brownsville economic journal (spring 2013 issue)

Vol. 1, No. 3 / Spring 2013EJ

Guest EditorialThomas L. Friedmanexplains ‘How Mexicogot back in the game’

United States’ neighbor to the Southsurpasses China in competitiveness

‘MADE IN CHINA’

HECHO EN MEXICO‘Dashboard City’The auto parts sector is a topcomponent of the Matamorosmaquiladora industry

Maritime IndustryPort of Brownsville, a vitalcomponent in the localand regional economy

BrownsvilleMSAArea has potential to be-come an emerging regionin the technology industry

is giving way to

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EJ

8 Top performing metroBrownsville MSA could become an emerging region in the technology industry

‘More bang for your buck’Veterans International Bridge is the only U.S.port of entry that allows the access of Mexican trucks with 30 or more tons of cargo16

Port of Brownsville, a vital component in thelocal and regional economy34

Guest Editorial:How Mexico got back in the game

5Local IndustryCorner:Capitalizing on our proximity and relationship with Mexico

Marketing Corner:SpaceX zeroing in on Cameron County

14

1828

Fitch RatingsCameron Countybridge systemmaintains its ‘A’bond rating

On the cover:Mexico surpasses Brazil and China in economic growth and competitiveness

20

Cover Design and Illustration:Jorge I. Montero

EDITOR IN CHIEFGilberto [email protected]

DESIGN COORDINATOR &EDITORIAL CONTENTJorge I. [email protected]

COPY EDITORSylvia [email protected]

PHOTOGRAPHYBEDC Editorial TeamBrad Doherty

PUBLIC RELATIONSMichelle [email protected]

CORPORATE CONTACTLizzy de la [email protected]

CIRCULATION Sylvia [email protected]

EDITORIAL OFFICEBrownsville Economic Development Council301 Mexico Boulevard, SuiteF1 (ITEC Campus)Brownsville, Texas 78520Tel. (956) 541-1183 / Fax:(956) 546-3938

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Mexico’s resurgence as an importanteconomic market made headlines duringmost of 2012, and so far has done so this2013.Stories of how Mexico has surpassed

Brazil as the fastest growing economy inLatin America and how it has becomemore competitive than China in manufac-turing costs have told the economic suc-cess our neighbor to the South has had inthe past year.This economic success is well received

and applauded here in Brownsville, thestate of Texas, and the rest of the UnitedStates not only because Mexico is ourneighbor, but because Mexico is one of ourtop trading partners.The United States is, by far, Mexico’s

most significant trading partner. Nearly80% of Mexico’s exports go to the UnitedStates and 50% of Mexico’s imports comefrom the United States.The economies of these two countries

are linked in one shape or form. And ana-lysts agree that Mexico and the U.S. aremore partners rather than competitors.This economic partnership is very evi-

dent here in our Borderplex region, whichincludes Brownsville and Matamoros.The sister cities not only share a river,

but also an economy, infrastructure, cul-ture, and way of life that is unique to ourregion.If Brownsville’s economy worsens, it

affects Matamoros. If Matamoros enjoyseconomic success, Brownsville enjoys thatsuccess as well.Both depend on each other, and for that

reason, we are focusing this issue of EJ onhow Mexico is emerging as a top economyin the world.We are also introducing the

maquiladora industry in Matamoros, whichis home to 115 companies, the majority ofthem from the U.S.Despite being affected by the last re-

cession, it has maintained its competitiveedge and has seen a healthy growth the lastcouple of years. The concept of ‘Made in China’ is now

becoming secondary to a phrase we in theBorderplex region are happy to say:‘Hecho en Mexico.’This is now the trend.And we welcome that. EJ

Mexico and the U.S.:Partners, not competitors

PRESIDENT’SCORNER

EJ

Jason HiltsPresident & CEO

Brownsville Economic Journal Spring 2013 BEDC.com 4

The Economic Journal of the Brownsville Borderplex is published on aquarterly basis and distributed according to the fair-use doctrine of U.S.copyright laws related to non-profit institutions, such as the BEDC, andfor educational purposes.

Brownsville Economic JournalSpring 2013BEDC.com 5

EJGUEST EDITORIAL

In India, people ask you about China,and, in China, people ask you aboutIndia: Which country will become themore dominant economic power in the21st century? I now have the answer:Mexico. Impossible, you say? Well, yes, Mex-

ico with only about 110 million peoplecould never rival China or India in totaleconomic clout. But here’s what I’velearned from this visit to Mexico’s indus-trial/innovation center in Monterrey.Everything you’ve read about Mexico istrue: drug cartels, crime syndicates, gov-ernment corruption and weak rule of lawhobble the nation. But that’s half thestory. The reality is that Mexico today ismore like a crazy blend of the movies“No Country for Old Men” and “The So-cial Network.” Something happened here. It’s as if

Mexicans subconsciously decided thattheir drug-related violence is a conditionto be lived with and combated but notsomething to define them any longer.Mexico has signed 44 free trade agree-ments — more than any country in theworld — which, according to The Finan-cial Times, is more than twice as many asChina and four times more than Brazil.Mexico has also greatly increased thenumber of engineers and skilled laborersgraduating from its schools. Put all thattogether with massive cheap natural gasfinds, and rising wage and transportationcosts in China, and it is no surprise thatMexico now is taking manufacturing mar-ket share back from Asia and attractingmore global investment than ever inautos, aerospace and household goods. “Today, Mexico exports more manu-

factured products than the rest of LatinAmerica put together,” The FinancialTimes reported on Sept. 19, 2012.“Chrysler, for example, is using Mexicoas a base to supply some of its Fiat 500sto the Chinese market.” What struck memost here in Monterrey, though, is the

number of tech start-ups that are emerg-ing from Mexico’s young population —50 percent of the country is under 29 —thanks to cheap, open source innovationtools and cloud computing. “Mexico did not waste its crisis,” re-

marked Patrick Kane Zambrano, directorof the Center for Citizen Integration, re-ferring to the fact that when Mexicancompanies lost out to China in the 1990s,they had no choice but to get more pro-ductive. Zambrano’s Web site embodiesthe youthful zest here for using technol-ogy to both innovate and stimulate socialactivism. The center aggregates Twittermessages from citizens about everythingfrom broken streetlights to “situations ofrisk” and plots them in real-time on aphone app map of Monterrey that warnsresidents what streets to avoid, alerts thepolice to shootings and counts in days orhours how quickly public officials fix theproblems. “It sets pressure points to force

change,” the center’s president, BernardoBichara, told me. “Once a citizen feels heis not powerless, he can aspire for morechange... . First, the Web democratizedcommerce, and then it democratizedmedia, and now it is democratizingdemocracy.” If Secretary of State John Kerry is

looking for a new agenda, he might wantto focus on forging closer integration withMexico rather than beating his headagainst the rocks of Israel, Palestine,Afghanistan or Syria. Better integrationof Mexico’s manufacturing and innova-tion prowess into America’s is a win-win.It makes U.S. companies more profitableand competitive, so they can expand athome and abroad, and it gives Mexicans areason to stay home and reduces violence.We do $1.5 billion a day in trade withMexico, and have been spending $300million a day in Afghanistan. Not smart.

Turn To Page 11

How Mexico got back in the game

IIn India, people askyou about China, and,in China, people askyou about India:

Which country will be-come the more domi-nant economic powerin the 21st century? Inow have the answer:

Mexico.

Thomas L. Friedman“Foreign Affairs” columnistfor The New York Times

As a result of the disintegration of the So-viet Union and subsequent “independence” ofthe Central European countries that fordecades were subjugated by the Moscow gov-ernment, countries such as Romania, Hun-gary, Poland, the Czech and SlovakRepublics, Bulgaria and others opened uptheir borders to direct foreign investment andbecame real life, formidable competitors ofcountries such as Mexico that for many yearshad been at the top of the list of investors in,primarily, the automobile and electronic man-ufacturing sectors.In more recent years China reached out to

the world and before many realized what washappening with the “sleeping giant” China be-came an economic superpower and one of themost attractive destinations for foreign in-vestors.True. Not only Central European countries

and China had abundant labor force, skillfulbut outdated in Europe and untrained inChina, workers compensation was also verylow and with the incipient growth in thoseeconomies, people began to demand goods

and services formerly not available or just un-affordable. Many factors combined to makean investment in those countries desirable.One did not have to be a genius to forecast

that, sooner rather than later, workers wouldseek and get better pay and the high demandof goods and services by the recently acquiredpurchasing power of the local inhabitants,combined with all those needed to build,house or supply to the numerous companiesthat moved in, will sensibly diminished thecompeting edge of all those countries.In very recent years, investors are coming

to realize that they have always been betteroff in Mexico, a neighbor to the largest econ-omy in the world with dozens of years ofmanufacturing experience, incentives, infra-structure, the NAFTA, a stable economy andnot a “world” away from the consumer mar-kets. Interestingly enough, many are nowcoming back.The Mexico alternative is not the result of

a trend or a fashion. The momentum of Mex-ico is, undoubtedly, one of a permanent na-ture.


EJVIEWPOINTS

Investing in Mexico: Not a trendbut a permanent momentum

I

Ernesto Velarde DanachePresident & Founder ofErnesto Velarde-Danache, Inc.Mexican & International Lawyers

In very recent years, investors are coming to realize that they havealways been better off in Mexico, a neighbor to the largest economyin the world with dozens of years of manufacturing experience, in-centives, infrastructure, the NAFTA, a stable economy and not a“world” away from the consumer markets. Interestingly enough,

many are now coming back.

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Brownsville-Harlingen MSA has manyopportunities to become an emergingregion in the technology industry

Top performing metro EJACCOLADE

A MARKET WITH POTENTIAL

Milken Institute Best-Performing Cities Indexranks the Brownsville-Harlingen MSA 29th out of 200 large metros in the country; touts thereturn of technology clusters as the story of 2012



The Milken Institute rankedBrownsville-Harlingen as one of the top30 best performing large metropolitanareas in the U.S. in its annual report,where it highlighted the return of technol-ogy clusters in 2012.The 2012 Milken Institute Best-Per-

forming Cities Index, released on January17, 2013, ranked the Brownsville-Harlin-gen MSA 29th out of 200 large metros inthe country, beating out other TexasMSA’s like McAllen-Edinburg-Mission(38), Corpus Christi (44), Killeen-Temple-Fort Hood (63) and Beaumont-Port Arthur(116).“This ranking only shows the progress

this region has made and continues tomake today,” said BEDC President &CEO Jason Hilts. “If we continue this up-ward trend, more companies and morecountries will look our way to do busi-ness,” Hilts said.The report ranked Brownsville-Harlin-

gen first in the “5-year Relative High-TechGDP Growth” with a score of 152.70. Inthe category of “5-year Wages andSalaries Growth,” Brownsville-Harlingen

ranked 10th with a score of 112.88. In thecategory of “5-year Job Growth,” the arearanked 7th with a score of 110.29.

Technology leads the wayMilken’s index report highlighted the

return of technology clusters as the top

story for 2012, which was the main reasonwhy the San Jose, California, MSA rankednumber one in the list.The San Jose area, known more

broadly as Silicon Valley, is a powerhousein Internet search, communications net-working, semiconductor and computer de-sign, medical technology, telecomservices, and data processing.The resurgence of business investment

in equipment, especially information tech-nology and software, was the unheraldedstory of this recovery, the report indicated.The latest technology wave is powered bysocial media, mobile devices, clean tech,and “big data” analytics, in which datagenerated online are processed for clues totargeting customers more effectively andenhancing operations. “People expect tech to be one of the

most dynamic sectors of the economy, andit was,” says Ross DeVol, chief researchofficer of the Milken Institute and one ofthe report’s authors.

