Seeing Past the Misperceptions:

Crossborder Trends and Why They Matter

San Diego Regional Economic Development Corporation

Chairman’s Competitiveness Council • April 25, 2013

A Few (Possibly)

Surprising Facts About

Tijuana & Baja California

• Amongst top MX Metro regions, Tijuana ranks #6 in population

• Tijuana: Second-largest city on West Coast of North America

• Nearby Mexicali: #13 in ranking of Mexico metro regions…

TIJUANA : BIGGER CITY THAN YOU MIGHT THINK

• Over 62,000 trucks cross northbound (and

south) each month…

• Otay Mesa is typically #2 Land Port along US-

Mexico border: $32.8B in trucked trade (2011)

• Trucked trade at Otay Mesa = 6X value of

goods through Sea Port of San Diego…

REGIONAL PORTS: $32B BY LAND…$5B BY SEA

#3 State employment in Mexico’s maquiladora/IMMEX industries

• Mexico: 2.0M (above 2007 peak of 1.9M); Baja: 236K (vs. 260K in 2007)

• Tijuana: 159K (vs. 170K in 2007); Mexicali: 48K (vs. 57K in 2007)

• Baja’s growth sectors: medical devices, aerospace, automotive, food…

TIJUANA & BAJA CA: MAJOR MANUFACTURING CENTER

• Tijuana: a national (& North American) leader in some tech sectors…

• #1 location in NorthAm for medical device mfg employment (31K)

• One of top NorthAm metros for electronics mfg employment (46K)

REGIONAL ECONOMICS: BAJA’S ADVANTAGE FOR TECH MFG

Santa Clara County

San Diego County

Orange County

Michigan State

Los Angeles County

Chicago Metro

Boston Metro

New York State

Minneapolis-St. Paul

City of Tijuana*

9,859

10,360

11,528

11,261

12,570

12,789

15,229

18,233

22,099

31,079

2010/2012 Medical Device Mfg Employment in Key Regions*

*data for Q2-2012 *see endnotes for estimation methodology used

• China: times they are changin’

• Total China costs for mfg & logistics

to North American markets increasing

• Boston Consulting Group: by 2015,

China mfg costs approx. $4.50/hr

• KPMG: 2012 Competitive

Alternatives study found little

difference in Mexico v China costs

• One of San Diego’s unique

advantages is nearshore proximity

to lower-cost, globally competitive

manufacturing in Baja California

NEXT DECADE: MFG COSTS TO FAVOR MEXICO…AND TJ

Sí. Tijuana and Baja California:

on the mend…

• Despite media hysteria: peak

of violence in 2008

• Fact: in 2012, Tijuana’s

homicide rate significantly

lower than many cities in US

• Some increases in Q1-2013,

but still far lower than 2008-

2009 peaks…

• …Yet perceptions of violence

continue to impede stronger

relations

BUT…HAS REGIONAL SECURITY IMPROVED?

The Border & What it

Means for San Diego

Border crossers are commuters, tourists, and consumers…

• At-border surveys by Crossborder Group show typical $140-170 daily

average expenditure by Mexico-residing border crossers

• …$10-14 million in crossborder retail expenditures daily

BORDER CROSSERS: SIGNIFICANT SOCAL ECONOMIC IMPACTS

BAJA CALIFORNIA: PART OF REGION’S HEALTH CARE SYSTEM

…Baja California also de facto part

of San Diego’s (and SoCal’s) health

care marketplace

• Survey: 46% of US-residing

border crossers used medical

services in Baja California over

12 previous months…

• What? Dental, eye care,

pediatric, elective surgeries…

• Not only lower-cost source for

health care services, but also for

Spanish-speaking health care

professionals

• Border delays resulting in fewer people crossing the border…

• From 61.5M individuals crossing in cars, buses, and walking in

2003 – to just over 41.3M in 2012 (a -32.8% decline!)

BORDER INFRASTRUCTURE: NOT KEEPING PACE

• Around $2-3 billion needed just for California-Baja CA POEs

• Lack of funds (and resulting queues/delays) an economic, social

& health threat to region

BORDER CROSSINGS – PLANNED…BUT NOT ENOUGH $$

SOMETHING UNIQUE: THE “CALI-BAJA” MEGA REGION

Tried to give a few insights for “why” the binational Cali-Baja

Mega Region should matter…

• San Diego Regional EDC blog, March 4:

¡Gracias! ¿Preguntas?

Kenn Morris, President/CEO of Crossborder Group

Email: Kenn @CrossborderBusiness.com

San Diego: 619-710-8120 • Tijuana: 664-380-6151