More Alberta companies are dancing to a salsa beat as trade with their hermanos to the south continues to climb.

Nevertheless, some say even more emphasis should be placed on this emerging region for potential business.

"I think there's a perception about Latin America in terms of how it was in the 1980s: Hyperinflation, economies in turmoil and a lot of political instability," says Jeff Adams, a spokesman with Calgary-based CSI Wireless.

"The reality is that it's a burgeoning market with a growing middle class, and a good place to do business."

CSI recognized the importance of the Latin American market when it turned its attention south to sell desktop cellphones and GPS systems. Since 2002, it has racked up more than $80 million in sales below the Rio Grande, mainly in Mexico.

Edmonton's Marathon Marine discovered the Latin allure one day when it received a call from a Venezuelan fishing resort.

The Saranda Resort, 70 per cent owned by Calgary-based Merendon Hospitality Group that operates on Guri Lake, became interested in the boat-builder's lifetime warranty on its hulls.

The unexpected contract proved a boon to Marathon.

Mike Sturk, Business Edge
Drillers Technology president Ron Gnyra has found the year-round Mexican energy market a perfect fit for his company.

"What it meant to us was two things: A contract that was $1 million-plus, and a contract that gave us winter work building 16 boats during a time when we normally wouldn't be active," says co-owner Dave Unsworth.

Marathon, which mainly does business in Canada and the United States, is now keeping an eye out for other possibilities in the region and elsewhere worldwide.

Countries such as Venezuela, Colombia or Ecuador can present some unique business opportunities, says David Nygaard, director of Americas for Alberta Economic Development. He notes, though, that the juicier morsels are found in Mexico.

"A small company in Calgary could go down to a small market ... and find one or two or three good customers, and if your company isn't too big you could achieve some significant sales," he says. "But in terms of Latin America, Mexico is where a lot of things are happening for Alberta companies."

Mexico has become one of Alberta's most important trading partners, ranking fourth behind the U.S., China and Japan in terms of exports. According to provincial government statistics, in the early 1990s Alberta exported around $83 million worth of goods to Mexico; last year the figure reached $658 million.

Calgary's Drillers Technology is taking advantage of these growing relations. At the start of 2003, the small firm slipped into the Mexican market and currently has eight drilling rigs working almost 365 days a year. The country accounts for 60 per cent of the company's annual revenues.

Drillers president Ron Gnyra says his firm had been looking to head south because it wanted some relief from the cyclical nature of Canada's drilling industry, when a joint-venture opportunity with Dowell Schlumberger de Mexico (the Mexican arm of U.S. oilfield services giant Schlumberger Ltd.) appeared.

"Mexico is a great place to do business," Gnyra says. "We know that we'll always have very steady work because they're drilling year-round there."

While not as economically or politically stable as Canada and the U.S. - there is some concern about the change in government, Gnyra notes, as President Vicente Fox's six-year term ends in 2006 - and the initial language barrier, the high rig-utilization rate has made it worthwhile. Partnering with Dowell Schlumberger has also eased the bureaucratic problems that can arise from getting started in another country.

"The best way to (enter a new market) is to partner with a local company that knows the lay of the land," Gnyra adds.

Canada's ambassador to Brazil, Suzanne Laporte, also urges Alberta businesspeople to seriously examine opportunities in that country, especially in the energy sector.

She says the Brazilian government wants to invest upward of $40 billion in the oil and gas sector by 2010, including 60 per cent in exploration and production activities, and is seeking private-industry partners to achieve that goal.

Agriculture is another area Laporte has hoped Alberta "would become more involved in, given the immense opportunities," she told the Calgary business community at a panel discussion on Latin America, hosted by Calgary Economic Development (CED) and the Canadian Council for the Americas.

Laporte spoke of a recent conversation she had with a Texas rancher, who recently sold 50,000 head of cattle to Brazil and purchased a spread of 30,000 hectares.

"So you can see the Americans are moving into the beef cattle industry in Brazil," Laporte said. "I would suggest you should look, very aggressively, in investing in Brazil and partnering with Brazilian companies in that field."

Laporte added Brazil is also a leading producer of soybeans, corn, chicken, coffee, sugar and orange juice.

She also urged Premier Ralph Klein to seriously consider opening a trade office in the country. "Brazil is a great launching point for doing business in other countries in the Americas."

Government statistics show Alberta did $82.22 million worth of business with the South American economic giant last year, down from $114.35 million in 2003.

According to a report from the United Nations' Economic Commission for Latin America and the Caribbean (ECLAC), $20 billion US in investment is needed to resolve current energy shortages in countries such as Chile, Argentina, Paraguay, Uruguay and Brazil.

Foreign direct investment will be central to achieving this amount, ECLAC said.

The report, released last month, notes that despite the $77 billion US invested in electricity and gas in the 1990s, investment in the region's energy sector did not meet expectations of higher generation capacity. Changes to the region's regulatory framework and foreign operators entering the market were expected to improve the system, but this did not occur.

"Thus, new capacity is not enough to meet rising demand for electric power," the report stated. "It is still necessary to increase generating and transmission capacity in the electric power sector, find more hydrocarbon reserves and build gas pipelines."

None of this is lost on the CED, which is currently drafting a trade development strategy to work with both the provincial and federal governments to ensure Calgary companies know exactly what lies beyond North America's borders.

"Oftentimes I don't know whether all companies recognize the opportunities that are out there," says Clark Grue, vice-president of investment and trade development for CED. "We want to educate companies so they can decide where they want to be internationally," Grue points out that while growth in the Americas is important, other world regions - most notably Asia - are key trade destinations for Calgary companies.

And then there's all the activity happening in their own backyard.

"The thing about Calgary companies is that there's so much opportunity here," he says. "So to get them to (move to new markets) and leave a safe environment in Canada and the U.S., where they're making good money and things are going well, doesn't always fit their profile."

(John Ludwick can be reached at ludwick@businessedge.ca)