An opportunity for BrownsvilleMilken statistics have shown that

Brownsville-Harlingen MSA lags behindin growth within the technology sector.

Turn To Page 11

Written byJorge I. Montero “”

“The technologi-cal leadership de-termines the statusof the industry as awhole. Brownsvillehas the advantageof having dual tech-nological advancesboth in the U.S. &

Mexico”- Hector Garza

CEO of GC Telecom, LLC

Gilberto Salinas, BEDC’sExecutive Vice President, wasrecently recognized as one ofthe top 40 economic develop-ers under the age of 40.The award was presented

by Development CounsellorsInternational during the Inter-national Economic Develop-ment Council’s LeadershipSummit held in Orlando,Florida, in January.Salinas was one of four

economic developers in thestate of Texas to be recognizedby DCI. He was also the onlyone south of Houston to re-ceive the distinction.When asked about what is

the most overlooked issue fac-ing economic development,Salinas replied:“It’s easy to overlook what

I think is the most importantfactor driving decisions forsite location – skilled work-force. Beyond infrastructure,real estate, incentives and acommunity’s quality of life,the availability of a labor forcewill dictate the longevity,health, stamina and success ofa company.”

The winners in DCI’s 40under 40 Rising Stars in Eco-nomic Development award,which will be announcedevery three years, were se-lected by a five-member selec-tion committee from a pool ofmore than 150 candidates.The firm, which special-

izes in economic developmentand travel marketing, viewsthe recipients as the industry’stop innovators, deal closers,job creators, investment at-tractors and marketing extra-ordinaires.Salinas develops market-

ing campaigns to promote theBrownsville Borderplex areaat the global level and in turnto recruit and expand industryin the region. He also works tocoordinate the best possibleincentives packages as well assuitable industrial sites forprospective companies, andensures that the communityand its public projects are rep-resented at the state level inhis role as legislative affairs li-aison.He lives with his wife,

Lizbeth, and their three boys:Daniel, 14, Gilito, 11, andSamuel, 4. EJ

BEDC’s Executive VP recognized byDevelopment Counsellors International

Top 40 under 40 EJACCOLADE

Brownsville’s rising starin economic development

By Staff Reports

Gilberto Salinas was one of four economic developers in the state of Texas to be rec-ognized by DCI. He was also the only one south of Houston to receive the distinction.

Staff Photo



Since 2003, the institute hasplaced the local MSA in the lowerpart of the rankings in “High-TechGDP Concentration” and “Num-ber of High-Tech Industries withLocation Quotients (LQ) over 1.”The LQ is a measure of high-techconcentration in a metro area. Ametro with a LQ higher than 1 issaid to be more concentrated thanthe United States and vice versa.But Brownsville has many op-

portunities to become an emerg-ing region in the technologyindustry, according to HectorGarza, CEO of GC Telecom,LLC, a company based inBrownsville that provides repairservice to manufacturers of elec-tronic devices such as cellularphones, tablets and radio systems.“The technological leadership

determines the status of the indus-try as a whole. Brownsville hasthe advantage of having dual tech-nological advances both in theU.S. and Mexico,” Garza said.He added that the University

of Texas at Brownsville is an im-portant factor for the region’s suc-cess since the academic institutionhas several technological pro-grams that will educate and opentechnological opportunities.

As far as the industry’s out-look for 2013, Garza stated thatthe future looks promising.“The technological innova-

tions are far more advanced than afew years ago. We are on the cut-ting edge in this field. The worldhas yet to reach its technologicalcapabilities,” he said.In regards to GC Telecom,

Garza mentioned that his com-pany has maintained its ground as

a leader in the competitive tech-nology industry.“GC Telecom is on the cutting

edge in its field. We invest re-sources in research and develop-ment worldwide. We provideresources to those companies thatmay need assistance in the tech-nological field. This has allowedus to stay on top of the technologyfield,” Garza said.

Steady successIn the past three years,

Brownsville-Harlingen MSA hasreceived high marks from theMilken Institute annual report.In 2010 the Brownsville-Har-

lingen MSA took a huge leap inthe rankings from the 70th spotrecorded in 2009 to number 13th,moving up a remarkable 57 spots.That year Milken rankedBrownsville-Harlingen MSA firstin high-tech output growth, inlarge part driven by telecommuni-cation services, and second in thefive year period.The local MSA, whose popu-

lation is approximately 414,123,dropped 15 places in the insti-tute’s rankings in 2011 falling tonumber 28. Despite the drop,Brownsville-Harlingen has main-tained its ranking in the top 30 fortwo years in a row, thanks to thesteady economic growth the areahas experienced recently.According to the institute’s

website, the index ranks U.S. met-ropolitan areas by performance oneconomic growth, job creation,retention and sustainability. Thecomponents include job, wage,salary, and technology growth. EJ

Brownsville-Harlingen MSAContinued from Page 9

How Mexico got back in the game

Continued from Page 5

We need a more nuanced view of Mexico. Whiletouring the Center for Agrobiotechnology at Monter-rey Tech, Mexico’s M.I.T., its director, Guy Car-dineau, an American scientist from Arizona,remarked to me that, in 2011, “my son-in-law re-turned from a tour of duty in Afghanistan and wetalked about having him come down and visit forChristmas. But he told me the U.S. military said hecouldn’t come because of the [State Department]travel advisory here. I thought that was very ironic.” Especially when U.S. companies are expanding

here, which is one reason Mexico grew last year at3.9 percent, and foreign direct investment in Monter-rey hit record highs. “Twenty years ago, most Mexican companies

were not global,” explained Blanca Treviño, the pres-ident and founder of Softtek, one of Mexico’s leadingI.T. service providers. They focused on the domesticmarket and cheap labor for the U.S. “Today, we un-derstand that we have to compete globally” and thatmeans “becoming efficient. We have a [software] de-velopment center in Wuxi, China. But we are moreefficient now in doing the same business from ourcenter in Aguascalientes, [Mexico], than we are fromour center in Wuxi.” Mexico still has huge governance problems to fix,

but what’s interesting is that, after 15 years of politi-cal paralysis, Mexico’s three major political partieshave just signed “a grand bargain,” a k a “Pact forMexico,” under the new president, Enrique PeñaNieto, to work together to fight the big energy, tele-com and teacher monopolies that have held Mexicoback. If they succeed, maybe Mexico will teach ussomething about democracy. Mexicans have startedto wonder about America lately, said Bichara fromthe Center for Citizen Integration. “We alwaysthought we should have our parties behave like theUnited States’ — no longer. We always thought weshould have the government work like the UnitedStates’ — no longer.” EJ

A version of this op-ed appeared in print on February 24, 2013, on page SR11 of the New York edition with the headline:

How Mexico Got Back in the Game.


EJOIL INDUSTRY

The Mexican ruling party's recentdecision to adopt a platform that couldopen up the country's giant oil monop-oly to private investment has caught theattention of some industry gurus inTexas, who say the move bodes well forU.S. business interests.The Institutional Revolutionary

Party, or PRI, remains adamant that thestate-owned company, Petróleos Mexi-canos, or PEMEX, will stay under statecontrol. But the proposal, which re-quires legislative approval, could meanmore oil is exported from Mexico to theU.S., and that Mexico might turn toAmericans for guidance on how to in-crease production there. “Any time you allow the private

sector more free rein, you see morebusiness,” said WorldCity presidentKen Roberts. “There are exampleswhere too much of a laissez faireattitude can run amok. But gen-erally speaking, when the pri-vate sector gets involved, it

tends to always look for a way to domore business.”The U.S. and Mexico traded about

$494 billion in goods in 2012, accord-ing to WorldCity, a Florida-based com-pany that uses U.S. census data to tracktrade patterns. Overall refined andcrude oil amounted to more than $57billion in two-way trade.Roberts said oil imports from Mex-

ico have more than tripled in value overthe last decade, peaking in 2011 at$37.15 billion. He said that despiteAmerica’s continued effort to find newsources of energy, he didn’t see oil pro-duction worldwide declining soon.

“As the U.S. continues to become

extremely successful in fracking, and ifthere’s successes in nontraditionalmeans of powering our vehicles, thereare all sorts of factors that can changethat,” he said. “But I think there’s goingto be a need for lots and lots of oil for

years and years tocome.”

Mexico’s energy reformdrawing interest in Texas

In 2012, overall refined and crude oilamounted to more than $57 billion in two-way trade between the U.S. and Mexico

Analysts say, however, that interestedentities should view the proposal cau-tiously. Energy reform was one of the hall-marks of Mexican President Enrique PeñaNieto’s campaign last year, when he suc-cessfully propelled the PRI back to thecapital after 12 years out of power.Duncan Wood, the director of the Mex-

ico Institute at the Woodrow Wilson Inter-national Center for Scholars, said theeffects of such a proposal, however, re-main unclear.“They are talking seriously about al-

lowing private investment in the oil sectorin general, [but] they want the state to re-tain control. So what that actually meansin reality is very tough to work out,” hesaid. “Because retaining control could belegislative, regulatory; it could be thedominant player. No one is quite sure whatthat means.”Wood added that Peña Nieto’s admin-

istration would like to put forth additionalreforms, and that those could affect the po-litical climate leading up to the PEMEXnegotiations.“The PRI is fully aware that it needs to

maintain a broad popular support for itsagenda, and if it’s going to engage in fiscalreform, where they are talking aboutadding value added tax on food and medi-cine, that’s going to be hugely unpopular,”he said. “If they also begin talking aboutopening up the oil sector, then that’s possi-ble that will cause a reaction from the baseas well. And the political party that is bestplaced to take advantage of that is the left-

wing [Party of the Democratic Revolu-tion]. That could cease upon an upswell ofpopular rejection of an opening of the sec-tor.”Foreign companies are very likely to

express interest, Wood said, but he doesn'tpredict an instant influx.“It’s not as in we’re going to see a

flood of companies in to Mexico immedi-ately,” he said. “They are going to sit backand analyze and make sure the conditionsare right.”But Texas companies have already ex-

pressed interest, highlighting their expert-ise in drilling and offshore production.The South Texas Energy and Eco-

nomic Roundtable, or STEER, a coalitionof exploration companies currentlydrilling in the Eagle Ford Shale that offi-cially launched in mid-March, said privateinvestment would bolster trade betweenthe U.S. and Mexico.“A reform of Mexico’s energy sector

has the potential to have a significant im-pact on the entire United States, particu-larly in the oil and gas region in SouthTexas that already enjoys strong ties withMexico and has experienced unprece-dented industry growth, enhanced modern-ization and technological advancements,”said STEER president Omar Garcia.Those technological advancements

will be a key factor for many U.S. inter-ests, said Scott Miller, a senior adviser atthe Center for Strategic and InternationalStudies. Despite having proven oil re-serves, PEMEX has under-produced, he

said.“The capability is there, but what they

need is better technology and better accessto some of the more modern techniques,and this is where U.S. energy servicescompanies — many of them located in andaround Houston — would, I think, find amajor business opportunity,” he said. “It’ssomething that oil and energy develop-ment around the world tends to benefithandsomely from U.S. know-how andU.S. technology.”Miller added that “state control” of a

resource is not something to necessarily bewary of. The largest private owner of en-ergy reserves, Exxon Mobil, owns only 2percent of the world’s share.“Most oil resources or energy re-

sources are in government hands, eitherstate-owned enterprises or state-controlledenterprises,” he said. “All of Russia, all ofVenezuela and Petrobras [in Brazil] andmost of the Middle East. So it’s not un-usual to have that. It’s really how theystructure it and what access is providingfor oil services. But any opening of anysort will be looked at as an important op-portunity.” EJ

This article was written by Julian Aguilar and appeared in

the Wednesday, March 6, 2013edition of The Texas Tribune


MEXICO

TEXAS

GULF OFMEXICO

MATAMOROS

BROWNSVILLE

Location ofSupremus 1and Trion 1

Discovery of newdeepwater oil deposits

In 2012 Mexico discoverednew deepwater oil deposits withestimated reserves of more than600 million barrels.

