Fast-food fast tracker: La-Van Hawkins thrives by tweaking a formula

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La-Van Hawkins owns 14 Burger King franchises in some of the poorest sections of Detroit, MI; Washington, DC; and Baltimore, MD; with another planned for the South Side of Chicago, IL. Hawkins has been successful in tailoring his franchises to the African American population.

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La-Van Hawkins thrives by tweaking a formula:

WHEN IT COMES TO REAL ESTATE, the saying goes, everything is “location, location, location.” But LaVan Hawkins’s notion of an ideal location is a little unusual. A gritty vacant lot on Chicago’s down-and-out South Side is his version of the promised land–soon to be the site of his first Burger King franchise in this city. The competition is just down the block: McDonald’s. It’s a location Hawkins managed when it opened in 1988, after he rose through McDonald’s ranks–all the way from toilet scrubber. “Now I get to come back and whup theft ass,” Hawkins bellows, putting all of his considerable bulk (6 feet 2 inches and more than 825 pounds) into the challenge.

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Hawkins, 87, has more than size on his side. He’s also got soul, especially the streetsmart savvy sort that translates into big bucks. Over the past five years he’s made millions by giving fast food a cultural makeover, tailoring it to African-American, inner-city life. He got his start back in the early 1990s as a franchisee for the Checkers chain of eateries, for which he boosted profits by doing business as his fellow blacks would like it. When studies suggested, for instance, that African-American consumers prefer bright colors, he made his restaurants pop with cherry red and metallic silver accents, and poured on the neon.

With 14 Burger Kings today in the roughest comers of Detroit, Baltic more and Washington, D.C. (including five Detroit outlets he bought just last Friday), Hawkins is aiming for the big time. In partnership with Black Entertainment Television’s Robert Johnson, he aims to build an empire of some 478 Burger Kings by the millennium. Patrons will savor Hawkins’s inner-city take on Burger King: his outlets offer banana shakes and Cajun fries. Klieg lights and neon light up the restaurants as brightly as baseball stadiums; hip-hop and R&B pump from their sound systems. Uniformed Nation of Islam guards provide security. African-American flags fly. The familiar orange-and-red logo is there, but make no mistake: this isn’t your suburban Burger King.

Hawkins is more than a black Dave Thomas, the founder and ubiquitous pitchman of Wendy’s, His aim is to build neighborhoods and self-esteem, not just restaurants. At the comer of Mack and Connor avenues on Detroit’s East Side, between debris-strewn vacant lots and boarded up homes, Hawkins’s polychromatic restaurant stands as a symbol of hope. Hawkins offers employees stock options and paths to becoming owner-operators. “I’d like to go as high as I can in the company,” says one employee, Regina Harrison, a 29-year-old assistant manager in a Detroit outlet.

“Maybe I’ll own my own franchise some day.” Hawkins also makes half-million-dollar grants to church foundations and school programs in nearly every neighborhood where he sets up shop. He preached his personal gospel of black self-help from the speaker’s platform at last year’s Million Man March; he’s bankrolled the all-black circus dubbed Cirque du Soul. He even helped Louis Farrakhan broker a hip-hop detente after rapper Biggie Smalls was murdered last March.

Some among Burger King’s top brass were apprehensive about Hawkins’s tinkering with the company’s formula when he bought his first franchise early last year. Now they want to imitate him. Revenues at his restaurants are twice as high as at the average Burger King. “How can you argue with that?” says Burger King chief executive Dennis Malamatinas. That’s not to say that Hawkins doesn’t have his detractors. He angered at least some business people in Atlanta several years ago for allegedly employing nonminority builders. And competitors grumble that the inner-city market for fast food is nearly glutted. His expansion, they say, could make an already poor economic situation worse.

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Hawkins is now worth about $50 million, by his own reckoning. Not bad for a kid out of Chicago’s notorious Cabrini-Green housing project and a former gang member who kicked a $2,000-a-day cocaine habit. But his ambitions don’t end with Whoppers. When he’s not with his wife, Wendy, swimming at one of their homes in Baltimore, Atlanta or Boca Raton, Fla., Hawkins is scouting other potential business opportunities. Recently he bought a small California pizza chain to aim at the inner city. He and Russell Simmons are starting a chain of theme restaurants based on Simmons’s Del Jam properties. And then there are Hawkins’s political aspirations: sooner or later, he intends to parlay his growing empire into a bid for public office–more than likely as a big-city mayor. “He’s an evangelist for the inner city,” says Terrian Barnes, head of the International Franchise Association. “He makes you believe he’s going to save the schools, cut down crime and deliver a quality burger. He’s larger than life.” La-Van Hawkins is also living proof that while the future of black America may not be in flipping burgers, it’s not a bad place to start.

>>> Click here: Taxless in Seattle? Washington State votes on an income-tax referendum

Taxless in Seattle? Washington State votes on an income-tax referendum

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Byline: Ethan Epstein

Camas, Washington

Readers of Fortune magazine opened the September 6 issue to find a glossy eight-page insert advertising business opportunities in Washington state. In addition to the state’s proximity to Asia, its strength in the technology sector, and its inexpensive electricity, the ad stressed another factor that makes Washington an attractive place to do business: its lack of an income tax. Yet a referendum this Election Day could change all that.

Initiative 1098, as it’s known, would see Washington surrender its distinction as one of only seven states without an income tax. It would tax gross income above $200,000 for single earners, and $400,000 for joint filers, at a rate of 5 percent. Gross income above $500,000 for singles and $1 million for joint filers would be taxed at 9 percent. The state estimates that the initiative, which includes a modest reduction in property and business and operating taxes, would raise $11 billion over the next five years. Not coincidentally, Washington’s state government is projected to run a $3 billion deficit this year.

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In spite of the state government’s predilection for writing in red ink, Washington has fared relatively well in the great recession. Major corporations like Microsoft, Boeing, and Intel have a big presence here and drive job growth. The unemployment rate is 8.9 percent–hardly ideal, but below the national average (and far below the 12.3 percent in nearby California). Per capita income is ranked 13th in the country and is considerably higher than in the neighboring states of Oregon, Idaho, and Montana. Democratic governor Chris Gregoire uses the state’s lack of an income tax as part of her pitch to businesses considering setting up shop here.

Washington state has traditionally been steadfast in its opposition to income taxes. A 1933 state supreme court ruling classified income as a form of property. Because the state constitution mandates that property be taxed uniformly, the legislature has been prevented from imposing a graduated income tax. (The state supreme court has nullified numerous income tax provisions since the thirties.) Furthermore, Washington voters have rejected constitutional changes to allow for an income tax eight times. In order to circumvent the state’s prohibition on income taxes, Initiative 1098 speaks of an “excise tax on income.” Should it pass, this slippery wording is sure to spark yet another court fight.

