Forty three maquila purchasing managers explained their needs to about two hundred potential suppliers from Canada, Mexico, and all parts of the U.S., in formal and informal meetings during the two-day conference in the Sunshine Showroom at the Sunland Park casino. Among the maquila plants represented were Foxconn, Delphi Automotive, Toro, Sumitomo, ADC Telecommunications, and Electrolux.
I caught up to Jerry Pacheco, one of the principal planners of the conference, near the end of the conference, and asked him for his reaction to the unexpectedly large number of participants at the conference.
"In spite of the recession, the swine flu, and a spike in the violence in Juarez, interest in doing business on the border continues. Smart business people realize that times of crisis are also times of opportunity," he said. As an example, he cited the strong presence of auto parts suppliers at the conference. As GM and Ford become much smaller, auto parts suppliers are looking to diversify. "That's why Foxconn was such a big hit at this conference. Agustin (a Foxconn representative) said he got so many requests for information--240 cards--he's going to have to schedule a special meeting for those who want to follow through," he said.
Foxconn, scheduled to become the largest maquila plant in Mexico, is now operating at its new facility adjacent to the port of entry of San Jeronimo, Mexico, and Santa Teresa, New Mexico. There, it builds Dell computers. "When you build that many computers (about one million per year) that's a lot of screws, latches, plastic parts, buttons, and the like, for suppliers to provide," Pacheco said.
According to Francisco Uranga, Corporate Vice President for Latin American Operations at Foxconn,who spoke at the conference, there are 3900 persons employed there now, gearing up to 7500 jobs by October of this year. The campus at San Jeronimo includes a 40-room hotel for company executives to stay in. Another Foxconn plant operates independently at the Oscar Flores industrial park in Juarez, building Hewlett Packard computers.
Uranga explained that the decision to locate just South of New Mexico was due in part to the proximity of a population of 400,000 in West Juarez (Foxconn will be closer to this population than any other large maquila plants), the commitment by Mexican authorities to build a suitable road from Anapra to San Jeronimo to connect the plant to this source of labor, to the provision of electricity and water to the site, and the the strategic location of the plant in a Free Trade Zone next to a Free Trade Zone on the U.S. side. "Foxconn does not technically lie on Mexican soil," he said. Free Trade Zones provide tax breaks and other incentives for companies locating within them.
Another panel at the conference discussed the implications of large-scale infrastructural projects for trade in the Paso del Norte area. Curtis Spencer, President of IMS Worldwide, Inc., said the expansion of the Panama canal (a $5.25 billion project) will double it's shipping tonnage capacity, which will reduce demand for Mexican ports to transport goods to the U.S. The all-water Gulf and East Coast ports will be the main beneficiaries, not Mexican ports. On the other hand, as Mexican West Coast ports at Lazaro Cardenas and Punta Colonet expand, Mexico will be an attractive alternative--when the global economy recovers--for U.S. markets to re-route there instead of through Los Angeles-Long Beach, ports that have become highly congested. This will stimulate traffic through the Paso del Norte region as well as other U.S.-Mexico border crossings.
The Punta Colonet project to create a deep water port south of Ensenada in Baja California Norte, has been delayed and cut down in scope due to the global recession. This $3.8 billion project will be accompanied by the construction of a railroad connecting the port to the U.S. However, no decision has been made about the place the connection will be made. Farmers in Yuma flatly rejected putting the crossing into the U.S. immediately north of San Juan Rio Colorado. One of the possible options is for the railroad to go through Sonora to Cd. Juarez. Other options would include Calexico and Nogales. If it were to go through Juarez, this would greatly stimulate the growth of traffic through the border crossings in the Paso del Norte.
Locally, the decision of the Mexican government to divert rail traffic from downtown Juarez to Santa Teresa by building a spur, combined with the decision of Union Pacific to create an inter-modal facility near Santa Teresa, promises to increase the strategic importance of the port of entry at Santa Teresa-San Jeronimo. Luis Heredia, director of public affairs at Union Pacific Railway, explained that discussions with the BLM and the State Land Office are about to conclude and it is expected that by the end of this month Union Pacific will acquire the land it needs for the facility. The state of New Mexico has exempted locomotive diesel fuel from gross receipts taxes, in the interests of promoting the creation of this intermodal facility.
In a second phase, Union Pacific will build an intermodal ramp, with up to 30 tracks, to allow the building of trains. And in a third phase, Union Pacific will build a facility to simplify train-truck transfers. As these come on line, downtown El Paso will be able to rebuild one of the least distinguished areas in the entire Paso del Norte region.
The conference, now in its 16th year, was sponsored by various entities, including the International Business Accelerator (Jerry Pacheco is executive director); the North American Institute, headed by Dr. Jon Amastae, of UTEP; the City of Juarez; Western New Mexico University; the New Mexico Small Business Development Network; the Mesilla Valley Economic Development Alliance; and the New Mexico Economic Development's Office of Mexican Affairs.