Dubbed Supremus 1 andTrion 1, the oil wells are located ina zone situated about 111 miles offthe Mexican coast and 24 milessouth of the maritime border withthe United States. Mexican au-thorities have said that these dis-coveries should allow Mexico toincrease its annual oil productionby up to a third.


Brownsville and its sister city, Matamoros, areat the epicenter of one of the most dynamic andfastest growing regions.

Just a few years ago the two cities formed apartnership, “Brownsville-Matamoros United,” tobetter market the vast economic advantages of con-ducting business along the border.

The area has become a hub for internationaltrade and commerce due to its ideal geographic lo-cation, solid infrastructure and logistics, valuableresources, pro-business climate, a young andskilled workforce on both sides of the border, lowlabor costs, and the region’s overall low cost of liv-ing.

Brownsville has received many favorable rank-ings from renowned and well-respected sources.

Recently, Brownsville was named the 6thfastest growing manufacturing region in the U.S.(IndustryWeek magazine), as well as, “NorthAmerica’s Best Cost-Effective City” (FDI Maga-zine). Not long ago, Brownsville was also rankedNo. 4 in “America’s Next Recovering Job Mar-kets” (BusinessWeek), and in January 2013,Milken Institute’s Best Performing Cities of 2012ranked Brownsville MSA 29th out of the 200largest metros in the U.S. based on measures ofemployment growth, wages/salaries, and technol-ogy performance.

All the pieces are slowly coming together andwe’re seeing good things coming to fruition thanksto our community’s efforts to attract industry, re-tain business, and improve our region.

One of our goals has been to fortify our part-nership with Mexico.

Unfortunately, our sister city has been plaguedwith drug violence and organized crime for the lastfew years.

However, while the violence has affected manyindustries in Mexican cities, the maquila industryhas fortunately remained somewhat immune to theviolence. Many of these border Mexican cities arebooming despite the violence, and according toJason Beaubien from NPR, “The duty-freemaquiladora assembly plants along the border arerapidly adding jobs, and exports to the U.S. arereaching record levels.”

Contrary to what most people think, the drugviolence is not hindering Mexico’s economicgrowth, however, many small businesses are hurt-ing and countless of Mexican entrepreneurs aregravitating north in search of business and invest-ment opportunities, in addition to refuge.

If Brownsville is able to build and promote astrong and effective organization with a sound sup-

port system for these Mexican entrepreneurs, ourcommunity will be able to capture many of themwho are coming in to do business.

Hence, the Brownsville-South Padre IslandChapter of the Asociacion de Empresarios Mexi-canos (AEM) was recently formed in the latter partof 2012.

The AEM is a non-profit organization dedi-cated to support Mexican nationals build a success-ful business in the US. Among the organization’sgoals are to: contribute toward the professional andintellectual development of its members, help itscommunity develop, and collaborate with partner-ships between the US and Mexico. The AEMstarted in San Antonio in 1996, and it has spread todifferent communities.

Marco Saldivar, the AEM Brownsville-SPIchapter president, says, “We’re in a prime and criti-cal time to have this kind of support structure be-cause we have many Mexican nationals coming inand investing a lot of money.” Many of these Mex-ican entrepreneurs have either opened their busi-nesses already, are in the process, or they areseriously considering.

Yet, many have hit road blocks due to the unfa-miliarity with the U.S. legal structure, tax system,real estate, permitting, immigration, and just run-ning/doing business on the U.S. side. They knowtheir business and how to operate it better thananyone else, but operating in the U.S. is different.

Having a local AEM chapter is a win/win situa-tion. If we are able to help Mexican entrepreneursunderstand the process, navigate through the sys-tem, and effectively start their business here, theywill win.

At the same time, if we are able to retain them,we win too because they will be creating jobs, of-fering more diverse products/services to our com-munity, living here, and therefore contributing tothe tax base.

The AEM local board works together to coordi-nate breakfast meetings and workshops, in whichthey bring professional speakers to present on top-ics of high interest and value. The AEM board alsoorganizes mixers that create an environment con-ducive to networking and exploring opportunities.

The AEM Brownsville-SPI Chapter Board ofDirectors includes: Marco Saldivar, IgnacioTorteya III, Diana Bakalem Villarreal, Lizzy de laGarza, Gerardo Gonzalez, Rafael Chacon, AdrianaContreras, and Connie Hensley.

For more information on the AEM please con-tact Marco Saldivar at [email protected] orvisit www.aem-brownsville.org. EJ

Partnering with Mexico and capitalizingon our strategic geographic location

LOCALINDUSTRYCORNER

Lizzy de la GarzaDir. of Business Retention & Expansion


EJLOGISTICSCargo transportVeterans International Bridge is the only U.S. port of entry that allows the access of Mexican trucks with 30 or more tons of cargo

The Borderplex region hasan international bridge-unique in its kind – thatservices the port ofBrownsville from the city

of Matamoros, Mexico.The Veterans International Bridge is

unique in that there is no other interna-tional bridge in the United States that per-mits the entry of Mexican trucks whosecargo exceeds 30 tons, 10 tons more thelegal limit imposed on other internationalports of entry along the U.S.-Mexico bor-der.

More for lessThe tomato grower in the Mexican

State of Sinaloa, located near the PacificCoast, loads his trucks with 30 tons of thefruit, instead of the 20 permitted, when heships his cargo thru the Nogales,Arizona, border or theMcAllen, Texas, border.A truck from

Sinaloa can enter the U.S. legally thruBrownsville, where by way of the easilyaccessible Texas highways, he can makethe short trip of 8 miles to the Port ofBrownsville and unload its 30 ton ship-ment of tomatoes.With the extra 10 tons of cargo on

board (50% more of the usual shipment)the access thru the Port of Brownsville cansave them 50% in transportation costs,compared to the costs of shipments enter-ing the restrictive international bridges inArizona and the West Coast. In otherwords, it is like shipping 10 tons of the

product with no transporta-tion costs.

‘More bang for your buck’With the extra 10 tons of cargo on board, access thru the Port ofBrownsville can save Sinaloa producegrowers 50% in transportation costs.

Photo by Brad Doherty


From ‘Devil’s Backbone’ to engineering marvelThis will be possible once the con-

struction of the Mazatlan-Durango super-highway is completed. The new roadwaywill substitute the infamous highwayknown as the ‘Devil’s Backbone’. This in-credible engineering marvel includes thehighest suspension bridge in North Amer-ica, 63 tunnels, and countless of other highbridges.Known also as the “Interoceanic High-

way”, since it will connect the Pacificcoast with the Atlantic coast, this highwayhas cost the Mexican government morethan $1.2 billion, and will eventually con-nect Brownsville with the productivetomato industry of Sinaloa.

Saving time and moneyThis is only the beginning of a series

of opportunities. Why send tomato ship-ments to the Northwest by way of Arizonainstead of Texas? Once in Brownsville, theSinaloa tomatoes will be at the center ofthe continent, 528 miles closer to Wash-ington, D.C. and the East Coast marketthan if they would have entered the U.S.thru Nogales.This in turn will save an additional

$925 per shipment. But produce growerscan still save more. Mexico’s Northwest isone of the least populated regions in theworld.As a result of this, Nogales reports lit-

tle activity in cargo shipments to Mexico,with only a handful of American trucks re-turning South with cargo. The emptytrucks have to travel from Los Angeles,about 186 miles away, or other placeswhere they unloaded their shipments.This could add an additional $978 to

the costs of moving the cargo. In total, thepotential savings add up to $1,903 intransportation costs in the U.S., in additionto whatever amount the exporter fromSinaloa saved in moving his cargo in Mex-ico. Location, Location, Location!The Veterans bridge, or more com-

monly known on the Mexican side as “LosTomates”, is the closest U.S. bridge toMexico City, and located only about 186miles from the city of Monterrey. So, con-trary to the remote city of Nogales,Brownsville sees a great amount of trafficin cargo transport to the South, which gen-

erates a high volume of empty truckslooking for cargo to take back to the East.This helps reduce the transportation coststo the North, to cities like Chicago, or tothe East Coast, in comparison to isolatedArizona.Why pay more for the transportation of

light cargo from Sinaloa to the East Coastof the U.S. (thru Arizona, a state without acoastline)? For less money one can ship30 tons of cargo to the center of the conti-nent and to an international deep waterseaport. The same is applied to other Mex-ican states such as Michoacan, Nayarit,Guerrero, Morelos, Jalisco and evenSonora.

Potential client for thePort of BrownsvilleAdd to the potential savings of $1,903

per cargo shipment in the U.S. a 50% sav-ings in transportation costs in Mexico andBrownsville will become the favorite portof the Sinaloa exporters. With more than20,000 trucks a month transporting agri-cultural products during Winter thru Ari-zona, Sinaloa could become the Port ofBrownsville’s top client. Only in 2012,more than $2.7 billion in fresh productscrossed to America in Arizona.Maybe the majority of the cargo was

destined to Chicago, New York and othercities East of the Sun State; only a smallportion of the products destined to Califor-nia cross in Arizona, since Sinaloa usesthe international bridges in Calexico/Mex-

icali or the Port of Mazatlan to movecargo to the West Coast.As a result, the majority of the goods

crossing in Arizona end up in the EastCoast in the U.S.; and because of that,they should be transported thruBrownsville ports of entry. Also, the trans-port of grains, animal feed, fertilizer, steel,wood, paper and other goods of the Texasmarket will be more affordable to theSinaloa importer.

Unlimited potential to satisfy the demandEurope demands fresh produce with

good quality during the winter months.The savings in transportation costs is noteverything in the tomato, papaya, avo-cado, and mango industries, or any otherproduce harvested during Sinaloa’s winterseason – it is also about quality controland freshness.And Sinaloa has unlimited potential to

increase its production and satisfy this de-mand.If the Sinaloan exporters work with

Brownsville, they will not only reducetransportation costs, but will also drasti-cally improve the quality of their freshproducts, by cutting the time of delivery. EJ

Joseph Linck is a former Director of the Port of Brownsville and

expert broker in consumer goods

NMAZATLAN

DURANGO

TORREON

SALTILLO

MONTERREYBROWNSVILLE

MATAMOROS

TEXAS

UNITED STATES

MEXICO

InteroceanicHighwayThe Federal Highway 40stretches across sevenstates in Mexico. Oncecomplete, it will reducefrom 20 to 12 the hoursit takes to travel the 750miles from Mazatlan, inthe state of Sinaloa, toMatamoros/Brownsville.


Zeroing in on Cameron CountyMARKETINGCORNER

Michelle LopezDir. of Public Affairs &International Development

The rumors swirled around formonths before anyone publically an-nounced that Brownsville was one ofseveral sites Space Exploration Tech-nologies, better known as “SpaceX”, waslooking at for their new rocket launchsite. Fast forward about 14 months, and

Cameron County couldn’t be in a betterplace. Right now, South Texas is theleading candidate for the project, beatingFlorida, Georgia and Puerto Rico; how-ever, the deal is far from being done. On March 6th, State Representative,

Rene Oliveira, filed House Bill 2623 thatwould give Cameron County and theGeneral Land Office the authority to tem-porarily close a beach for launches andspace flight activities. “This is an important tool to bring the

company to Cameron County, but it alsoprotects citizens’ access to the beach intimes of peak summer use,” saidOliveira.

