing for acquisitions and financing to leverage on existing assets in Mexico in order to cash-in on resources. We are currently developing special programs directed to the automotive, electronics and mining sectors to cover very particular industry needs," he added. "We also consider Asset Based Lending is the next step and we are currently working on a couple of deals which link facilities around the world in the U.S., Europe, Asia and Mexico."
What is important to say is related to the perspective of transnational companies in regard to hiring financial services with GE Capital for their operations in Mexico. One of GE's biggest value propositions is the ability to execute abroad while keeping a local relationship at the parent company level. This means the customer is always certain about what needs to happen and they know both representatives in the local and foreign country operate in tandem, as opposed to having to deal with a different individual with a different cultural background in the foreign country.
Alfredo Espino, GE's International Finance V.P. and Senior Sales Manager, concluded with this observation: "Our biggest challenge is to raise awareness so multinational companies get to know our product capabilities. I have been in this business 12 years and still find companies which think the only way to finance their Mexico expansion is with their own resources or through U.S. banks which do not like to lend on assets located in Mexico."
"I invite subscribers," Mr. Espino added, "...to contact us to talk about their Mexico related projects. We will most certainly understand their needs and then share our experience and partnership in order to grow their operations in the most efficient way possible."