When Mexico Sneezes . . . Global Economy Catches the Flu

I just completed a week of therapy . . . in Puerto Vallarta! What was anticipated to be a long overdue rest from the hectic pace of life turned into a state of frenzy as the stories of swine flu outbreaks dominated international news.

By Dawn Kristof Champney

I just completed a week of therapy . . . in Puerto Vallarta! What was anticipated to be a long overdue rest from the hectic pace of life turned into a state of frenzy as the stories of swine flu outbreaks dominated international news. While some attempted to provide balanced reporting, citing the unknowns associated with this latest strain of flu and dismissing any need for panic or travel restrictions, others cautioned against leaving the country, participating in public gatherings, or using mass transit in fear of encountering a deadly virus. In the end, we did our homework, confirmed that neither the CDC nor the WHO were recommending travel restrictions, and set forth on our family vacation to Mexico.

What I found to be most compelling about the trip, besides the beauty of the land, was the compassion of the people. Everyone greeted us with appreciative smiles, yet you could discern fear in their eyes, having nothing to do with the flu. They were encountering a “perfect storm” with the global economy spiraling downward, drug-related gun violence along the U.S.-Mexico border spiking upward, and now the H1NI flu whose origin still remains a mystery. The pandemonium that has surrounded this flu has, indeed, been deadly to Mexico – to its economy, that is, not to the spirit of its people.

Everywhere we turned we were thanked profusely by the locals for visiting their country during these trying times. They kept asking us why Americans were canceling their vacations and wedding plans to ‘P.V.’, which had yet to experience a single case of flu and was a safe distance from anywhere that had . . . safer even than our home back in Washington, D.C.! Our reply was one of regret, embarrassment, even apology for people’s over-reaction and the resulting economic consequences Mexico now suffers, evidenced first hand by the significant layoffs that occurred at our resort during the week of our stay.

So what does all this have to do with the water industry? It is just another example of how ours is a global community. It used to be that when America sneezes, the rest of the world catches a cold. Seems that’s no longer the case. To try to shelter ourselves from the world around us is naïve at best; destructive at worst. Mexico is a critical trading partner for companies in the water and wastewater industry. The “perfect storm” it faces will undoubtedly curtail investment plans for its infrastructure, meaning less business opportunities – and less jobs – for U.S. companies serving Mexico’s water and wastewater markets.

The situation is potentially more dire in Canada, our largest trading partner.

We have created our own “swine flu” of sorts in the U.S. under the guise of Buy American, which now has the real possibility of cutting off our trade with Canada. In 2006, the U.S. exported over $7 billion in environmental technologies to Canada. Ironically, the stimulus plan signed into law in February only provided $6 billion in water and wastewater infrastructure funding through the state revolving fund programs. The net result, should Canada retaliate and adopt similar protectionist measures (a very real possibility), could be an actual loss of over $1 billion in business for U.S. companies serving the Canadian environmental market. That’s nothing to sneeze at.

Unfortunately, the stimulus plan is not the only piece of legislation containing protectionist language. At present count, seven pieces of legislation working their way through Congress have similar Buy American requirements, including one which would provide funding for water and wastewater projects over the next five years.

This is not a short-term fix for U.S. employment. It is a long-term strategy being pursued by protectionist-minded members of Congress who don’t understand what the real long-term implications are for U.S. companies that won’t survive if they are unable to compete in today’s global market. Our nation’s water and wastewater utilities will also be victims of such myopic thinking as they will be deprived of cost-effective, innovative technologies they have come to rely upon – technologies that U.S. companies have succeeded in bringing to their municipal customers through their global supplier chains.

It is my hope that sounder minds will ultimately prevail and enable us to maintain a strong U.S. manufacturing base by encouraging fair and open trade, not trade barriers. It is also my hope that Mexico will ultimately weather out their “perfect storm” and find brighter days ahead. WW

About the author:
Dawn Kristof Champney is president of the Water and Wastewater Equipment Manufacturers Association., a 101-year old national trade organization which represents the interests of companies that manufacture and provide technologies used in municipal and industrial water supply and wastewater treatment applications.

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