Two days later and along withOliveira, SpaceX founder, Elon Musk,appeared before the Texas House of Rep-resentatives Appropriations Committee inAustin where he explained to committeemembers what his company was aboutand what he intended to do. “It all seems to be progressing pretty

well,” Musk said. “We are optimisticabout making this work in Texas in theBoca Chica area.”The launch site SpaceX wants to build

would be the first commercial orbitallaunch site in the United States. Othersites like Cape Canaveral, Florida, aregovernment launch facilities.“This would kind of be the commer-

cial version of Cape Canaveral. That iswhat we are thinking about establishingnear Brownsville,” Musk said.During the hearing, Musk mentioned

the public hearing held last May inBrownsville, where more than 500 peo-

ple showed up in support of the project. “It’s an environmental review where

you invite people normally to raise ob-jections. I don’t know if there were peo-ple who wanted to object, but they didn’tget a chance to because people kept com-ing up to the mic (microphone) and voic-ing their support (for SpaceX),” he said.“In fact, I don’t think I have ever seen anenvironmental hearing like that before.”Musk’s comments came just days

after the second successful resupply mis-sion of his Space X Dragon spacecraftfrom Cape Canaveral to the InternationalSpace Station.This flight is the second of at least 12

SpaceX cargo resupply missions to thespace station through 2016.The proposed area SpaceX is eyeing

is a privately owned land. It’s located atthe eastern end of State Highway 4,about three miles north of the Mexicanborder on the Gulf Coast and about fivemiles south of Port Isabel and SouthPadre Island. The Brownsville Economic Develop-

ment Council, Governor Rick Perry’s of-fice, city and county officials have beenworking with SpaceX for about twoyears. The project was kept under wraps for

more than a year until last April when de-tails of the project surfaced in a docu-ment from the Federal AviationAdministration (FAA) detailing an envi-ronmental review needed to be com-pleted before any construction is done. According to the Federal Register,

SpaceX proposes to build a verticallaunch area and a control center to sup-port up to 12 commercial launches peryear. The vehicles launched include theFalcon 9, Falcon Heavy and smallerreusable, suborbital launch vehicles. A second public hearing is tentatively

scheduled for the latter part of April. EJ


Alfonso Sanchez Garza named amongthe top ten mayors in the world

EJACCOLADEAmong the best

Matamoros Mayor receivesworldwide recognition

The City Mayors Foundation, aninternational think tank forlocal government, named Mata-

moros, Tamaulipas, Mayor AlfonsoSanchez Garza one of the top ten mayorsin the world.The accolade, announced in December

of 2012, is part of the foundation’s WorldMayor Project, which awards the WorldMayor Prize to mayors with great vision,passion and abilities that help make theirrespective cities good places to live, workand visit. The recognition is given everytwo years.Mayor Sanchez Garza was ranked 10th

in the list based primarily on the numberof votes received, achievements done dur-ing his term as mayor, and the quality oftestimonials the foundation received onhis behalf by Matamoros citizens.One testimony states that while in of-

fice, Sanchez Garza “has allocated re-sources to restore parks, improve the citytraffic by remodeling the main streets ofMatamoros, implemented free wireless in-ternet in some of the most visited places inthe city, rebuilt the local police force, cre-ated job opportunities for the people andeven reduced the violence in the city com-pared with previous administrations”.The City Mayors Foundation considers

Sanchez Garza a rising star in Mexicanpolitics.The World Mayor Project was created

to raise the profile of mayors worldwideand to honor those who have served theircommunities well and who have madecontributions to the well-being of citiesnationally and internationally.More than 205 thousand individuals

and organizations nominated a total of 912mayors worldwide for the 2012 WorldMayor Prize, which has been awardedsince 2004. The organizers consideredonly those nominations that were accom-panied by supporting testimonials. A listof 98 official candidates included 17 may-

ors from North America, 14 mayors fromLatin America, 34 mayors from Europe,21 mayors from Asia, five mayors fromAustralia and seven mayors from Africa.A shortlist of 25 finalists was largely

compiled based on mayors’ accomplish-ments detailed in the testimonials. Theshortlist included five mayors from NorthAmerica, four from Latin America, sevenfrom Europe, five from Asia, two fromAustralia and two from Africa. The list concluded with the Top 10 fi-

nalists. Sanchez Garza is the only mayorfrom Mexico and Latin America to appearin the Top 10 list.The winner of the 2012 World Mayor

Prize was Iñaki Azkuna, Mayor of Bilbao,Spain.According to its website, the City

Mayors Foundation was established in2003 and consists of professionals work-ing together in Europe, North and SouthAmerica, Asia and Africa to promotestrong and prosperous cities as well asgood local government. It encourages cityleaders from across the world to developinnovative and sustainable solutions tolong-standing urban challenges such asgovernance, society, housing, transport,education and employment.Matamoros is located south of

Brownsville, across the Rio Grande River.The sister cities make up the Borderplexregion, which includes the Port ofBrownsville, 13 industrial parks, four in-ternational bridges, one international railbridge, two airports, and access to mainhighways in the United States and Mex-ico. EJ

Written byJorge I. Montero

The City Mayors Foundation considers Mayor AlfonsoSanchez Garza a rising star in Mexican politics.

Courtesy photo

Cover story

Written by Jorge I. MonteroDesign and Illustration: Jorge I. Montero

ECONOMIC RESURGENCE

Brazil is no longer LatinAmerica’s top story oneconomic growth. Nei-ther is China’s successstory on labor costs.

Now it is Mexico’s turn to be on thespotlight of the economic world, growingfaster than Brazil and beating China in thelow cost manufacturing game to the extentthat “Made in China” is giving way to“Hecho en Mexico.”

The Aztec country, Latin America’s sec-ond-largest economy, is outpacing Brazilthrough export-led growth and soundmacroeconomic management. It is one ofthe most open of the world’s leadingeconomies, with a network of 44 free-tradeagreements.

“Not only is Mexico doing better, macro-economically speaking, than the false

stereotypes would have us think, Mexico isactually doing better than the UnitedStates,” said Richard Fisher, president ofthe Federal Reserve Bank of Dallas, in aninterview with The Washington Post in Sep-tember of 2012.

Also, Mexico has become more competi-tive now than China.

Earlier in 2012, China lost its factory-wage advantage over Mexico. Rising Chi-nese labor costs are pushing companies to“reshore” production back to Mexico andthe United States, where transportationcosts are lower, too, The Post reported.

Reasons to be optimistic about Mexico’seconomy include domestic momentum forreform and diminished competition fromChina, according to an editorial written byKay Granger, John D. Negroponte, andCharles Shapiro published in the San DiegoUnion Tribune.

Mexico surpassing Brazil, China in economic growth and competitiveness

ECONOMIC RESURGENCE

Granger, a Republican congresswomanfrom Texas, is chairwoman of the HouseState and Foreign Operations AppropriationsSubcommittee. Negroponte, a former deputysecretary of state and former U.S. ambassa-dor to Mexico, is chairman of the Council ofthe Americas. Shapiro, former U.S. ambas-sador to Venezuela, is president of the Insti-tute of the Americas, a public policy thinktank at the University of California, SanDiego.The editorial explains that rising wages

and higher transport costs make Chinese ex-ports more expensive, playing to Mexico’sgeographic advantage as companies seek tocut costs through near sourcing.

The reasons for successThe Schwab Center for Financial Re-

search reported that geographical proximityto end markets, or “near-shoring,” is becom-ing more desirable for two reasons: The ris-ing price of oil has driven globaltransportation costs higher in recent years,and manufacturers want to be able to adaptquickly to market changes. Near-shoring has helped Mexico’s manu-

facturing sector, helping grow the country’smarket share in goods that are expensive toship because of their bulk or weight, such astelevisions, major household appliances andautomobiles. Another factor contributing to Mexico’s

growing market share, according to theSchwab Center, is its workers’ advances inareas that require higher skills, such as cars,telecom equipment and aerospace. The Washington Post reported that trade

analysts have watched Mexico move from

farm work to assembly plants to the high-skill manufacturing necessary to make air-planes and satellites.Many U.S. goods, including metalwork-

ing machines, agricultural processors, andcar parts, are shipped to Mexican factories,as the country grows as a manufacturinghub, helped by the North American FreeTrade Agreement and lower transportationcosts and wages, The Washington Postadded.The labor-cost equation is also favoring

Mexico, according to the Boston ConsultingGroup.In 2000, Mexican factory workers earned

more than four times as much as Chineseworkers. Due in large part to China’s dou-ble-digit wage increases in recent years, by2010, Mexican workers earned only 1.5times as much. BCG estimates that by 2015,the fully loaded cost (including benefits,taxes and indirect costs) of hiring Chineseworkers may be 25% higher than hiringMexican workers.

Trade with U.S.In 2012, Mexico became the second

largest export market for the U.S., with a 9.1percent growth, totaling a record $216.3 bil-lion, according to statistics from the Interna-tional Trade Administration, an arm of theU.S. Department of Commerce. Mexico’seconomic resurgence helped edge out Chinaas America’s second largest trading partnerafter Canada.The Economist reported that Mexico is

already the world’s biggest exporter of flat-screen televisions, BlackBerrys and fridge-

Nissan subsidiary JATCO recently announced investment of $220 million to build its second automotive parts plant inAguascalientes, Mexico, beginning operations in the summer of 2014.

Courtesy Nissan

Cover story

TRADE FACTS WITH U.S.

$500 billion of total trade in U.S. goods andservices with Mexico in 2011

$224 billionof exports

$277 billionof imports

$53 billion the U.S. goods and servicestrade deficit with Mexico in 2011

No. 3Mexico is currently our 3rdlargest goods trading partnerwith $461 billion in total (twoways) goods trade during 2011.

DID YOU KNOW?

In 2011, Mexico was thesecond-largest importer ofU.S. goods, purchasingbillions in electronics,transportation equipmentand machinery — and alot of jewelry, beer andcheese. At the end of theyear, U.S. businesses hadexported about $198 bil-lion in merchandise, a 10-year high.

freezers, and is climbing up the rankings incars, aerospace and more. The doorway forthose imports is the 2,000-mile U.S.-Mexicoborder, the world’s busiest.Roughly 80% of Mexico’s exports went

to the United States in 2011, and exportsconstitute more than 30% of Mexican grossdomestic product (GDP),which means thatthe United States generates a quarter ofMexico's economic activity. Over the pasttwo years, the United States has been a goodexport market because its economy has beenone of the most stable globally, revealed theSchwab Center for Financial Research.Trade with the United States has in-

creased sixfold since NAFTA went into ef-fect in 1994, according to Bank of Mexicoand U.S. Department of Commerce data.The trade agreement eliminated tariffs forgoods and made it easier to invest across theborder.“Before NAFTA, we had a slight trade

deficit with the United States,” DanielChiquiar, a Bank of Mexico statistician, toldThe Washington Post. “Now we have a hugetrade surplus.”Some analysts are viewing Mexico and

the United States more as partners, ratherthan competitors. And that partnership leadsto economic success for both countries.“Mexico and the United States are no

longer competitors, where one country winsand the other loses. They are partners,”Christopher Wilson, of the Mexico Institutein Washington, told The Washington Post.“The Mexican and U.S. economies are now

as deeply integrated as any on Earth.”

