And its impact in the economic development of the State
The border offers important advantages to companies that decide to install their operation plants nearby the neighboring country. Mainly they sought that goods and products being manufactured in border cities such as Reynosa, Nuevo Laredo, Matamoros, “to mention some in the state of Tamaulipas” reach in less time to its main distribution center in the United States, reducing transportation costs and expose goods to the lowest possible risk.
That is why; there are good reasons to locate a maquila and manufacturing company in the border. Companies can have the benefit of double nationality to develop in Mexico and the United States; for experts, another advantage is that it is an attractive from the workforce point of view, since there are certain mixtures in employees behavior with personnel studying, that studied or worked in the United States and that today are working in the industry, having thus the opportunity of living in the United States and that cross to Mexico to work.
Industry impact in Reynosa’s economy
The maquila industry has been for 30 years one of the main economic engines in the State, together with the economic development it generates.
For Martin Anzaldua, director of Grupo Rio San Juan, to locate the maquila companies in the border, basically means to have the convenience of moving in a shorter time period; that is the idea of locating the industrial parks near the international bridges. This benefit is achieved provided the import and export traffic is agile regarding the processes being done at customs; otherwise, it will be the same if the industrial parks are located near of far from the international bridges.
Now, regarding the location of companies in the different industrial parks in the State; the main objective for this industrial parks to be near the international bridges is precisely that, to reach the international crossing in less time and be near the plant in case of a last moment need.
Anzaldua also highlighted regarding the employment generated by the industry, and said that: “Taking into account that nowadays maquila companies in Reynosa are the ones offering a great job opportunity; we see that there is an important job offer. I think it is very important to serve and keep companies being established in Reynosa and the State for them to continue generating those jobs. Today is one of the few job generators we have in the city.”
If we talk about the Anzalduas International Bridge; in this moment it can still not be used for commercial traffic; only for commercial traffic ‘empty’ from north to south; but if the opportunity of crossing goods was given in this crossing, it is estimated a route time from the del Norte Industrial Park to the bridge of 10 minutes maximum. “This generates an impact in costs; time is money and the less time is invested in a work the cost decreases considerable,” said Martin Anzaldua, director of Grupo Rio San Juan.
Meanwhile, Jorge Torres, president of Interlink Trade Services, said that for effects of maquila plants installed at border and near of commercial crosses, one of them has to do with transportation costs reduction, time reduction and thus for them to react in a quicker manner to the export merchandise movement as well as of import.
Regarding “minimizing safety matters risks,” being located near the border also represents an advantage for the companies; as this way inspection risks or military check are decreased; “as they are located more into the interior, more is the roads traffic in Mexico and companies are major risk of military checks, which delays goods transportation times and also, many times it causes problems regarding risking the integrity of the supply chain on merchandise according to CTPAT and OEA,” said Jorge Torres.
Another advantage of locating maquila plants in the border is that managers as well as employees inside the American payroll can move in a quicker manner from the plants located in Mexico and be back in the United States (living in the United States and working in Mexico.)
Regarding the amount of crossings that a company can do by the proximity of the international crossings, Torres explained that while the amount of crosses a company can do per day varies, “since from this depends the size of the company, its production level and the type of product” there are companies that cross a truck per day, until those crossing 100 trucks every day.
In normal times, a crossing from Reynosa to the United States, once it left the plant and is documented, must be of two hours at the most; however, this time can be increased in perishable season, because they are competing, somehow, with these trucks at the bridge. “We are in the need of more commercial bridges options, we have seen cases where contingences have been present where trucks suffering some accident or damage, have stopped the crossing operations for more than 6 hours.
A company’s case
Cesar Cisneros, senior manager of international trade and logistics at Woodcrafters, said that this company does not have any plant located specifically at an Industrial Park; in fact this company has two plants located in the border, but not especially near an international bridge. Woodcrafters are present with two operation plants in Gomez Palacio, Durango, and the time-transit to reach the border is of 10 to 12 hours approximately. “With the experience of these two plants, it is acceptable to say that it is convenient to be located near the border; but mainly located near an international bridge,” said Cesar Cisneros.