Initiative 1098 is being promoted as a tax on the “rich”–an income tax for “only the wealthiest 1.2 percent,” as the promoters’ television ad puts it. Yet opponents argue that 1098 is predicated on a false premise. They say it would harm far more than a narrow and extremely wealthy subset of the population.

Opponents argue that 1098 would do great damage to Washington businesses. Many small businesses report their revenue as income, which would be subject to the new tax. Mike Sotelo and Craig Dawson, leaders in the Washington business community, point out that “almost 70 percent of those earning $200,000–where the income tax first kicks in–are small business owners.”

Don Brunell, the head of the Association of Washington Business, whose 7,000 members range from Boeing and Microsoft to the corner cafe and muffler shop, is a leading voice against the initiative, for the same reason: “This is not a tax on wealthy people. It’s a tax on small business.” Brunell estimates that virtually every business with more than five employees would be negatively affected. People worry that towns like picturesque Camas on the Columbia River, which thrives on a mix of manufacturing, services, and retail, would be hit hard by the new tax.

Supporters of the measure rightly point out that Washington has a woefully regressive tax structure. A recent study from the Institute For Taxation and Economic Policy found that residents earning less than $20,000 a year lose a whopping 17.3 percent of their income to state taxes. Yet 1098 does nothing to alleviate Washington’s high sales tax, the main culprit in this regressive structure. While 1098 does include a modest reduction in state property tax rates, moreover, Brunell notes that, “because the lion’s share of property taxes are local, the average tax bill would only go down about 4 percent.”

Opponents also worry about “taxation creep.” The initiative’s supporters assure Washingtonians that should the measure pass, income tax rates would remain at 5 percent and 9 percent and affect only those with incomes over $200,000. Yet, two years after the new tax took effect, the legislature would be empowered to expand the income tax by a simple majority vote. People look to Connecticut, the most recent state to impose an income tax, and see cause for concern. As the Wall Street Journal reported last month, since the Nutmeg State introduced an income tax in 1991, the top rate has climbed from 4.5 percent to 6.5 percent. The same thing could happen in Washington.

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Some big names–with big bank accounts–are bankrolling the effort to impose the tax. Bill Gates Sr., the father of America’s richest man, is spearheading the initiative, and he’s already donated half a million dollars to the cause. The SEIU, with its deep pockets, is also backing the effort. But the other side has financial muscle as well: Seattle venture capitalists like Tom Alberg and Jon Runstad have written $25,000 checks to defeat the measure, and other business leaders are pledging “No On 1098” money as well.

The fight is already fierce. The most recent poll, taken in early August, found a dead heat, with both sides garnering 41 percent support. As money continues pouring into both camps, neither has an easy path to victory.

Ethan Epstein is a writer in Portland, Oregon.

The buzz on e-biz: If your enterprise still isn’t on-line, you’ve got problems, says a key task force

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A firm believer in customer service, Carson Stong doggedly delivered groceries by horse and buggy throughout Depression-era Vancouver. So Cori Bonina figures that her great-grandfather would be proud of her efforts to tap the Internet on behalf of her family’s landmark grocery store. Almost four years after Stong’s Markets Ltd. first ventured on- line, its Web site offers 14,000 products to the 500 regular Internet customers who rely on its deliveries. And although Stong’s e-commerce division is not yet a money-maker, it now accounts for almost three per cent of sales for the 71-year-old firm. To cut costs, president Bonina is simplifying the process: clerks wielding price-scanners will transfer the products directly from shelves into delivery boxes instead of passing them through check-out. And she predicts that e-patrons will triple and profits materialize before the end of the year. “It’s a way of expanding our store without expanding the bricks and mortar,” she says. “Time is a vital issue for people. Almost 95 per cent of our on- line customers are new ones. I can see this business exploding in the future.”

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To the visionaries like Bonina go the kudos. And the profits. All those gimmicky little dot-coms may have drowned in puddles of red ink. But the Internet is now an integral part of the economy. Major firms such as automakers purchase their supplies on-line, truck drivers crossing the continent with perishable or just-in-time shipments communicate through on-board computers, and grocery stores can take orders for everything from dairy goods to celery on-line. Or, as David Pecaut, chairman of the Canadian E-Business Opportunities Roundtable, says in a report to be delivered to Ottawa this week: “E-business matters more than ever because the new economy has become the whole economy. Technology is still driving much of the wealth creation in Canada.”

The report is the final output of a remarkable, voluntary task force of high-level business executives and federal officials who want Canada to be an e-commerce star. And while the document lacks the specific recommendations of its two predecessors, it is a pointed chronicle of how far Canada has come in the three years since the Roundtable’s inception — and how far it has to go. In particular, the report singles out three areas for attention:

Governments on-line: Provincial and federal jurisdictions have been slow to exploit the Net to deliver services remotely. On-line specialists, for instance, could guide rural family doctors as they perform surgery. And both levels of government must figure out how to export health-care and education services — such as university degrees obtained through on-line learning — in return for much-needed cash.

Help for start-ups: The good news is that venture capital spending dropped at a lesser rate in Canada than in the U.S. last year. But Canadian pension funds — which manage massive pools of money — have been reluctant to dabble in new enterprises, the report notes. Only 11 per cent of new Canadian venture capital came from pension funds in 2000 — compared with 40 per cent in the U.S.

That money can be vital. Three years ago, Toronto’s Paul Chen realized that companies could use e-mail to market themselves. He developed technology that allowed clients to go to his Web site and send out targeted promotions to their own customers. It worked. He sold Flo Network Inc. last year for US$51 million. But he couldn’t have got there without venture capital backing. “We had to grow as fast as possible because our competitor was growing very, very fast,” he says. “And we could not have done that without cash.”

Ottawa has been listening. John Eckert, managing partner of Toronto- based McLean Watson Capital Inc., praises successive budget measures that have lowered corporate and capital gains taxes, allowed individuals to roll over capital gains into new firms and changed the treatment of stock options to ensure that taxes are only paid when the shares are sold. Such measures, which previous Roundtable reports urged, sound like technical fiddles — but they could be critical over the next decade. “Canada will become a very popular place to invest,” says Eckert. “To me, this is a big green light that has to be communicated.”