A change of directionThe change in presidency and the return

of the Institutional Revolutionary Party(PRI) to power has also helped the country’seconomic climate change from somber andnegative to brighter and positive.The PRI and Mexico’s new president

Enrique Pena Nieto have shown support forstructural, pro-market, reforms.U.S. Representative Henry Cuellar, D-

Laredo, is optimistic that Pena Nieto willhelp strengthen economic ties between bothcountries, something that would bringtremendous benefit to the border region, es-pecially the Borderplex, which is comprisedof Brownsville, Port of Brownsville andMatamoros.Cuellar told local online newspaper The

Rio Grande Guardian that he was satisfiedwith what Pena Nieto had said when he metwith President Obama and congressionalleaders during a visit to Washington, D.C.,in late November of 2012.“When President-elect Pena Nieto talked

with the congressional leadership he startedwith a very different message to the one Ihave heard from past presidents of Mexico.Usually, Mexican presidents talk about im-migration, guns, security, drugs,” Cuellartold The Guardian.“He answered questions when it came to

those issues but his real emphasis was eco-nomics. How do we enhance the economicrelationship between the U.S. and Mexico?

Top exportsElectrical machinery ($32.3 bil-lion), machinery ($31.5 billion),mineral fuel and oil ($23.6 bil-lion), vehicles ($18.1 billion),and plastic ($12.7 billion).

$198.4 billionU.S. goods exports to Mexico in 2011

No. 2Mexico was the United States’2nd largest goods export market in 2011.

Top importsElectrical machinery ($54.3 bil-lion), vehicles (cars, trucks andparts) ($45.8 billion), mineralfuel and oil (crude) ($43.9 bil-lion), machinery ($38.6 billion),and precious stones (gold andsilver) ($9.8 billion).

$262.9 billionU.S. goods imports from Mexico in 2011

SOURCE: Office of the United StatesTrade Representative

TRADE FACTS WITH U.S.

Nissan’s manufacturing plant in Aguascalientes, Mexico, assembles diesel fueled motors.Courtesy Nissan

How do we maximize this relationship tomake the border region more efficient? Heemphasized the importance of the border re-gion. I think that is good news,” said Cuellarto the online newspaper.The Guardian’s interview was done be-

fore Pena Nieto was officially sworn in inearly December of 2012.“Pena Nieto talked about foreign invest-

ment and oil and gas in Mexico, not to giveit away but to bring in more technology anddevelop partnerships. He talked about the oiland gas in the Gulf of Mexico. So, his em-phasis was economics, economics, econom-ics,” Cuellar added.In March, the PRI took a step toward

opening its state oil company, PetroleosMexicanos (Pemex), to foreign investment.In what is considered an important ac-

complishment since he took office, PenaNieto was able to persuade his party tochange its bylaws to clear the way forchanges at Pemex.Pemex is the top source of tax revenue

for the Mexican government. But its produc-tion of oil has been declining dramaticallyand the company is in dire need of outsideexpertise for deep-sea exploration, the LosAngeles Times reported.“It’s a win-win situation” for Mexico and

the U.S., Fadel Gheit, a senior energy ana-lyst at Oppenheimer & Co., told the L.A.Times. “The Mexican government finally re-alized that banning international companies

from participating in this sector was very ill-advised because they lack the technology,they lack the expertise, and they don’t haveenough money to put up the capital neededto grow production.” EJ

Mexico’s new President Enrique Pena Nieto has shown support for structural, pro-market reforms.Courtesy Presidencia de la Republica de Mexico

Cover story

TRADE FACTSWITH TEXAS

$86.63 billion exports of goods to Mexico in 2011

Main exportComputers and electronics

DID YOU KNOW?Computers and electron-ics generated $19.6 billionand were 23 percent oftotal exports sent to Mex-ico.

More than 70 percent ofthe chickens Texas shipsbeyond its borders go toMexico

“”

“The Mexican gov-ernment finally realizedthat banning interna-tional companies fromparticipating in thissector (oil) was very ill-advised because theylack the technology,they lack the expertise,and they don’t haveenough money to putup the capital neededto grow production”

- Fadel Gheitsenior energy analyst

at Oppenheimer & Co.

Michigan has its “Motor City”, Cali-fornia its “Silicon Valley”, and the Border-plex the “Dashboard City”: Matamoros.“The auto parts sector encompasses

35% of all the maquiladora industry inMatamoros. Practically all the parts thatcreate a dashboard in a vehicle are manu-factured in Matamoros,” said RobertoMattus Rivera, Executive Director for theMatamoros Maquiladoras Association(AMMAC), giving the reason why thiscommunity earns the title of “DashboardCity.”.he Matamoros maquiladora industry,

that has serviced the area for 48 years, iscomprised of different sectors such as

metal mechanics, plastics, constructionmaterial, textile, service suppliers, chemi-cals, electronics, and auto parts, the mostprominent sector of the industry.The main clients of the auto parts in-

dustry in the city are GM, Ford, Chrysler,Honda, Toyota and Volkswagen.Brownsville’s sister city, located south

of the Rio Grande, is home to115 compa-nies, the majority of them from the UnitedStates. These companies together generateapproximately 65,000 direct and morethan 15,000 indirect jobs to Matamoros.The electronics industry is another im-

portant asset of this border town. Elec-tronic tablets, capacitors, power sources,and delicate fiber optic systems are someof the items manufactured here.“The industry’s output surpasses the $1

billion per year and a potential market of

millions of dollars exists in the buying ofmaterials for the process of fabrication,”Mattus said.Matamoros’ eight industrial parks are

home to highly respected companies suchas Delphi, Kemet, GE, Inteva, Autoliv,Trico, Universal Lighting, among others.Such companies help make this city of500,000 people a competitive place to dobusiness.

Bright forecastAnalysts have stated that Mexico is al-

ready the world’s biggest exporter of flat-screen televisions, BlackBerrys andfridge-freezers, and is climbing up therankings in areas that require higher skills,such as cars, telecom equipment and aero-space.

‘Dashboard City’The auto parts sector, a top component of the Matamoros maquiladora industryWritten by

Jorge I. Montero


Brownsville Economic Journal BEDC.com 26 Spring 2013

And Mexico’s success in the automo-tive industry reverberates in the “Dash-board City”.“In Matamoros the heart of the

maquiladora industry is the auto parts,electronics and metal mechanics sectors”,Mattus said. “The markets that our compa-nies reach out to foresee a positive outlookand growth according to sales projectionsfor 2013.”He also added that Mexico “is transi-

tioning towards a reforming governmentthat gives us hope for a greater economicstability, and above all, legal certainty forforeign investment based on labor and ed-ucation reforms that are already in placeand also the energy reform that is soon tocome.”In 2012, China lost its factory-wage

advantage over Mexico. Rising Chineselabor costs are pushing companies to“reshore” production back to Mexico,where transportation costs are lower, too.Because of that tendency, at least 10 com-panies have established in Matamoros inthe last couple of years.“Some 10 factories that had operations

in China have decided to relocate to Mex-ico, particularly in Matamoros due to theproximity with the U.S. market and com-petitive costs available here,” Mattus said.He stressed that in order to bring com-

panies and attract foreign investment tothe Borderplex area, AMMAC is workingalongside the Tamaulipas State Govern-ment, the City of Matamoros Governmentand the Brownsville Economic Develop-

ment Council.“(BEDC) is the first agency contacted

by American investors who are seeking in-formation about the economic conditionsof this region, which is one of the mostsolid in attracting foreign investment inthe country and offers a large skilled man-ufacturing labor force,” he said.Such collaboration has led to new in-

vestments in the maquiladora industry.Mattus pointed out that one of the most

recent investments in Matamoros has beendone by Overhead Doors, which has estab-lished full operations in one of the city’seight industrial parks. The company is inthe metal fabrication industry and manu-factures residential and comercial over-head doors.The AMMAC Executive Director

added that at least eight companies are ex-panding their operations in Matamorosthanks to the success in their respectivemarkets.In 2011, Matamoros was ranked the

No. 9 Cost Effective City for Foreign Di-rect Investment by North American Citiesof the Future. The city boasts an ideal climate for in-

vestment and doing business in an easy,fast and flexible manner; offers an excel-lent and capable labor force and humancapital at the level of engineers and techni-cians; competitive prices, and most impor-tantly more than 45 years of successamong the foreign companies that con-tinue working here and that are backed bymodern infrastructure and more than 1,000

local suppliers.“Matamoros has a deeply rooted busi-

ness culture similar to other foreign com-panies’ business philosophies that givesthis city another advantage in productivityand success among its competitors,” Mat-tus said.

Peaceful climateThe state of insecurity that surrounded

the city of Matamoros in the last couple ofyears has gradually began to dissipate.The city now lives in a peaceful and

positive climate that has brought backtourism and investments to the area.“The best example (of the positive cli-

mate) is that of the more than 1,000 for-eigners, the majority of them Americans,that live in the Rio Grande Valley and thatcross the border on a daily basis to work inMatamoros in the factories. To this date,there have been no reports of particularcases where foreigners have been victimsof violent situations,” Mattus said.Federal, state, and local agencies have

also been coordinating to reinforce secu-rity and ensure that the city’s citizens andcompanies operations are not at risk.“Companies have taken the necessary

precautions (to protect themselves fromthe state of insecurity), but I insist in say-ing that the violent climate is graduallydissipating and we now see a climate ofconfidence and security that helps peopleconcentrate more on their jobs. This inturn helps with productivity and compa-nies become more competitive,” he said. EJ

From left to right: Manuel Garcia Garza, Secretary of Economic and Employment Development for the city of Matamoros; Jason Hilts, BEDC’s President and CEO; BryanKerrick, AMMAC’s President; Alfonso Sanchez Garza, Mayor of Matamoros; Rolando A. Gonzalez, CEO for Gobar Systems Inc.; Jorge I. Montero, BEDC’s Marketing andDesign Coordinator; Gilberto Salinas, BEDC’s Executive Vice President; and Roberto Mattus Rivera, AMMAC’s Executive Director. The different economic developmententities work together to bring business opportunities to the Borderplex region.

Courtesy photo

Tamaulipas State and Matamoros offi-cials announced a series of investmentprojects that will benefit the infrastructureof the Port of Matamoros and help expandthe city’s maquiladora industry.The announcement was made during

Tamaulipas Governor Egidio TorreCantu’s visit to Matamoros in January,where he revealed that the investment forthe projects totaled about $300 million.The Governor said that one of the

short-term projects contemplated is the re-habilitation of the existing infrastructure atthe Port of Matamoros.This will help activate the port’s termi-

nal required by the Mexican national oilcompany Petroleos Mexicanos (Pemex) tosupport their exploration activities in thePerdido Fold Belt in the Gulf of Mexico.

The estimated cost for the project is $112million.“The project includes the dredging of

the canal and dock area, the northern andsouthern extension of the jetties, rehabili-tation of the dock area, construction of arailroad yard, storage facilities, and accessto the main roadway that leads to theport,” Torre Cantu said. In 2012 Mexico discovered new deep-

water oil deposits with estimated reservesof more than 600 million barrels. Dubbed Supremus 1 and Trion 1, the

oil wells are located in the Perdido FoldBelt, a zone situated about 111 miles eastof Matamoros and 24 miles south of themaritime border with the United States.Mexican authorities have said that thesediscoveries should allow Mexico to in-crease its annual oil production by up to athird.Matamoros Mayor Alfonso Sanchez

Garza thanked Governor Torre Cantu forhis support to help develop the Borderplexregion and highlighted other infrastructureendeavors that are near completion such asthe international railroad bridge and theextension of the Veterans InternationalBridge. These projects, the Mayor said, will

help create a modern and competitivecommercial and industrial corridor thatwill not only benefit Matamoros andTamaulipas, but Mexico as well.Governor Torre Cantu also took part in

the groundbreaking of “Proyecto Espejo1” at the Los Palmares Industrial Park.The project will create four industrial unitsat the park with a total investment of morethan $30 million.Both ambicious projects will help fuel

economic opportunities in the region andgrowth within the maquiladora industry. EJ


Projects will help fuel economic opportunitiesand growth within the maquiladora industry

EJINFRASTRUCTUREGreater competitiveness

Investments to benefitthe Port of Matamoros

By Staff Reports

The infrastructure projects will benefit the city of Matamoros and the Port of Matamoros. It will also help expand the city’s maquiladora industry and help the region gain a competitiveedge.