“The time we do from Gomez Palacio to the border has to be added to customer’s deliver, it is a long time; the fact with transportation makes difficult having good tariffs due to distance and the second is that many of the customers in this area require a the Laredo route, they do not go to Reynosa that much, then this complicates the situation, as they also want to do the return with a loaded cargo and not only with an empty one aiming to make the movement affordable,” he noted.
Woodcrafters has two industrial buildings located in the border; one of them in Rio Bravo, Tam. and the second one in Valle Hermoso, Tam., therefore they use different international crossings, such as: Los Indios, Los Tomates, Progreso and Pharr, TX., this due to the location of the plants throughout this area. The plant in Rio Bravo does not have a nearby bridge, since it is located just in the middle of the Progreso and Pharr crossing, therefore they use both routes. Regarding the plant located in Valle Hermoso, it is located one hour distance from the Los Indios Bridge and more than an hour from the Los Tomates Bridge; despite that Valle Hermoso is considered as the border door, it is a problem to be an hour distance, therefore it impacts also in highways, tariffs and additional times.
“If we had our own delivery point in another area of the world; call it South America, the Caribbean or Europe, that will be good, because maybe our exit routes will be others, but in this case, as we supply to the United States and Canada, we have to go North, therefore it complicate us a little,” Cisneros said. Laredo and Reynosa are the nearest cities to Gomez Palacio, Dgo., from there we must go to Juarez, our distribution centers are located in the Valley, we have one in Weslaco, McAllen and recently we opened one more in Mission, TX.
Export crossings Woodcrafters made by the Pharr, TX. Bridge “only in December 2017,” were 844; on average they fulfill about 45 exports per day, and in the entire 2017 they fulfilled 9,277 exports; in fact this company is classified as one of the 5 companies that fulfills more exports through the Pharr International Bridge. As of the beginning of 2018, Woodcrafters has held 823 shipments in January.
Francisco Javier Solis Morales, secretary of Economic Development and Employment in Nuevo Laredo, highlighted that when the maquila and manufacturing industry started, it was considered important to locate them near the border mainly due to the relation of the value chains and at the moment of having the supplies of the Northern part of the country. This helped a lot, having them close decreased the freight costs, afterwards came the boom, with the movement of the industry to other parts of the country’s center.
The secretary of Economic Development and Employment in Nuevo Laredo noted that today the industry is returning to this area and this is mainly due to two factors: one of them is the factor ‘value chains,’ from the point of view of what can be achieved and do with the supply added value from the United States and Mexico. Another factor is that practically the export maquila and manufacturing industry not necessarily has all its market in the US or Canada; but it also reaches other parts of the world.
The industry represents an attraction for investors; manly Asian, because it gives their families the opportunity of enjoying the best from the point of view of a country, regarding what Mexico has to offer them and the advantages they also could have in the United States.
Bob Katusak, plant manager at IAI in Matamoros, Tamaulipas, also shared his opinion about the advantages of manufacturing companies locating their production plants in border cities.
He remembered that the maquila industry in Matamoros has about 50 years of experience and it is a rich area regarding labor matters; he highlighted that its people has the widest experience and quality in workforce a worker can have; however, “regarding costs,” he mentioned that the northern area is a little high to be installed; however, even so it compensates with the proximity of the United States.
“We cross 60 % of our merchandise to the neighboring country – the United States – crossing times are short, usually the merchandise reaches the neighboring country in 1 or 2 hours.” He said that in his experience, the customs service – Mexican as well as American – has been pretty good. Thus another advantage of being installed in the border “despite the excellent workforce quality” by much already known, is the infrastructure industrial parks have, since they have excellent buildings for the installation of a maquila company, in addition of good services and with wide warehouses.”