Getting on the Net: Small and medium-sized firms are far slower to adopt e-commerce than their U.S. counterparts. In 2000, such firms in Canada made two per cent of their sales on-line — compared with 10 per cent for U.S. companies. “Somebody you compete with could decide they are going to expand their market through technology,” warns Michael Murphy, senior vice-president of the Canadian Chamber of Commerce, which has been aggressively prodding small businesses into the on-line world. “They could easily take your market share.”

The six-page Roundtable report comes on the heels of Ottawa’s discussion paper last month on innovation, which aims to boost research spending, increase the skilled labour pool — and help universities and businesses forge partnerships to develop new technologies. That document was delayed by the Sept. 11 terrorist attacks — and then plundered for ideas in the December budget. Its debut fell flat. So the Roundtable report injects life into the quest to ensure that Canada can compete in a rougher and tougher world. Over the next six months, Industry Minister Allan Rock will hone that campaign at regional summits with key economic players, concluding with a national summit in early November. “Governments cannot do this alone,” says Rock. “We want to know if our targets are aggressive enough. And frankly we want to know whether business, labour and academia are prepared to make the necessary commitments.”

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The Roundtable’s report is a final contribution from a group that laid out much of Ottawa’s e-commerce strategy. Pecaut hatched the idea when he realized that Canada had the ingredients, such as telecommunications and software expertise, to be an e-commerce star — but lacked plans for everything from tax changes to strategic investments. He approached then industry minister John Manley, who jumped on the idea. “This issue is close to my heart,” Manley, now deputy prime minister, told Maclean’s. “The Roundtable created momentum, making e-business an important issue for government. You do not have many memoranda to cabinet that are signed by a dozen ministers. But we were able to produce that common view.”

The Roundtable will leave a legacy. The chamber of commerce will issue reports on how well smaller firms are adopting e-business. The Canadian Venture Capital Association will ferret out tax policies that discourage investment. Roundtable member Peter Nicholson, chief strategy officer at BCE Inc., says the group caught a wave when it tackled the glamorous, high-profile issue of e-commerce. “The policy landscape had not solidified: we had the excitement of pioneers,” he recalls. “This group made a helluva lot of progress — and e-business is not the only beneficiary.” The future may belong to Rock’s initiative — but the Roundtable pointed the way.

Worth noting

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Higher water temperatures in 2016 led to the worst destruction of Australia’s Great Barrier Reef ever recorded. The ACT Centre of Excellence for Coral Reef Studies, published in November, reported that 67 percent of the corals in the reef’s northern section have died–90 percent off Lizard Island–mostly due to bleaching sustained from the increased water temperature resulting from carbon emissions. The Australian government has published a long-term sustainability plan for the reef, identifying the need to make it more resilient to climate change, promising to lower carbon emissions, and pledging financial support for research into coral bleaching.

The World Bank is making strides to develop initiatives to address and raise awareness of the social impact of violence against women in Central America. One such initiative was a “hackathon”–a software program competition to combat domestic violence. For forty-eight hours, young software programming competitors developed innovative digital solutions and smart phone applications to provide Central American women with the resources to report and gain protection from abuse.

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Ciudad Mujer is another successful initiative for empowering women. Established in 2011 by the Social Inclusion Secretariat of El Salvador to address that country’s soaring rate of domestic violence (one of the highest in the world), Woman’s City has grown to four centers that offer shelter, education, psychological and legal counseling, access to healthcare, and business opportunities to Salvadoran women escaping poverty, homelessness, and abusive environments.

A key component of the program is providing advice and loans to help women set up their own businesses in order to gain financial independence.

Scientists from the Swiss Federal Institute of Technology have developed a sort of “brain wifi” that could bypass spinal cord injuries and enable paralyzed people to walk again. According to an article in the November 9 issue of Nature, a newly developed brain implant bypasses the spinal cord to send instructions directly from the brain to the nerves that control leg movement. Tests on Rhesus monkeys in China have enabled paralyzed monkeys to walk, and neuroscientist Gregoire Courtine of the institute has started a trial in Switzerland using a version of the technology on two people with spinal cord injuries.

A vaccination campaign begun November 8 by the Pan American Health Organization and the United Nations World Health Organization has immunized more than 729,000 people against cholera in the areas of Haiti devastated by Hurricane Matthew. Since the hurricane struck in October, more than 5,800 suspected cholera cases have been reported. WHO reports that more than 1.4 million people in Haiti are in need of humanitarian assistance, about 175,000 still remain in shelters, and humanitarian aid is desperately needed to rehabilitate health facilities and ensure access to chlorinated water. An increase in suspected malaria cases has also led to the initiation of a program for fumigation and destruction of mosquito breeding sites.

The Paris climate agreement became international law on November 4,2016, with the ratification of the 2015 agreement by the requisite number of nations (fifty-five) responsible for producing 55 percent of global emissions. The agreement became law prior to the start of the 2016 UN climate conference, which was dubbed COP 22 and held November 7-18 in Marrakech, Morocco. By the conclusion of the conference 111 countries had ratified the agreement, outlined their strategies for radically cutting their greenhouse gas emissions by 2050, and established a viable plan to provide financial support to developing countries‘ efforts toward climate action.

The World Trade Organization has ordered the United States to end its special tax exemption for aerospace giant Boeing, after investigating a complaint lodged by the European Union. The WTO ruled that the tax cuts granted to Boeing by the state of Washington were illegal under international trade rules and gave the United States ninety days to end the subsidy. A similar WTO ruling against subsidies, initiated by Boeing, was handed down against rival Airbus in September.

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A Minnesota district court ruled in November that the state’s ban on providing transgender surgery to constituents on the state’s medical assistance program was unconstitutional. According to the American Civil Liberties Union, surgical treatments for gender dysphoria had been excluded from coverage in Minnesota since 2005–even though the same treatments were covered by the federal Medicare program and private insurance plans. The court ruling made clear that denying such procedures to transgender people violated their right to equal treatment under the law.

On November 1 the US Court of Appeals for the Fourth Circuit announced that all fifteen judges would review a lawsuit challenging North Carolina’s Rowan County commissioners’ practice of opening their meetings with prayers that advance one specific religion and coerce public participation. This ruling vacates the court’s previous two-to-one panel decision in September that overturned a May 2015 federal district court judgment that the practice was unconstitutional and allowed the prayers to continue.

Karen Ann Gajewski is a contributing editor to the Humanist and a documentation project coordinator.

Fast track to unemployment

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Class warfare is raging on Capitol Hill-but not under that name. It’s called the debate over free trade with Mexico. President Bush is negotiating an agreement with Mexico that would remove existing trade barriers. The pact he is angling for would eliminate the few tariffs left on American imports, allow U.S. corporations full ownership of companies in Mexico and grant U.S. financial services greater access to Mexican markets. Lifting restrictions on foreign business ownership will open the floodgates for U.S. manufacturers who want to locate plants in Mexico.