Courtesy photo


Despite competition from bridges far-ther up the Rio Grande Valley and a dropin border crossings, the Cameron Countyinternational bridge system is in solidshape financially.That’s according to Fitch Ratings,

which in January affirmed the “A” ratingand stable outlook on the county bridgesystem’s $6.3 million in revenue bonds.The same goes for $13.9 million in out-standing debt to the county — the bridgesystem’s share of bonds the county issuedin 2005, 2008 and 2011.Pete Sepulveda, county administrator

and bridge system director, said Fitch’slatest report leaves the bridge system’s sta-tus unchanged from last year, which is agood thing.“Annually they review our financials

and see where we’re at, and then make adetermination whether to leave us with thesame rating or change our rating,” he said.“The way the economy has been the

last couple years I doubt that any govern-ment entity has improved their credit rat-ing only because of the whole situationnationwide. So to be able to maintain yourrating and a stable outlook, that’s posi-tive.”Most of the bond money is used for

capital improvements to the bridge sys-tem, Sepulveda said. The biggest project,which began 18 months ago and is com-plete, is the construction of additionalcommercial truck lanes at Veterans Inter-national Bridge at Los Tomates.Wait times at the bridge will be re-

duced substantially when the project isfinished in early March, Sepulveda said.The county also operates Gateway Interna-tional Bridge in Brownsville and the FreeTrade International Bridge at Los Indios.

The Fitch report said that overall traf-fic on the county’s bridges declined for asixth consecutive year — down 2.5 per-cent in fiscal year 2012 — to 5 milliontotal crossings annually.However, Sepulveda said that while

passenger traffic has been flat, commercialtraffic has picked up — almost 5 percentin fiscal year 2012, according to Fitch.Passenger vehicle traffic constituted 58percent of revenues in fiscal year 2012,compared to 26 percent for commercialtraffic, according to the report.The increase in commercial traffic is in

part due to the stable and growingmaquiladora industry, while security prob-lems have also become less of an issue,

Fitch said.“We went through a period of time

where we would get bomb threats and wewould have to shut down the bridge,”Sepulveda said. “It’s been a while sincewe had one, so it’s kind of calmed down.”To counter declining revenue from

crossings, bridge system management hasinstituted several toll increases. Tolls fromfiscal year 2012 were up 3.6 percent fromthe previous year to $15.1 million, Fitchnoted. EJ

This article was written by Steve Clark and appeared in

the Monday, February 11, 2013 issue of The Brownsville Herald

Commercial traffic picks up at local international ports of entry

EJLOGISTICSFitch Ratings

County bridge system maintains its ‘A’ bond rating

Vehicle crossings

Northbound 3,709,400 4,487,407 317,403* 8,514,201

Brownsville bridgeborder crossings 2011 2012 2013 Total

Southbound 3,846,507 3,276,389 402,051* 7,524,947

Pedestrian crossings

Northbound 2,109,895 2,104,561 156,735* 4,371,191Southbound 1,928,719 1,850,098 272,754* 4,051,571

Truck crossings

Northbound 177,986 190,204 Not available 368,190Southbound 187,714 191,526 32,020* 411,260

Rail crossings

Northbound 39,398 43,044 3,482* 85,924Southbound 45,246 53,608 3,347* 102,201

SOURCE: Texas Center for Border Economic and Enterprise Development*Figures for 2013, where available, are as of March 15


BUSINESS&ECONOMICBRIEFS

Expanded truck lanes onU.S. side of Veteransbridge completeCommercial trucks crossing Veterans

International Bridge at Los Tomates willnow have their own travel lanes into theUnited States from Mexico.The commercial traffic lanes at the

bridge opened in February after nearly twoyears of construction.The $6 million project funded by the

Federal Highway Administration’s Coor-dinated Border Infrastructure Fund iscomplete on the U.S. side, CameronCounty Judge Carlos H. Cascos said.Officials said the project on the Mexi-

can side is 60 percent complete and theentire expansion is scheduled to open thissummer.“This will allow for an increase in le-

gitimate trade and travel through the portof entry,” Cascos said.“With the completion of the Mazatlan-

to-Matamoros highway in the next year,this will be a viable option for the produceindustry,” he said.Cameron County formed a partnership

with The Texas Department of Transporta-tion and the FHWA to fund and constructthe project.

This article was written by Steve Clarkand appeared in the Tuesday, February

26, 2013 issue of The Brownsville Herald

Port of Brownsville aleader in foreign tradeexportsAccording to the Foreign Trade Zone

(FTZ) Annual Report, the Port ofBrownsville ranked Number 4 of the Top25 Foreign Trade Zones in the nation andNumber 2 in Texas. The Port exportedcommodities valued over $750 million.The top three commodities moved werepetroleum products, steel, and lubricatingoils. The 2011 Annual FTZ report can beaccessed through the NAFTZ Associationand the FTZ Board.The Port of Brownsville is the Grantee

for Foreign Trade Zone No. 62 and offerssites at the Port of Brownsville,Brownsville-South Padre Island Interna-

tional Airport, Harlingen Industrial Parkand Airpark, NAFTA Industrial Park andFINSA Industrial Park at Los Indios. Zonestatus is available to any of the Port’sproperties.“It’s gratifying to see Texas as the

number one state in Foreign Trade Zoneactivity and that the Port of Brownsville isleading Texas ports in FTZ export activity.FTZ designation is just another tool wecan utilize to attract more industry andmanufacturing to our area,” said Port Di-rector and CEO Eduardo A. Campirano.The Port of Brownsville is a leading

in-transit port and major importer of steelin the United States. The Port is guided byits vision to create quality jobs, attract pri-vate and public investment, increase itscargo handling capacity and promote thecommon good of the region by strategiceconomic development of its land hold-ings.

BPUB reveals deal formajor generating facility

Brownsville Public Utilities Board of-ficials announced in January plans for amassive power generation project they saywill not only secure the city’s electricityneeds well into the future but energize thelocal economy as well.The city-owned utility company signed

a development-and-purchase agreementwith Tenaska Inc., an independent energycompany based in Omaha, Neb., to buy anownership interest in an 800-megawatt,natural gas-fired power plant that Tenaskaplans to develop on 270 acres at FM 511and Old Alice Road.BPUB’s ownership interest would enti-

tle it to 200 megawatts of capacity fromthe Tenaska Brownsville Generating Sta-tion, enough to meet the electricity needsof roughly 100,000 Brownsville areahomes, officials said. The plant would usewater — converted into steam to drive tur-bines — from BPUB’s Robindale waste-water treatment plant.Under the agreement, BPUB is respon-

sible for building a water pipeline fromthe wastewater plant to the power plant, adistance of roughly five miles, as well as agas pipeline from Edinburg — about 50miles — to supply the power plant withfuel.

Trico partners with TSCfor job training grantTrico Products has partnered with

Texas Southmost College to provide jobtraining using a $364,133 Skills Develop-ment Fund grant from the Texas Work-force Commission (TWC). The grant will be used to help workers

increase their skills in molding and pro-duction, as well as to increase employees’capacities to eliminate waste and stream-line processes, ultimately helping the com-pany remain competitive. Under this grant, 242 incumbent work-

ers will be trained, including material han-dlers, industrial technicians and machineoperators. Upon completion, the traineeswill earn an average hourly wage of$16.52.

“The Skills grants deliver customizedtraining solutions that help Texas employ-ers and workers succeed in the market-place,” said TWC Chairman AndresAlcantar.“This investment builds not only em-

ployee skills, but the capabilities of ourcommunity colleges to the benefit of em-ployers and the community. We arepleased to make this investment.” From the program’s inception in 1996

through 2012, Skills Development Fundgrants have created or upgraded more than286,000 jobs throughout Texas. The grantshave assisted 3,901 employers with theircustomized training needs. The Legislature appropriated $48.5

million to the Skills Development Fundfor the 2012-13 biennium. EJ

The Tenaska power plant will be located along the FM511 corridor.

Courtesy photo


U.S. goods and services exports reachedan all-time record in 2012, totaling $2.2 tril-lion. Export records were seen across theboard, including in: capital goods, automo-tive vehicles, parts, and engines; consumergoods; travel and tourism. This announce-ment follows the release of the 2012 U.S.International Trade in Goods and Servicesdata by the Commerce Department’s Cen-sus Bureau and Bureau of Economic Analy-sis.In December 2012, exports of goods and

services grew by $3.9 billion to $186.4 bil-lion, which included increases in industrialsupplies and materials and travel andtourism. Imports also decreased by $6.2 bil-lion to $224.9 billion. As a result, the tradedeficit decreased to $38.5 billion in Decem-ber, down from $48.6 billion in November.“The administration’s efforts to promote

U.S. exports are paying off, with export lev-els reaching a record $2.2 trillion in 2012,”said Deputy Secretary Blank. “We’re con-tinuing to make historic progress toward thepresident’s goal of doubling exports. As partof this effort, the National Export Initiativehas helped U.S. companies by leveling theplaying field and providing access to newmarkets. Not only did exports outpace thegrowth in imports for the first time since2007, but exports have helped support the

creation of over six million private sectorjobs over the past 35 months. This work ismore important than ever—particularly withglobal economic headwinds affecting therate of export growth across the board—sowe will continue to help American workersby removing trade barriers and increasingmarket access.”

2012 HIGHLIGHTSRecord level of exports: U.S. exports

set another record in 2012, growing $92.6billion and reaching $2.2 trillion despitesignificant economic headwinds fromabroad.

Exports outpaced imports: Growth inexports of goods and services outpaced thegrowth of imports of goods and servicesboth in dollar value and percent change forthe first time since 2007, with exports grow-ing by $92.6 billion or 4.4 percent.

America’s trade deficit declined: TheU.S. trade deficit improved by $19.5 billionin 2012, from the $560 billion recorded in2011, and is well below the pre-recessionhigh of $753 billion recorded in 2006. Infact, it is at the lowest level since January2010. EJ

SOURCE: U.S. Department of Commerce

UNITED STATES

U.S. goods and services exportsreach all-time record in 2012

Gross Domestic Product

0.1%

Real gross domestic product -the output of goods and serv-ices produced by labor andproperty located in the UnitedStates - increased at an annualrate of 0.1 percent in the fourthquarter of 2012 (that is, fromthe third quarter to the fourthquarter), according to the “sec-ond” estimate released by theBureau of Economic Analysis.

Trade in Goods and Services

-$44.4billion

Total January exports of $184.5billion and imports of $228.9 bil-lion resulted in a goods andservices deficit of $44.4 billion,up from $38.1 billion in Decem-ber, revised. January exportswere $2.2 billion less than De-cember exports of $186.6 billion.January imports were $4.1 bil-lion more than December im-ports of $224.8 billion.

Construction Spending

-2.1%

Construction spending duringJanuary 2013 was estimatedat a seasonally adjusted an-nual rate of $883.3 billion, 2.1percent (±1.3%) below the re-vised December estimate of$902.6 billion. The Januaryfigure is 7.1 percent (±1.8%)above the January 2012 esti-mate of $824.7 billion.

Employment

7.7%

Total nonfarm payroll employ-ment increased by 236,000 inFebruary, and the unemploy-ment rateedged down to 7.7 percent.Employment increased inprofessional and businessservices, construction, andhealth care.

