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First Person: Juarez and El Paso - A Fulcrum Point for U.S. / Mexico Trade and Near-Shoring Opportunity

The editor of Area Development recently met with the mayors of El Paso, Texas, and Juárez, Mexico, to find out how they are working together to advance business in this cross-border area.

2012 Directory
I know the first question on everyone's mind when discussing setting up a facility in Mexico concerns the recent news of violence there. Can you tell us about the safety situation for businesses in the region?
Murguía: In the three industrial areas of Juárez, which comprise approximately 60 million square feet of maquila space, there have been no incidences of violence.

What about the situation in the rest of the city?
Murguía: The citizens of Juárez still come out to enjoy the parks, and to participate in parades and national celebrations. Juárez is actually one of the safest places to be in Mexico.

How have the recent incidences of violence in parts of Mexico affected businesses on the El Paso side of the border?
Cook: Actually this has had a positive effect for us. Some Mexican businesses have been expanding into El Paso.

How is the El Paso/Juárez region faring in the economic recovery?
Cook: We've been able to recover from the recession pretty quickly. We've benefited from growth at the Army's Fort Bliss. Since 2005, the Pentagon has pumped about $5 billion into construction at the installation, which has stimulated the local economy. This military base is actually our #2 economic driver.

Which sectors of the El Paso economy were hurt during the economic downturn?
Cook: The automotive sector was hurt the worst, but even that has stabilized. And many new industries have decided to locate in the El Paso/Juarez region. There's been a surge in consumer electronics as well as durable medical equipment. In fact, of the 83,000 jobs we lost during the recession about 35,000 have already been recovered. Companies with expansions completed or under way include Electrolux, GE Healthcare, Automotive Lighting, Keytronics, Viasystems, Warner, Foxconn, Wistron, RR Donnelley, Eagle Ottawa, BRP-Bombardier.

What benefits does a Juárez location offer to companies?
Murguía: First of all, we offer a geographic advantage. We are central to both the East and West coasts. About 110 million people in North America are within a one-day drive of our region. And, importantly, we have a skilled labor force that has developed over 40 years.

Are U.S. companies that previously outsourced to China coming to Juárez now?
Murguía: Yes. It makes sense. They can take advantage of our skilled labor force while saving on logistics costs by manufacturing in Juárez instead of China.

Tell me more about the region's growing consumer electronics sector.
Cook: As Héctor said, many of the consumer electronics companies that had previously offshored to China are coming back to the El Paso/Juárez region, especially those that manufacture more technologically advanced products. There's a particular Taiwanese company that's building a major manufacturing plant to employ more than 10,000 people. It makes products for HP, Dell, and other brands.

Are there any new incentives available to companies setting up in the region?
Cook: The city council just passed a new incentive in El Paso, the Impact Fund, derived from an incremental increase in franchise fees paid by the community's electric utility customers. It's estimated to generate more than $4 million annually, with three quarters of the fund dedicated to life sciences projects and a quarter to help other high-impact businesses.

I understand that over the last 10 years the population of the region has increased by 70 percent. Has this put a strain on natural resources?
Cook: Although we are in the desert, water actually represents a strength of our region because of a vast underground aquifer and the presence of the Rio Grande. These sources were previously thought to be unusable, but El Paso is the site of the world's largest inland desalination plant, which produces 27.5 million gallons of fresh water daily from these sources. We share this water resource with Juárez - we `drink from one cup,' in effect.

Some 18 percent of all U.S.-Mexico trade passes between El Paso and Juárez. Are any plans in place to expedite the movement of goods?
Cook: In terms of numbers, it's between $50 and $70 billion worth of goods so it's important to move these products as efficiently - and safely - as possible. Officials in El Paso and Juárez are planning to build the first monorail for shipping cargo across this international border.

Can you describe how this will work and the cost?
Cook: A 15-mile elevated `guideway' will connect Customs facilities on both sides of the border. All-electric vehicles will be able to move some 2,000 containers across this path daily. It will take about two years to build at a cost of $140 million - all of which is coming from private enterprise. This system will be able to handle the same amount of traffic as currently crosses three international bridges.

How about security issues?
Cook: All of the containers will be inspected before being placed on this shuttle so security will be greatly enhanced from the current situation. This is the newest innovation in transportation in 50 years, and we are very excited about it.

In sum, what would you say to business considering El Paso/Juárez?
Murguía: Our region's unique strategic location, with great infrastructure and one of the most qualified labor pools, provides many advantages to any company looking to set up along the U.S./Mexico border.

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