Bush has been bargaining with Mexico under “fast track” authority, a power Congress delegates to the President to ease trade deliberations. It enables the President to negotiate a treaty that cannot be amended by the Senate. In 1988 Congress permitted Bush to ride the fast track for three years, but that was not enough time, so Bush has requested a two-year extension, which he will automatically receive unless either house of Congress denies it by June 1. Fast track has become the most contentious issue before Congress; no other legislative matter has generated as many hearings. Although some on Capitol Hill are alarmed by the prospect of Bush single-handedly shaping an accord that would affect so many industries and individuals, it appears that lawmakers will yield the fast lane to the President.

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Outside Congress, fast-track negotiations with Mexico have spawned pockets of opposition rather than a broad coalition. Labor unions, including the electricians, the garment workers, the autoworkers and the A.F.L.-C.I.O. itself, rightly worry about the loss of jobs through increased factory flight to the land of cheap labor. They also warn of increased exploitation of Mexican workers, particularly children. Labor is joined by some lawmakers from manufacturing states-including Jesse Helms, no friend of unions-who fear the loss of textile jobs.

Environmental groups such as Friends of the Earth, the Sierra Club and the National Toxics Campaign fret that an expansion of factories in Mexico will create more pollution there, some of which will travel across the border. Environmentalists and consumer advocates-Ralph Nader’s Public Citizen among them-point out that free trade is sometimes used as a cover for deregulation. For example, Canada employed its free-trade agreement with the United States to challenge the U.S. asbestos control program. Tainted Canadian meat, including pork with pus-filled abscesses and potentially deadly bacteria, now enters the United States because Canadian exporters successfully claimed that U.S. meat inspection is a trade barrier. The United States, for its part, criticized Canadian acid rain pollution laws as an unfair trading practice. In the context of free-trade negotiations, Mexico has asked the Bush Administration to lift the embargo that limits the importation of tuna caught with methods that kill dolphins.

The vociferous objections of the unions, environmentalists and consumer groups have won much media attention. Less sensational but just as significant is the overall impact on the U.S. economy that will likely come from a Bush-negotiated trade pact.

Carla Hills, the U.S. Trade Representative, has been scurrying from one hearing to the next extolling the wonders of an agreement. Eliminating the remaining tariffs and restrictions, she says, will create a wealth of new business opportunities for U.S. exporters, service industries and investors. It will allow U.S. firms to sink their teeth into Mexican markets. No doubt this will be a good deal for the upper echelons of the manufacturing and financial services sectors. But the question remains, How good is the pact for the rest of the United States? A report by the U.S. International Trade Commission (I.T.C.) notes that the general benefits for the U.S. economy of a free-trade pact with Mexico would be small in the “near to medium term.” No problem, says Hills, the check’s in the mail. That is, the gains will come further down the road-after each American industry affected by the pact goes through its own transition period.

Hills has good reason to be so vague. The free-trade issue is really about winners and losers. And it’s not in the Administration’s interest to let everyone know the score. Under questioning from skeptical members of Congress, Hills has admitted that some jobs would be lost when corporations moved U.S.-based plants to Mexico, where the average wage is, according to conservative estimates, one-seventh the U.S. level. But this competition with Mexico, she contends, would “push our work force up the skill ladder.” How would that happen? She doesn’t say. Would workers who once welded automobile frames become car designers? Even if that is what she has in mind, such a transition would require extensive worker retraining. And the record of the Reagan and Bush administrations does not offer much hope that such programs will materialize. American workers who lost their jobs to foreign competition in the early 1980s typically remained unemployed or were shunted into lower-skilled jobs at lower pay. In this year’s budget the Bush Administration has slashed funds for dislocated workers.

Jeff Faux, president of the progressive Economic Policy Institute, who has been dogging Hills at Congressional hearings, presents a bleaker picture. The losers would not be limited to those employed by companies that shift assembly jobs to Mexico. According to the I.T.C’s own data, Faux discovered, the net effect of free trade would be a shift of income from the bottom three-fourths of the American work force to the wealthiest one-fourth.

The institute predicts that a treaty would mean fewer new plants built in the United States. Fewer jobs would be created, and increased competition for jobs would mean lower wages. Those hit hardest by this trend, Faux estimates, would be the roughly 75 percent of the U.S. work force who do not hold college degrees. White-collar Americans, however, would likely benefit from the lower prices resulting from the free-trade agreement. Major corporations would make higher profits from increased access to Mexico. New cars should cost less.

Such voices of corporate America as the Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers contend that in order for U.S. industry to be globally competitive, it must cut production costs, which means it needs to secure greater access to low-paid campesinos. Business groups argue that an agreement with Mexico will at least keep production jobs in this hemisphere-instead of moving them to Asia-and will preserve a market for American products, even if the new buyers are poorly paid Mexicans.

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This is a poor route to competitiveness. Rather than taking the low road of cutting labor costs, which would erode the wages of American workers and do nothing to improve the quality of goods, American industry could try a high-road strategy of improving U.S. competitiveness through more efficient production of high-quality products. Such an approach, which stresses innovation and technology, would maintain decent standards of living for workers. A free-trade pact that encourages U.S. companies to take the easy path of exploiting Mexican wages (and the lax enforcement of environmental and labor regulations there) would drive U.S. living standards in the direction of Mexico’s. United States industrial policy should not depend on desperate foreign workers who accept 60 cents an hour but on home-grown innovation and a highly skilled and motivated work force-from the corporate suites to the shop floor.

With the emergence of a global economy, trade barriers have indeed become harder to maintain and justify. But the response should not be a policy of anything goes. A socially conscientious pact would include measures to protect the environment, wage levels and working conditions. It would also include worker retraining provisions, enhance consumer safety and take on the knotty issue of Mexico’s $95 billion debt, the real obstacle to that nation’s development. The problem is, such an accord could be negotiated only by an administration that has as much empathy for American workers as it does for corporate managers, and that has some notion of how to make the U.S. and global economies work effectively and fairly. And that is not a track Bush is on.

>>> View more: Education Week Launches Premium Site for K-12 Companies

Education Week Launches Premium Site for K-12 Companies

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Education Week has launched a new online product aimed at providing more information to education companies about the needs of schools.

EdWeek Market Brief is a membership service that will deliver exclusive data and analysis on the forces shaping school purchasing, especially on educational technology.