Import and Export Price Indexes

0.6%

The price index for U.S. imports in-creased 0.6 percent in January, fol-lowing declines of 0.5 percent and0.7 percent the previous twomonths. The January upturn wasprimarily led by higher fuel prices.U.S. export prices rose 0.3 percentin January after declining 0.1 per-cent in December and 0.6 percentin November.

Private constructionSpending on private construction was ata seasonally adjusted annual rate of$614.2 billion, 2.6 percent (±1.2%) belowthe revised December estimate of $630.9billion.

Public constructionIn January, the estimated seasonally ad-justed annual rate of public constructionspending was $269.0 billion, 1.0 percent(±2.1%) below the revised December es-timate of $271.7 billion.

SOURCES: U.S. CensusBureau;U.S. Bureau ofEconomicAnalysis


Global Economic Activity

1.1%

The Global Economic ActivityIndex, a monthly proxy forMexico gross domestic prod-uct, rose 1.1 percent in No-vember after edging up 0.4percent in October. Service-re-lated activities (including trade,transportation and govern-ment) expanded 1.7 percent.

Exports

2.6%

Exports bounced back in No-vember, growing 2.6 percentafter falling for three consecu-tive months. Exports trendeddown in 2012, suppressed byfalling oil exports. Oil exportswere down 6 percent in the first11 months of 2012 over thesame period in 2011, whilemanufacturing exports grew 5.6percent.

Industrial Production

0.9%

Industrial production (IP) grewin November, increasing 0.9percent month over monthafter falling 0.9 percent in Oc-tober. Mexico IP follows onthe heels of U.S. IP, whichgrew in November and De-cember. Mexico’s IP typicallytracks U.S. IP, due in part tothe U.S. automotive industry’slarge presence in Mexico.

Consumer Price Index

3.5%

Inflation declined signifi-cantly in the last threemonths of 2012. Althoughheadline inflation is stillrunning slightly above theCentral Bank’s target of 3percent, it fell to 3.5 percentin December, its lowestreading since April.

Peso/Dollar Exchange Rate

12.9pesosper dollar

After losing a little groundagainst the dollar in Novem-ber, the peso resumedstrengthening in December.The exchange rate averaged12.9 pesos per dollarduring December, down from13.1 in November. Thepeso has appreciated 8.1 per-cent since June, when thepeso reached its lowest valueof 2012 at 13.9 pesos.

Employment

4.8%

Formal employment—jobswith government protectionsand pensions—expanded atan annualized rate of 3.9 per-cent in November (monthover month) after growing 4.9percent in October. On aquarterly basis, employmentgrew 4.8 percent in the thirdquarter, similar to its pace inthe first half of the year.

MEXICO

During 2012, Mexico’s economicgrowth led activity levels to continue in anorderly manner the convergence towards theproductive potential of the country, in a con-text in which no demand-related inflationarypressures were observed and in which infla-tion resumed its downward trend, once theeffects of the temporary shocks affecting itdissipated. The balance between the income from

productive factors and the absorption in theeconomy, reflected in the country’s externalaccounts, allowed them to persist at reducedand fully fundable levels. The national financial system has sup-

ported economic growth in a sound manner,i.e., without accumulating imbalances in thereferred sector. This favorable performanceis largely due to the adequate macroeco-nomic policy stance. Particularly, thestrengthening of public finances and themonetary policy aimed at reaching the 3 per-cent permanent inflation target are notewor-thy. The fact that the abovementioned eco-

nomic phenomena took place in an interna-tional environment of persistent signs ofweakness emphasizes the benefit of main-taining a strong macroeconomic frameworkin Mexico.The macroeconomic scenario foreseen

by Banco de México is the following:

Growth of the Mexican Economy:Considering U.S. industrial productiongrowth in 2012 and the performance of theMexican economy throughout the year, theannual GDP growth in Mexico is calculatedto have been around 4.0 percent in 2012. For2013, the interval for the expected GDPgrowth rate in Mexico announced in the lastInflation Report remains unchanged, so thatGDP growth is estimated to be located be-tween 3.0 and 4.0 percent. For 2014, theGDP growth rate of Mexico is foreseen tolie between 3.2 and 4.2 percent, in line withthe expectation of a stronger U.S. economicexpansion for that year.

Employment: For 2013, considering theanticipated economic activity growth andthe recent approval of the labor reform, theforecast for the increase in the number ofIMSS-insured workers is revised upwardsfrom an interval of 500 to 600 thousandworkers stated in the previous Inflation Re-port to an interval of 550 to 650 thousandinsured workers. For 2014, an increase ofbetween 700 to 800 thousand workers is ex-pected. EJ

The complete report is available atwww.banxico.gob.mx.

It includes information available as of February 11, 2013

Forecast by Banco de Mexico

SOURCE: Federal ReserveBank of Dallas


The oil industry in Texasdoubled its production inone year, pushed by newlyfound deposits located Southof the State and now pro-duces 1.5 million barrels ofpetroleum a day, 50 percentmore than in 2011.Christi Craddick, Texas

Railroad Commissioner incharge of managing the sub-soil resources, said thatTexas now represents aquarter of the total produc-tion of crude oil in theUnited States. The oil boom that Texas is seeing “is ev-

ident not only in the numbers of production,but also in the number of jobs being createdand the taxes that this industry brings,”Craddick said.The Commissioner added that the oil in-

dustry was responsible for creating 427,000new jobs in Texas in 2011 and contributedto the state about $9 billion in taxes.“We are finding new resources with in-

novative technology and pioneer tech-niques,” she said.“I think we have the potential to satisfy

our energy needs in North America, so wecan stop depending on oil produced in hos-tile nations,” she added.Craddick said that today about 18.5 mil-

lion barrels of oil are consumed each day inthe U.S. and that 12 million barrels a dayare imported to the country.“Some analysts predict that the oil im-

ports could be reduced to six million barrelsper day in 2014,” the Commissioner said. EJ

Information provided by Mexican news agency Notimex

TEXAS

Texas registers a new oil boomEmployment

6.1%

Texas gained 12,000 jobs in De-cember after adding 23,500 jobsin November. Texas employmentgrew by 2.9 percent in 2012,adding 305,000 jobs. CurrentTexas employment stands at10.98 million. The unemploymentrate edged down to 6.1 percent inDecember from 6.2 percent in No-vember. The Texas rate remainslower than the U.S. rate, whichwas 7.7 percent in February.

Quarterly Exports

0.7%

Quarterly Texas exports in-creased 0.7% in the fourth quar-ter of 2012. The fourth-quarterlevel of exports was 2.9% higherthan a year earlier. Exports toMexico, Texas’ largest tradingpartner, increased by 2.1%,while exports to Asia fell 2.2% inthe fourth quarter. Exports toChina rose sharply by 22.2%after three quarters of decline.

Production Index- Texas Manufacturing

6.2

Texas factory activity expandedin February, according to theTexas ManufacturingOutlook Survey. The productionindex, a key measure of statemanufacturing conditions, camein at 6.2, suggesting growth con-tinued but at a slower pace thanin January.

Natural Gas Prices

0.3%

Natural gas prices edged upto $3.34 per million Btu inFebruary, a 0.3 percent in-crease from the January level.The price was 33.1 percenthigher than in February 2012.

Crude Oil Prices

0.7%

The West Texas Interme-diate crude oil price rose0.7 percent to $95.32 perbarrel in February butwas down 6.8 percentyear over year.

Texas Rig Count

833

The Texas rig count rose to833 in February from 821 inJanuary, the first increase in8 months, but was down 8.9percent year over year.

SOURCE: Federal ReserveBank of Dallas


BROWNSVILLE BORDERPLEX

Brownsville home sales see modest growth in 2012After a small bump in sales in 2012

over the previous year, realtors in theBrownsville and McAllen areas are cau-tiously optimistic about continued growthin the market in the near future.The two markets saw increases in an-

nual sales of 2 percent and 7 percent, re-spectively, after a down year in 2011.But sales have yet to reach levels seen

even after the recession.Larry Jokl, former president of the

Brownsville-South Padre Board of Real-tors, said Cameron County saw a smalluptick in 2012 home sales because morepeople are moving to the area.“You’re seeing the expansion of indus-

try, both here and across, and so manypeople are coming in,” he said. “It’s basi-cally across the board.”But for now that growth translates to a

housing sector only treading water, hesaid.“We’ve got a market that’s just slowly

coming back financially,” Jokl said. “Ithink the market will improve dramatically

but that’s going to take a while.”Area Realtors are hopeful 2013 will

bring consistent, if modest, growth.“We’d like to think that the market is

starting to recover,” said Lee Jinks, associ-ation executive at the Greater McAllenAssociation of Realtors. “We’re prettypleased with the way the market is going.”Jinks said although area home sales

haven’t matched numbers from 2007 or2008, “those weren’t necessarily normalmarkets” at the peak of the housing bub-ble.University of Texas-Pan American

business professor Steven Lovell saidmuch of the Rio Grande Valley is seeingflat growth because of the large number offoreclosed homes.“That is kind of depressing some of the

prices at the top end,” he said.The area, meanwhile, has not added

enough new jobs to fuel significant newhome sales, he said. Much of the increasein sales is being driven by standard popu-lation growth.

Harlingen stood out last year as thefifth-highest growth area of the state.Lovell attributed the success in the localmarket to both the city’s geography at thejuncture of Expressways 77 and 83 and tonew retail such as the 145,000-square-footBass Pro Shop.“The one good thing is there’s a recog-

nition now, especially with the businesscommunity ... as far as retail is concerned,the Valley is an area that is going to begrowing,” he said. “More and more com-panies are going to be looking at us fromthat point of view.” EJ

This article was written by Andrew Kreighbaum and appeared

in the Friday, February 8, 2013 issue of The Monitor


EJMARITIME INDUSTRY

Port of Brownsville officialshad solid proof on hand ofthe maritime industry’seconomic value to the city,region and state when

Texas legislators visited the entity in lateJanuary.That proof came in the form of a re-

cently finalized report by Pennsylvania-based Martin Associates/ John C. MartinAssociates, one of the world’s top port in-dustry economic analysts.Among the key findings is that vessel

and cargo activity at the Brownsville

port’s marine cargo facilities and ship re-pair/oil rig maintenance operations gener-ated 21,590 jobs in the state in 2011.Of that number, 11,230 jobs directly

impact the local and regional economy,while business revenue related to the han-dling of marine cargo generated an esti-mated $925 million in local economicimpact in 2011, according to the report.Overall, maritime operations at the

port produced a total of $2 billion in eco-nomic activity in the state, said Martin As-sociates. In addition to overall jobs andeconomic impact, the amount of income

and local expenditures generated is esti-mated at $771.3 million for 2011, generat-ing $134 million in local and state taxes.The report, commissioned as a com-

panion to a Martin Associates study ofports’ impact statewide, covers only mar-itime activities at the Port of Brownsvilleand not the economic contributions ofnon-maritime port tenants.It includes offshore drilling rig fabrica-

tor Keppel AmFELS and the port’s variousship recycling companies, said EddieCampirano, port director and CEO.

Study shows job and revenueimpact of Port in local, regional,and state economy

Port of Brownsville

According to the report, the vessel and cargo activity at the marine cargo facilities and ship repair/oil rig maintenanceoperations generated 21,590 jobs in Texas in 2011. Of these 21,590 jobs, 11,230 jobs directly impact the local andregional economy.

