Trade deals put KC on the map;
International leaders meet
By Rick Alm
The Kansas City Star
October 14, 2005

Nearly 200 U.S., Canadian and Mexican business and government leaders met Thursday to map new North American trade partnerships that will place Kansas City in a pivotal role.

“Kansas City is well positioned to be an economic and transportation hub of North America,” said Sen. Kit Bond of Missouri, keynote speaker for the two-day conference. He outlined the region’s central geography, nationally ranked highway and rail assets, and a pending agreement that will allow Mexico to establish its first foreign-based customs inspection office here.

That precedent-setting international pact is the subject of high-level talks now between the two nations, and Bond said the deal was expected to close soon.

The Kansas City Council has approved a $2.5 million loan to KC SmartPort to build the customs facility in the West Bottoms near Kemper Arena on city-owned land east of Liberty Street and mostly south of Interstate 670.

Mayor Kay Barnes welcomed Kansas City’s international guests as “three cultures coming to the table as one for an economically stronger North America.”

In the past year, the city has signed cooperative agreements with the Mexican deep-water port cities of Manzanillo and Lazaro Cardenas, and the Mexican state of Michoacan, aimed at fostering business and government partnerships to move goods to and from Mexico through Kansas City.

The city today is scheduled to sign similar agreements with Winnipeg and the Canadian province of Manitoba, and Manitoba Premier Gary Doer is expected to be on hand at the Kauffman Center, where the first “North America Works” conference is being staged.

Bond praised the effort as the first bringing together of the hemisphere’s key transportation, business and government leaders in working sessions.

Transportation partnerships are a key component, and central to that is the Mexican customs presence in Kansas City.

Freight would be inspected by Mexican authorities and then sealed in containers for movement directly to Mexican destinations, with fewer border delays.

The deals become more lucrative when Asian markets that ship through Mexican ports are figured into the mix.

Officials say the arrangement would shave significant time and labor costs for U.S. and Canadian exporters.

“Do the math,” Kansas City-based international cargo broker David Burdick said at a work session Thursday.

“People are saying this can’t be done. Well, it’s already being done. We’re way past proving our point,” said Burdick, president of Priority Logistics Inc.

Burdick said the advantages of using Mexican ports over strained U.S. ports such as Los Angeles and Long Beach, Calif., are staggering.

“Labor costs alone are 64 percent cheaper in Mexico,” he said. “As soon as Kansas City is clicking, everybody will want to use it.”

That is the hope of KC SmartPort, which promotes international trade in the region.

Nonprofit SmartPort, which will lease the customs site, has agreed to repay the city’s loan over 10 years with revenues generated by international trucking shippers, who will use the Mexican customs clearinghouse.

SmartPort President Chris Gutierrez said he hoped the facility would be ready by March for an expected ribbon-cutting by Mexican President Vicente Fox.

The city, meanwhile, is expected to reap spinoff benefits, including increased shipping and warehousing activity in Kansas City, said Bonnie Sue Cooper, who has been engaged in Mexican trade issues for years.

“We’re getting a lot of calls” from business that sense expansion opportunity here, Cooper said.

“We’re going to put more people to work and we’re going to fill more potholes along the way,” she said.

Kansas City’s emerging role in international trade has not gone unnoticed in the industry.

Trade journal Expansion Management last month listed Kansas City No. 3 on its annual list of “America’s 50 Hottest Cities” to do business, ranking cities for their business climate, work force quality and other factors.

DHL , a subsidiary of the German firm Deutsche Post World Net and a top international express delivery company, last month opened a $3 million regional sorting center in Kansas City, Kan. A company spokesman at the time said this area was chosen for the facility because of its good transportation network.

DHL estimates that the new facility would pump $2.2 million annually into the area economy through employee payroll and taxes.

This month’s issue of Logistics Today features Kansas City as “the land of possibilities with little congestion and lots of resources” including a sprawling underground Foreign Trade Zone that already handles $9 billion a year in goods being moved internationally.

An added Kansas City advantage, the magazine noted, was the purchase earlier this year of Mexico’s Texas Mexican Railway Co. by locally based Kansas City Southern .

That purchase will bear fruit later if the former Richards-Gebaur airfield, planned for redevelopment as an intermodal transit and cargo hub, develops a similar Mexican customs operation for rail freight.

Thursday evening, Jose M. Basagoiti Jr., a director of Mexico’s BancoMext foreign trade bank, was scheduled to announce the establishment of a branch operation in Kansas City to attract U.S. investors to Mexican firms.

Basagoiti said nearly 17,000 Mexican firms already had U.S. investment partners, which have helped push the value of Mexican-U.S. trade to $275 billion a year from $93 billion a decade ago.

“There are a lot of investment opportunities in Mexico,” he said. “We’re working.”

Kansas City officials have been laying the groundwork for Mexican trade deals for years, beginning with sister city agreements with Guadalajara and Monterrey.

Kansas City’s quasi-public “MexiPlex” office at 16th Street and Baltimore Avenue is the only one of its kind in the United States, housing the city’s Mexican Business Initiatives Corp. , the Mexican Consulate’s three-state regional office, the offices of the North American International Trade Corridor Partnership and the Hispanic Chamber of Commerce of Greater Kansas City , and representatives of Guadalajara and Monterrey.

Reproduced with permission of The Kansas City Star © Copyright 2006 The Kansas City Star. All rights reserved. Format differs from original publication. Not an endorsement.