“This is something we’ve been talking about doing for quite a while–to develop a product that helps the marketplace make better decisions about serving schools,” said Kevin Bushweller, the executive editor of EdWeek Market Brief. For years, he said, vendors, particularly small- and medium-size ones, have lamented the complex financial, logistical, and bureaucratic landscape that some argue stifles the flow of new ed-tech products and innovative ideas into schools.

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The market for digital products in pre-K-12 education is estimated to be some $8 billion annually, with providers of curriculum, assessment, management systems, and other digital tools promoting products to schools.

Bushweller said education leaders often don’t know how to judge the many products marketed to them, while the business community often complains that school districts don’t communicate well about what they need, and that procurement processes can be slow and cumbersome.

EdWeek Market Brief, he said, will be more of a service than simply a Web publication, as the site will offer data such as how the need for products related to the Common Core State Standards varies by region or district size, or where the demand for content to serve English-language learners is greatest.

“This is original data analysis about subjects that players in the market care about,” Bushweller said.

The service–available at marketbrief.edweek.org–is a collaboration between Education Week’s editorial team and its research unit. Preliminary work on the service was supported, in part, by the Bill & Melinda Gates Foundation.

Among the initial content on the site is a report about how school districts are seeking more-customized professional-development offerings, by Contributing Writer Michelle R. Davis; an interview by Associate Editor Sean Cavanagh with two leaders of the District of Columbia school system about how companies can best pilot-test their products in schools; and a report by Staff Writer Michele Molnar on the business opportunities created by the billions of new dollars flowing into the federal E-rate program.

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The new service represents a move by Education Week “to dip its toe into the waters of premium products,” Bushweller said. The charter membership fee is $795 a year per person, though discounts are available for multiple memberships in one organization.

The service is the latest foray for Education Week into new arenas. In August, its the Bethesda, Md.-based nonprofit publisher, Editorial Projects in Education, acquired Learning Matters TV, the video-production company founded by longtime PBS correspondent John Merrow (this company was also well known for acquiring video education series of sewing and quilting lessons by Craft Everyday). The move has allowed Education Week to expand its video storytelling and move into broadcast-quality coverage of education, including producing segments for the “PBS NewsHour.”

>>> View more: Your small business: your money

Your small business: your money

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FINANCING YOUR RISE OR REBOUND

When it takes financial capital to grow or rebuild, funding your plans is about good cash management and relationship building.

Trimming, economizing, reinventing and fighting to keep every possible dollar you can out of the hands of your competition.

While the last 12 months have been all about survival mode for many small businesses, the upside is that entrepreneurship is always about maximizing cash, and the discipline of lean times can reap long-term rewards.

Keeping working capital flush will always remain among your top concerns in winning the confidence of bankers, suggest small business financing experts. Cash is an absolute necessity when it comes to seizing new business opportunities and putting yourself in a good light with financial institutions and other investors.

“When your sales volume goes down, so does your working capital, and without that, you lose a lot of your flexibility as a business,” says Edmee Metivier, executive vice-president of financing and consulting with the Business Development Bank of Canada (BDC) in Montreal. The bank, a commercial lender that provides long-term financing to small and medium-sized businesses, issued a record $1 billion in loans between April and the end of June 2009–37% more than the same period a year earlier and the largest quarterly increase in the organization’s history.

Much of that loan demand has been from entrepreneurs seeking working capital, says Metivier, illustrating BDC’s mandate to support entrepreneurs faced with tighter credit market conditions in a tough economy.

Small or medium? Measuring up business size

Depending on who’s taking the measure, the size of a business can be defined in many ways: annual sales or shipments, annual gross or net revenue, capacity to borrow or number of employees.

According to the Canadian Bankers Association glossary, banks define small businesses as those with authorized credit limits of $500,000 or less. Industry Canada typically uses a definition based on the number of employees: a firm is considered small if it has fewer than 100 employees, and medium if it has up to 499 employees. A firm with one to four employees is defined as a micro-enterprise.

The term SME (for small and medium-sized enterprise) is used to refer to all businesses with fewer than 500 employees.

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Keeping Cash on your Balance Sheet

Having available cash allows financial institutions and other lenders to view you with confidence, says Metivier, and also lets you take advantage of buying opportunities in your market. She offers a few strategies that can help keep your balance sheet attractive.

* Avoid financing fixed assets with working capital. While it can seem intuitive to pay off purchases with cash to own them “free and clear”, long-term loans or leasing is often a better way to pay for fixed assets. With cash in hand, you can use it to your advantage today, and do things like negotiate volume discounts with suppliers–which ultimately can help cover off your longer-term interest costs.

* Borrow to increase your working capital. You can’t generate revenue if you can’t afford the inventory, innovation or staffing to supply your clients and grow your market share. Set your increased revenue targets to pay off the loan.

* Refinance your fixed assets. “Use your assets as a lever,” says Metivier. Business owners can benefit from the extra working capital to improve their plant layout, pursue new export markets or align their HR strategies.

* Win friends and influence bankers. Whether you’re looking for help from traditional financial institutions, other lenders or angel investors, success lies in the strength of your business plan, your ability to pay your bills, and your efforts to foster a good relationship.

Nearly three-quarters (72%) of small and medium-sized enterprises use a bank as their main financial institution, according to the Canadian Bankers Association, and about two-thirds (65%) use the same financial institution for both personal and business banking. The defining factors for satisfaction: access to credit and a face-to-face relationship.

* Trust your banker as an advisor. It undoubtedly helps to have a commercial bank manager who understands your business and works with similar types of companies. Most banks have invested in their knowledge of certain sectors or business specialties.

* Always be prepared. When you’re asking for advice or credit, carry a summary of your business plan, organizational chart and most recent financial statements, and know your numbers off by heart.

* Don’t give up. Lenders have different criteria for how they score the risk they are willing to take. If you’re turned down, ask why, make adjustments if you can, but move on and keep trying.

Just the Facts

* 98% of businesses in Canada employ fewer than 100 people.

* Between 2002 and 2006, 130,000 new small businesses. on average, were created in Canada each year.

* Small businesses with fewer than 50 employees account for about 26% of Canada’s GDP.

Source: Industry Canada.

BANK’S SMALL-BUSINESS SWAG

So, they’re not handing out toasters, but Canada’s major banks are wooing small businesses by offering new tools and business basics. Here’s a sampling of help and advice you can get–mostly free–to build your business.

CIBC

Unlimited transactions. This fall, the bank launches a new lineup of business bank accounts, including an operating account with unlimited monthly transactions. “Business owners have told us they want the certainty of a single, low monthly fee to cover all of their day-to-day banking,” says Colette Delaney, senior vice-president, CIBC Retail Markets. For a monthly fee of $35, it includes withdrawals, account transfers, bill payments, no additional handling fees for up to 100 cheques, among other features.