Photo by Jorge I. Montero

A vital component in thelocal and regional economy


A 2006 study took into account all portactivities, maritime and otherwise, andshowed an impact of around 12,000 interms of jobs, he said.In comparison, thenew study shows morethan 11,000 jobs cre-ated by maritime activ-ities alone.“You can see that we obviously have a

big economic impact in the region andhow that economic impact compares to thestate as well,” Campirano said.According to the statewide study, com-

missioned by the Texas Ports Association,waterborne cargo operations at Texas’public ports totaled $277.6 billion in 2011.The study covered 16 public ports inTexas. Houston is the “800-pound gorilla”among Texas ports, Campirano said.The state’s maritime industry is second

only to California, he noted.Texas ports move 20 percent of all the

goods that enter the United States, Campi-rano said. The Panama Canal, which is un-dergoing a massive expansion project to

allow larger, next-generation containerships to use it, is a hot topic of discussionamong legislators because of the increasein cargo it could bring to the Gulf of Mex-ico.A report from the Panama Canal

Stakeholder Working Group looks at whatports need to do to capitalize on opportu-nities presented by an expanded PanamaCanal, which is expected to be complete in2014.The report makes recommendations

for Texas, including “providing for a vi-brant climate for port investment,” Campi-rano said. Despite the regional andstatewide economic benefit from ports,

Texas does not helpfund port infrastructureimprovements unlikeother Gulf ports thatget support from theirrespective states, hesaid.

“That’s something we don’t do inTexas,” Campirano said. “This is all gen-erated by ports and port users. This isstrictly private sector investment.”The Port of Brownsville is self-sustain-

ing when it comes to paying for its opera-tions, pouring some of the revenue itgenerates into capital improvements. Theonly tax money it receives is a 4.5 cent advalorem tax for retiring old debt.While Houston, the biggest container

port on the Gulf Coast, stands to benefitthe most from the Panama Canal expan-sion, smaller ports, including Brownsville,will benefit in other ways, Campiranosaid.

“We all have our niches,” he said. “Ithink our opportunities are going to comefrom ‘transloading’: Big vessels going intobig ports will parcel out the cargo, andsmaller vessels will take it to other Gulfports. That’s where I believe the Port ofBrownsville has the greatest chance ofbeing able to participate in that business.”Campirano said the port’s goal is to

“be an economic engine for the region andcreate good-paying jobs,” and that theMartin Associates report is evidence thatthe port is meeting that goal.It also shows that the port is recovering

from the bleak period during the globaleconomic crisis and the Gulf drilling em-bargo, enacted as a result of the 2010Deepwater Horizon spill.Though steel is king, much of the bulk

cargo the Port of Brownsville handles ispetroleum based such as gasoline anddiesel.“We’ve fared fairly well,” Campirano

said. “If we would have done this study in2008 at the peak of our activity, you kindof wonder what it would have lookedlike.”He said the port “hit rock bottom” eco-

nomically speaking during the recession,but that if cargo and jobs continue theircurrent upward trajectory things will befine. EJ


the Wednesday, January 23, 2013 issue of The Brownsville Herald

KEY FINDINGS

21,590state jobs generated in 2011 from vesseland cargo activity at the Brownsville port’smarine cargo facilities and ship repair/oil rigmaintenance operations

11,230 jobs directly impact the local and regionaleconomy

$925 millionlocal economic impact generated in 2011 bybusiness revenue related to the handling ofmarine cargo

$2 billioneconomic activity in the state produced bymaritime operations at the port

$771.3 millionof income and local expenditures generatedfor 2011, generating $134 million in localand state taxes


Federal authorities from Washingtonbraved gusting winds and billowing dustfor a dockside tour of the Port ofBrownsville on a Monday morning inearly March.Eddie Campirano, port director and

CEO, led the tour, which included DavidMatsuda, maritime administrator for theU.S. Department of Transportation, andU.S. Rep. Filemon Vela, D-Brownsville.Herman Deutsch, director of the MaritimeDivision of the Texas Department ofTransportation, was among other officialson hand.The occasion for the visit was a $12

million TIGER grant awarded to the portfor construction of a second marine dock.Port officials said the new, 600-foot-longdock will enable the port to significantlyboost its freight volume, making it morecompetitive with domestic and Mexicanports on the Gulf.TIGER stands for Transportation In-

vestment Generating Economic Recovery,a DOT discretionary grant program cre-ated under the American Recovery andReinvestment Act of 2009.Brownsville’s $12 million is part of

$500 million in TIGER grants announcedin June. The port was passed over forTIGER funds three times before but suc-ceeded with its fourth application. It willcontribute $14 million of its own funds forthe dock project, which Campirano saidshould start this June and take 18 monthsto complete.Matsuda said he was in Brownsville to

demonstrate the DOT’s commitment toports — all ports.“When the president talked about ports

and infrastructure in the (Feb. 12) State ofthe Union address, he wasn’t just talkingabout the big mega ports on the coast butalso places like Brownsville, Texas, here,”he said. “Ports of all sizes are economicengines. They really help generate jobsand help the economy.”According to Brownsville port offi-

cials, the port generates $2 billion in eco-

nomic activity annually for the state and11,000 direct and indirect jobs that impactthe local and regional economy.To help improve the nation’s port in-

frastructure, the DOT has made it possiblefor the first time for ports around the coun-try to compete for federal grants, Matsudasaid, adding that he might signBrownsville’s grant agreement as early asthis week.“It’s a good project,” he said. “We

wouldn’t have funded it otherwise.”Deutsch, head of TxDOT’s Maritime

Division, said ports are extremely impor-tant for Texas, generating nearly 25 per-cent of the state’s gross domestic productand more than a million jobs.“We have 28 ports in Texas, and

Brownsville is a very good example of amedium-sized port,” he said. “It’s very im-portant for us, there on the border. Theyhave all this domestic cargo but also inter-national cargo. We’re big advocates ofBrownsville and support all these initia-

tives.”Deutsch said his office is working with

all the state’s ports and the Texas Port As-sociation “to have one voice in Congressand one voice in Austin.”Vela, elected in November to represent

the state’s newly created 34th Congres-sional District, said the Obama administra-tion’s focus on infrastructure and jobs iscrucial to the regional economy. Vela saidpart of his role as congressman is to dowhatever he can to support those efforts.“I think what we see here is a good re-

flection of how — if you get the federaland the state and the local government towork together — you can really makethings happen,” he said. EJ


the Tuesday, March 5, 2013 issue of The Brownsville Herald.

EJMARITIME INDUSTRY

Federal authorities tour port facilitiesafter TIGER grant approval

Port of Brownsville

Maritime administrator tours Brownsville facility

Maritime Administrator David Matsuda, center, toured the Port of Brownsville facilities along with U.S. Rep. FilemonVela, D-Brownsville, Eddie Campirano, port director and CEO, and other local, state and federal officials.

Photo courtesy Maritime Administration


A bipartisan coalition of congressionallawmakers has filed legislation that wouldallow private and local money to be usedfor port infrastructure and to hire addi-tional officers at the nation’s internationalbridges.U.S. Reps. Michael McCaul, R-Austin;

Pete Gallego, D-Alpine; Henry Cuellar, D-Laredo; Beto O’Rourke, D-El Paso; File-mon Vela, D-Brownsville; and BlakeFarenthold, R-Corpus Christi, announcedMarch 13 that they filed House Resolution1108, the Cross-Border Enhancement Act,which would allow U.S. Customs and Bor-der Protection to enter into public-privatepartnerships to raise funds for projects thatwould facilitate trade.The agency, a division of the U.S. De-

partment of Homeland Security, is chargedwith overseeing the legal movement oftrade and people across ports. Under themeasure, it would partner with either localgovernments or private entities to poolmoney for improvements, new projectsand additional staff.It is a companion bill to a measure

filed in January by U.S. Sen. John Cornyn,R-Texas. Cornyn filed the same measurein 2012, and in addition to the partner-ships, his 2013 bill would also require theGeneral Services Administration to reviewadditional financial proposals.The movement by the U.S. House

members comes just weeks after the fed-eral budget cuts known commonly as se-questration forced the government tobegin furloughing CBP employees, asmany as 2,750 across the country, forweeks at a time.

“Because of the crucial role CBP playsin supporting the efficient and effectiveflow of goods between our two countries,we must leverage every available resourceto make sure that CBP has the tools itneeds to do its job well, keep lines shortand move goods and people across theborder efficiently,” Cuellar, who sits onthe House Appropriations Committee, saidin a news release.Mexico is Texas’ largest trade partner

and the United States' third-largest overall.In 2012, more than $229 billion and $86billion in trade passed through the Laredoand El Paso customs districts, respectively,according to U.S. census data analyzed byWorldCity, a Florida-based company thatuses U.S. census data to track trade pat-terns.“Our land ports of entry must be se-

cure and they must provide for the freeflow of commerce,” added McCaul, thechairman of the House Homeland SecurityCommittee. “Allowing CBP to partnerwith local governments and private stake-holders will maximize the value of limitedtaxpayer resources, and it will enable theprivate sector, which drives our economyand creates jobs, to proactively improvethe efficiency of cross-border operations.”But while the news is being greeted as

positive step forward, some border offi-cials are wanting more and wanting itsooner. Days before the legislation wasfiled, the Texas Border Coalition, a groupof elected officials and private-sector lead-ers that advocates for additional resourcesat the nation’s land ports, lamented a U.S.Senate financing measure it said fell short

of immediate relief needed on the borderafter budget cuts took place March 1.“The Senate version of HR 933, the

continuing appropriations bill, providesshort-term funding for no fewer than21,775 CBP officers, far short of the newhires needed to facilitate legitimate tradeand travel,” Monica Weisberg-Stewart, thechairwoman of the TBC’s immigrationand border security committee, said in anews release.“As far as we can tell, the bill provides

no short-term relief that would minimizeor eliminate the anticipated furloughs,such as by directing that current staffinglevels be maintained on the front lines,”she added.The appropriations measure includes a

mechanism that allows the Department ofHomeland Security to pilot similar fund-ing partnerships as those suggested inCornyn and the representatives’ bills,which Weisberg-Stewart lauded. But, sheadded, the cuts are sure to have a negativeimpact on trade and commerce.“The current budget landscape, includ-

ing implementation of the automatic se-questration spending cuts, has alreadythickened the legal border crossing pointsbetween the U.S. and Mexico,” she said,adding that according to DHS officials,wait times at land ports could exceed fiveor six hours. EJ

This article was written by Julian Aguilar and appeared in

the Wednesday, March 13, 2013edition of The Texas Tribune

EJINFRASTRUCTUREBipartisan coalitionCongressional lawmakers look to fundprojects that would facilitate trade

Legislators back new mechanismto fund port improvements

North Brownsville Industrial Park

SITE DESCRIPTION:

LOGISTICSn 1st manufacturing zoningn 5 miles from Port of Brownsvillen Rail access by Union Pacific,Burlington North and Brownsville RioGrande Railroadn Public transportation byBrownsville Urban Systemn 8 miles from Brownsville SouthPadre Island International Airportn 1/4 mile from SH 550, future extension of I-69

UTILITIESn Electricity supplied by BrownsvillePublic Utilities Boardn 1,500 feet from substation with 20MVAn Gas supplied by Texas Gas Servicen 4-inch gas line size with 125 lbs ofpressuren Telecommunications by AT&Tn No height restrictionsn Flat topographyn Site is development ready

n Water supplied by Brownsville Pub-lic Utilities Board:w 16” water line runs along ParedesLine Roadw 8” looped water line around theTitan property (adjacent to park)w Water comes from Rio Grande andunderground brackish water plantn Waste water service by BrownsvillePublic Utilities Boardw An existing lift station and an 8” sani-tary sewer gravity line at Titan property(adjacent to park)w Capacity at 10 MGD

™™™

“Texas is a state where a dream can be put to work.”- Texas Governor Rick Perry

It’s a commitment to create and sustain an environment that fosters business and entrepreneurship, trains the workforce of the future, and helps

to your growth and success Come to Texas, we’re

Wide Open for Business

brownsville economic journal (spring 2013 issue)

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