HOW A TEXAS FIRM WENT HEMISPHERIC
SAN ANTONIO — * In 1984, Mike Novak wouldn't have believed it if someone told him he'd be doing business outside the states. Today, he sees his firm as a ``textbook case'' of a business that survived by going international. And, thanks to the North American Free Trade Agreement (NAFTA), it's about to thrive in Mexico.
Mr. Novak grew up around construction sites. In 1980, with the oil-nourished Texas economy in a boom, Novak and his father founded Contemporary Constructors. It began building churches, museums, apartments, and shopping centers. Its volume of business reached $20 million a year.
Then 1985 brought dramatically lower oil prices. ``Everything crashed [in Texas],'' Novak says. Company executives found themselves wondering what they'd do for a living, he says.
So Novak changed strategies.
r First, his firm would concentrate on a niche: telecommunications facilities.
r Second, it would go international, especially to Latin America. ``Those countries are no longer banana republics for the most part,'' Novak says. Their leaders, many educated in the US, know the American quality of life and want it for their own people. That requires infrastructure projects and, chiefly, telecommunications, Novak adds.
r Third, Contemporary Constructors would work for Fortune 500 firms so there wouldn't be a question of getting paid. During the Texas recession of the mid-1980s, Novak's firm would start a project only to have the customer go broke before it had been paid for.
r Fourth, it would seek involvement in longer-lasting, not just individual, construction projects.
Today, the firm has worked for companies like GTE and Westinghouse in Colombia, the Dominican Republic, Honduras, Panama, and Venezuela. This month, it began building cellular-telephone facilities in Argentina. ``We had found, prior to NAFTA, that Mexico just had too many barriers,'' Novak says. No longer. Just back from Guadalajara, he is arranging a joint venture with a Mexican company that serves a similar niche.
That company lacks technical abilities that Telephonos Mexicanos wants, and Novak can provide. TelMex has assured Novak it will give the joint venture plenty of business. ``That's a perfect example about how NAFTA works,'' he says.