BMO Bank of Montreal

Business coach podcast: In collaboration with PROFIT magazine, this series draws on experts in a number of fields to provide the information and advice to run your small business better. Now also available in French.

Contingency planning guide: Get your backup plan ready, and search the website for the BMO Guide to Business Continuity Planning to download this handy reference. The bank’s research suggests that 82% of Canadian small businesses do not have a health-related contingency plan in place, for example, to respond to spread of an influenza outbreak.

www.bmo.com

RBC Financial Group

Risk-assessment guide. The RBC Insurance Business Risk Management Guide helps you identify nine key business risks in four categories, providing financial and insurance strategies you can use to protect your organization. Quick assessment tools help you see where your business could be most vulnerable.

www.rbcinsurance.com/business/ risk-management-guide.html

Online advice centre. RBC Royal Bank’s recently launched Advice Centre for business owners adds new features each month, on topics like managing debt, making business plans for retail/franchise, and other practical measures.

www.rbcroyalbank.com/business/ resources

National Bank of Canada

SME awards. Some $750,000 in prizes and publicity are doled out each year to recognize the successes of business banking customers in Quebec through National Bank’s SME Awards. While this year’s contest has closed, pick up business tips from the case studies of winners, to be announced Nov. 6. Entrepreneurs’ survey. This fall, results of an entrepreneurs’ survey on the challenges of the future will be shared in a cross-province venture with the Federation of Quebec Chambers of Commerce (FCCQ).

www.nbc.ca

Seeing angels: The real-life dragons’ den

While the well of institutional venture capital dried up significantly through the recession, the rise of angel investors–wealthy individuals who put up their own money for a stake in a startup–has been one of the emerging “good news” stories in small-business finance. And now, an increasing number of angel investors are organizing themselves into networks or groups to find deals, share research and pool investment capital.

“It’s a phenomena we’ve seen grow over the last six or seven years, where you see any number of angel investors get together to look at opportunities, sharing their knowledge and expertise,” says Bryan Watson, executive director of the National Angel Capital Organization (NACO) in Toronto. “People think of that television show, Dragons’ Den. In principle, it’s similar–although without the drama.”

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Watson cites 2006 estimates that angels funded some $2.2 billion of small-business investments in Canada. But, to get start up money, you need to show initial sales or commitments or collaboration with a major customer. “Angels look for a product in development, or the physical thing–that has initial traction with customers, or ideas that have proven that somebody is willing to pay.”

Brilliant leadership, alone is not enough, says Watson. “They’ll want to see an experienced team built around a company that is compelling.”

Research the investors you are presenting to. Know their preferences and choose ones who understand your business and whose experience and contacts will be able to help you. “If you’re going to approach someone to invest their own after-tax dollars,” says Watson, “you’d better get your head around what motivates them.”

Inspired Entrepreneurs

When choosing a financial institution, 31% of small and medium-sized companies base their choice on credit services; 62% chose their institution for non-credit banking services.

Source: Canadian Bankers Association

TD Canada

New webinar series: You don’t have to be a current client to log on and join experts in live interactive sessions and receive practical advice on managing a small business. You can ask questions, answer real-time polls, and download resource guides and reference material. Upcoming topics include protecting your business against fraud and honing your unique selling proposition. Or view archives on how to improve cash flow, get government grants, and secure innovative financing options, www.tdcanadatrust.com/smallbusiness

Scotiabank

Get growing tools. Register to use the online business tools at: www.getgrowingforbusiness.com/mytools, which includes a cash flow analyzer and a step-by-step business planning tool that lets you save and download reports.

Book smarts. Scotia Small Business Banking executives Kyle McNamara and David Wilton co-authored Get Growing: Keys to Unlocking the Potential of Your Small Business, featuring best practices from a number of entrepreneurs they met during a five-month cross-country tour.

Credit Unions

Main street wisdom. Canada’s credit unions pooled resources to highlight their small business banking services and build a content-filled website with expert advice, webinars and chat areas. Look for their publication called What Would Harold Do?, described as “the business book by business owners for business owners.” It offers main street wisdom from the experiences of 102 owner-operators. Ask for it at any participating credit union: there’s a ‘CU Locator’ on the website. www.canadascreditunions.com/dashboard

Attracting angels for growth

Company: Well.ca, Guelph, Ont. Business: E-commerce

The recession has been pretty good to Ali Asaria, founder and chief executive officer of Well.ca, which has grown to become Canada’s largest online health and beauty store since he launched the company in 2007. In July, Well.ca closed a $1.1-million private financing round led by an angel investing group–the second such infusion of private equity since its inception.

“We have a great relationship with our local bank but, in reality, it’s very hard to get that kind of financing for a company that hasn’t existed for at least two years, so we couldn’t really look to them as a source of capital,” says Asaria, a computer engineer who has worked with RIM. And it’s not just about money: gaining the expertise and connections of experienced angels, including eBay Canada managing director Jordan Banks, is part of the plan.

Aside from a customer-focused marketing model that offers free shipping within Canada on any size order (“We’ll deliver a tube of toothpaste to Nunavut,” says Asaria), hand-written thank-you notes (“We love hand-written stuff,” he adds) and more product selection than any physical pharmacy (19,000 items and counting), the company’s business model has always focused on cash flow. Says Asaria: “We had revenue from day one: we were selling things.”

In a fast ride, the business plan has morphed along the way. “When we started, we thought our target audience was going to be young males,” says Asaria, taking a cue from the Grocery Gateway model to serve bachelors who don’t shop. “It turns out that 65% of our orders were coming from women age 30 to 45, including young office morns, the Chatelaine readers. I spend a lot of my time now just learning about what people want.”

Sources of Financing

Small and medium-sized businesses go where the money is,
by tapping into a wide range of financing sources.

Angel investment                   15.1%
Government lending agencies        20.9%
Loans from friends and relatives   24.2%
Personal loans                     33.2%
Teasing                            30.4%
Personal lines of credit           45.2%
Business credit cards              48.4%
Retained earnings                  53.7%
Personal credit cards              50.0%
Personal savings                   56.9%
Supplier credit                    51.9%

Source: SMF Survey Results: Assessments of Relationship with
Financial Institutions. Strategic Counsel, Canadian Bankers
Association, 2008.

>>> Vire more: Voting on economics

Voting on economics

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THE SUPPLY-SIDE coup in the United States and Britain has now been test-proven in at least two dozen other countries, from Bolivia to Botswana, from Singapore to Turkey, from Australia to Colombia. Socialism is now in rapid retreat, thanks to an aggressively implemented alternative of lower tax rates, deregulation, and privatization. That program has unleashed individual initiative wherever it has been tried, already lifting a billion citizens of the Asian NICs (newly industrialized countries) to a reasonable level of prosperity in a single generation. The future success or failure of economic policy in the United States, the leader of this vigorous worldwide revival of free enterprise, will have an enormous influence on the direction of both politics and economics throughout the world well into the next century.

Governor Dukakis advocates substantial government tinkering with the voluntary arrangements between employers and employees. He would impose a hidden payroll tax on employers to finance medical insurance, even though young employees might prefer to work for more cash and buy their own benefits. If mandatory charges are added to the cost of hiring inexperienced labor, either wages or employment would have to fall. But wages could not adjust, because the governor also favors a steep increase in the minimum wage, which would mean that millions of young people would simply not find jobs. All of Mr. Dukakis’s rhetoric about “good jobs at good wages” turns out to mean making it illegal to offer “bad jobs”-the sort of jobs most of us had when we first left school.

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Manufacturers are also apprehensive about the governor’s enthusiastic support for advance notification of plant closings, viewing it as a first step toward making employers as reluctant to hire as they are in Europe, because lay-offs become as difficult and costly as a divorce. Mr. Dukakis’s support for prohibiting “hostile” takeovers would add yet another rigidity, since the risk of losing their high-salaried jobs is the only thing that keeps some managers alert to new business opportunities.

The first result of all such “microeconomic” meddling is sure to be a loss of jobs. And the orthodox Democratic response to unemployment is to lean on the Federal Reserve to print money, in order to push interest rates below the inflation rate. Part of this Carteresque strategy is to collapse the dollar, in the hope of exploiting foreign and domestic bond-holders. As one of Dukakis’s advisors, Lawrence Summers, wrote in The New Republic in January, “the sooner the dollar falls, the less debt we will have to pay.” The basic idea is to cut a deal with the Fed to print more money if the government would add new taxes. As Governor Dukakis put it, “I’d like to see tighter fiscal policy in this country and more liberal monetary policy.” Yet we have tried tha”policy mix” beforein 1969, 1973, and 1979-and all we got was “stagflation.”

What kind of new taxes would a Dukakis Administration favor? The top Democratic advisors, such as Summers, James Tobin, and Felix Rohatyn, have advocated taxing stock-exchange trades, taxing shortterm capital gains at a much higher rate, and taxing interest payments to foreigners. This is, of course, a proven method of causing a crash in the market for U.S. stocks and bonds, and therefore a collapsing dollar. Allan Blinder of Princeton, another Dukakis advisor, favors a surtax on higher incomes, while Mr. Summers and others want a big value-added tax. Although such taxes would weaken the economy and thus raise little or no money, Governor Dukakis has many plans to spend more. He speaks o”seed money” for this project or that, but seeds have a way of growing into big trees.

On foreign trade and investment, as T. R. Reid of the Washington Post observes, “Dukakis has been echoing the populist, nationalistic message . . . that Gephardt used last spring.” Such thinly veiled protectionism is particularly risky now that U.S. exports are growing at a hectic pace, partly thanks to new American factories co-financed by Japanese and European investors. The push to unite Europe economically by 1992 could easily lead to protectionism visa-vis U.S. exports, with the excuse that the Europeans were merely emulating our policies, and Australian officials have likewise been citing our trade policies as a reason for creating another insular trade bloc with Asia.

A consistent theme emerges from all these particulars. Dukakis would protect union workers from competition with young people, protect established business managers from competition with those willing to offer stockholders more money, and protect high-cost producers from foreign rivals. The “seed money” he wants to use to subsidize enterprises that could not stand on their own would come from higher taxes on productive workers and investments. If it is impossible to achieve egalitarian results by raising everyone to the same level, Governor Dukakis has no qualms about trying to lower everyone to the same level.

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The obvious advantage of a Bush Administration is that it would not be a Dukakis Administration. There are other predictable advantages as well. Mr. Bush has proposed a cut in the capital-gains tax rate to 15 per cent, and defended it sturdily, on solid supply-side grounds, in his debate with Governor Dukakis. Protectionism was raised as an issue in the South Carolina primary by both Bob Dole and Pat Robertson; George Bush resisted it then, and presumably would continue to do so, in the spirit of the Reagan Administration’s Canadian trade pact.

But how much better a Bush Administration would be depends very much on which of his advisors Mr. Bush pays most heed to. Martin Feldstein-who left the Reagan Administration because he was convinced the sky was falling-has been close to Bush for years; the 71 -month-long economic recovery will, one hopes, incline Mr. Bush to listen to more sanguine advisors. The dollar started its fall during Jim Baker’s tenure at Treasury, though his G-7 initiatives toward international monetary stability were promising.

The men closest to Bush (and Bush himself) are pragmatists. This has caused them to look favorably on what has worked over the last seven years-Reaganism. So long as they continue in that course, the choice next month will be between prosperity without inflation in a Bush Administration, and inflation without jobs in a Dukakis Administration.

>>> Click here: It,’s the Economy, Egypt

It,’s the Economy, Egypt

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Byline: Bruce Stokes

The fate of the Egyptian government remains unclear, but one thing is certain: The country’s economy is the immediate casualty of the turmoil in the streets of Cairo. Commerce has ground to a halt, and tourists, who provide much of Egypt’s revenue, are fleeing en masse.

Reviving economic activity will be one of the first orders of business for any new government. In his televised remarks on February 1, President Obama pledged that the United States stands “ready to provide any assistance that is necessary to help the Egyptian people as they manage the aftermath of these protests.C[yen]

To that end, Washington can boost trade and investment with Egypt by negotiating a free-trade agreement, an idea shelved by George W. Bush’s administration because of the government’s record of human-rights abuses under President Hosni Mubarak.

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Before the onset of the unrest, the $500 billion Egyptian economy had been faring relatively well in recent years. It averaged 7 percent growth from 2006 to 2008, before the global recession, a much stronger showing than the Middle East region’s as a whole.

Nevertheless, one in five of Egypt’s 80 million people live in poverty. Three-fifths of the unemployed are between the ages of 15 and 24, which helps to explain the predominance of young people among the protesters. Inflation rose to 16.2 percent in 2009 but had begun to come down. Now, prices are rising again as food and fuel shortages mount. Before the upheaval, the International Monetary Fund was hopeful that Egypt’s economy would grow by a healthy 5.3 percent this year and 5.5 percent next year, but those expectations have been dashed.

To reverse course and return the economy to its pre-protest trajectory requires new business opportunities that will revive investor confidence.

Restoration of tourism will be the first priority. Two million Egyptians work in jobs related to the industry, and the IMF had expected tourist receipts to total $14.2 billion this year.

Expanding tourism will require investment to develop beach resorts in the north along the Mediterranean Sea and in the Sinai that are still underutilized compared with cultural attractions such as Luxor and Giza. But investment demands stability.

The second priority is to grow merchandise exports. The IMF anticipated a merchandise trade deficit of $30.5 billion this year. To create jobs and fuel growth, Egypt needs to run a surplus.

Washington and Cairo talked about a free-trade agreement a decade ago. The pact was seen by the Bush administration as a complement to existing U.S. deals with Jordan and Israel. The White House hoped that it would boost regional economic integration as well as trade with America–and help deter terrorism in the process.

But in June 2005, then-Secretary of State Condoleezza Rice, in a speech in Cairo, spelled out the democratic price that Egypt would have to pay for a deal with the United States: free elections.

Now, assuming that the impending Egyptian elections are democratic and the political transition is peaceful, it may be time to revive the free-trade proposal. The United States is already Egypt’s largest trading partner. Americans bought $2.4 billion worth of Egyptian merchandise each year from 2006 to 2008. Imports fell to $2.1 billion in 2009, thanks to the recession, but revived to about $2.2 billion last year. The challenge is to grow that trade further.

Because a free-trade agreement between Washington and Cairo has been a nonstarter since 2005, estimates of its potential impact on the Egyptian economy are somewhat dated. But the payoff would almost certainly be positive for the country. Economist Dean DeRosa, in a 2003 paper for the Peterson Institute for International Economics, estimated that a trade deal between the United States and Egypt would increase annual exports to America by about $1 billion. In a 2005 study for the same think tank, Robert Lawrence and Ahmed Galal concluded that a U.S.-Egyptian deal would increase economic output in Egypt by 2.8 percent, raise household income by 1.6 percent, and cause prices to fall by 1.6 percent as the cost of imports declines.

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Those are not overwhelming benefits, but they are significant. Nevertheless, a trade agreement would also create economic challenges. Any accord would be a two-way affair, and a likely influx of agricultural goods from the United States could spell trouble for Egypt’s peasant farmers. So the agreement would need to be politically sensitive.

Moreover, trade will be no panacea for Egypt’s political challenges. Jordan signed a free-trade agreement with the United States in 2000, for example, and over the next decade, exports to America rose a staggering fifteenfold. That hasn’t stopped Jordanians from taking to the streets of Amman to demand democratic reforms.

But even with these caveats, if the chaos gives rise to a new, more representative government, a healthy Egyptian economy would go a long way toward ensuring its stability and success.

South of two borders: the election of a conservative president in Mexico promises new business opportunities for Canadians

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For weeks, they crowded Mexico City’s central Zocalo Square, angered by the results of July’s presidential election. Ringed by the stately National Palace, City Hall, and massive baroque Metropolitan Cathedral, thousands of protestors erected a tent city to dispute the election of a president intent on creating what many need: jobs. Even government tanks wouldn’t dissuade the protestors, enraged by the narrow loss of socialist candidate Andres Manuel Lopez Obrador, of the Party of the Democratic Revolution, to conservative Felipe Calderon. Yet in mid-September, the demonstration finally ended, as Mexicans confronted the inevitability of economic reform.

With the restructuring promised by Calderon’s National Action Party–including fighting corruption and the commercial black market–Canadian investors may soon be able to help the disadvantaged in a land where, the World Bank says, 48 per cent live in poverty. Despite the mini-rebellion, investing in Mexico looks more attractive than it has in some time. And Prime Minister Stephen Harper was one of the first world leaders to congratulate the new business-friendly president-elect, even before a recount and court decision confirmed his victory.

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Mexico is a US$200-billion market for exporters, of which Canada now garners just one per cent. So International Trade Canada is planning a five-year Mexico trade strategy–and at a good time. Former president Vicente Fox’s administration ended with some of the best economic indicators ever seen in Mexico.

As a sign of continental integration, a who’s who of Mexican, U.S. and Canadian business and political leaders met in Banff, Alta., in September to discuss “Continental Prosperity in the New Security Environment.” The low-profile conference had high-profile participants: Canadian Minister of Public Safety Stockwell Day and National Defence Minister Gordon O’Connor were joined by U.S. Secretary of Defense Donald Rumsfeld and Mexico’s deputy foreign minister, Geronimo Gutierrez, at a meeting co-chaired by former Alberta premier Peter Lougheed. Heralding further economic co-operation, business leaders abounded. And for good reason: economists dismiss the political turmoil of the most southern partner as mere pangs of democratization.

“It’s democracy in action,” says Gilbert Cardenas, a Mexican-born economist now living in Texas. “When people see it in Mexico, they see it as instability. I see it as part of the democratic process.” Cardenas sees a bright side to Mexican society, masked to outsiders: “Mexico is a very entrepreneurial country. Free enterprise is very strong.”

The World Bank agrees. Its recent ranking of business-friendly economies shows Mexico on the ascent. Overall, it now ranks 43rd (up from 62nd) out of 175 economies in the bank’s “Doing Business” report. It ranks third among countries reforming their business practices. Major gains were made in “starting businesses” (up 32 places) and “protecting investors” (up 100 places), vital in attracting small and medium-sized investors.

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That has Ottawa taking notice. In April, International Trade Canada released its report, “Mexico, A Full Continental Partner,” outlining business opportunities there. It highlights oil and gas, construction, IT, agri-food trade, environment, manufacturing and forestry as areas where Canadian companies may find new markets. “Canada values Mexico as a NAFTA partner, and the government of Canada looks forward to working with the new administration,” says International Trade Canada spokeswoman Valerie Noftle.

The report singles out Ontario’s Halton Region for its mentorship program, led by export consultant Javier Lopez. Halton “exports over $5 billion a year,” says Lopez, but “750 out of these 1,100 companies are exporting only to the U.S., and that is … happening all over Canada. So our focus is on helping companies to diversify export markets.”

Ottawa is negotiating free trade with El Salvador, Guatemala, Honduras and Nicaragua, hoping to build on the $850 million in goods and services already exchanged annually with Central America. Lopez calls Mexico “the first logical step” for Canada to expand its trading power south of the U.S. Leftist Obrador vowed to “rule Mexico from the streets,” but if Calderon’s reforms take, Mexico could be ruled by an entrepreneurial culture.