Doing Business at the Border
The logistics and distribution benefits of border locations are continuing to increase - and foreign-trade zones are adding to the equation.
Adding more weight to the balancing act, corporations are not only demanding a prime spot along the border, they are also demanding a location that offers access to low-cost labor and land. If the company can check all of these concerns off the list and still tap into emerging consumer markets that eliminate the need to transport goods across the border, they have found the ideal location.
All of this is part of the North American Free Trade Agreement's (NAFTA) promise. Over the last decade, cities, municipalities, state and provinces along the U.S.-Mexico and U.S.-Canada borders have vied for hot-spot status in hopes of attracting companies to their regions. Today, there are some clear winners - clusters that are established in the global footprint. But there are also some emerging markets that offer new hope to site selectors looking for the next competitive advantage.
"NAFTA was the cross-border engine in the beginning; now global trade is fueling the fire, both on the Canadian side and the Mexican side," says Charles E. Sullivan, managing director of capital management for ProLogis, a Denver-based industrial real estate development firm. "We believe that in the future you are going to see the emerging middle class in Mexico become a greater driver of distribution facilities along the U.S.-Mexico border."
¿Se Habla Español?
Indeed, locations just south of the U.S. border offer labor that is still far cheaper than American standards, even as wages rise enough to validate the market for increased product sales there. Tijuana, Juarez, and Reynosa are all seeing a flurry of logistics and distribution activity, says Sullivan, as well as locations like Monterrey, Mexico City, and Guadalajara that are a bit farther from the border. Demand for distribution facilities on the U.S. side has also remained stable as companies hedge their bets with locations on both sides of the fence.
Looking at recent expansions demonstrates the Mexican hot spots in living color. Hitachi Transport System, a global provider of third-party logistics services, secured 88,000 square feet of space at the ProLogis Park Monterey Airport in May. The 250-acre, master-planned park is less than three miles from the General Mariano Escobedo International Airport, the primary airport for Monterrey and the surrounding metropolitan area. It is located in the Apodaca submarket, the primary industrial corridor in the Monterrey market.
Stateside, Texas is the number-one state by export revenues. Laredo is building on its long history of U.S.-Mexico trade; nearly 60 percent of all U.S.-Mexican trade goes through Laredo. Meanwhile, El Paso offers the advantage of on-site U.S. Customs personnel as a Foreign-Trade Zone (FTZ), and McAllen, home to another FTZ, is just four miles from the Mexico border. Arizona has FTZs of its own, with Tucson being one of the hottest distribution locales in the state. New Mexico offers Santa Teresa and its 125,000-square-foot Bi-National Park.
Of course, California has a plethora of towns on the Mexico border. The Imperial Valley - made up of Brawley, Calexico, Calipatria, El Centro, Holtville, Imperial, and Westmorland - is a hot-ticket logistics area. And the Inland Empire is white hot. Sunglass maker Oakley, Inc. leased about 290,000 square feet of distribution space in southern California in the Crossroads Business Park, a master-planned park in Ontario, the heart of the Inland Empire. APL Logistics, Black & Decker, Broyhill Furniture, Clorox, Gillette, and Ford Motor Company, among many others, have also clustered in there.
Emerging Canadian Hot Spots
Canadian hot spots are situated along the Trans-Canada Highway, the longest in the world, that links all 10 provinces. The Trans-Canada Highway offers 18 major border crossings that make a way for about 70 percent of trade with the United States. This is a logistics dream for companies on both sides of the border. This roadway is opening up new markets in lesser-traveled towns that offer lower land costs and rents to companies looking to take advantage of the roadway's logistical benefits.
"Sumas, Washington, borders the city of Abbotsford, British Columbia. The Sumas-Abbotsford port of entry operates 24 hours a day. I see plenty of companies locating there," says James D. Phillips, CEO and president of the Canadian/American Border Trade Alliance in Lewiston, N.Y. "But we're also seeing dozens of companies building or leasing manufacturing and distribution facilities about an hour east of Vancouver, about 10 to 15 miles north of the crossing."
Another emerging hot spot is the Champlain-Lacolle area. Champlain is on the U.S. side while Lacolle is on the Québec side. This is the main border crossing between Montreal and Albany, also known as the Quebec-New York Corridor. Phillips describes this region as an "active, vibrant region" that is seeing tremendous transborder business as more companies locate there. Part of the attraction is among researchers and nanotechnology centers, he explains, that are producing medical supplies. "Champlain just opened up the newest, most efficient border station for U.S.-Canadian Border Patrol operations," he says. "It's state-of-the-art already seeing a lot of activity."
Toronto: The Trans-Canada Hub
Of course, with its more than 20 municipalities, the Greater Toronto area has secured bragging rights as one of Canada's busiest logistics centers. About 60 percent of the North American market population is within a day's drive of Toronto. Toronto Pearson International is Canada's busiest airport, handling more than 325,000 metric tons of air cargo annually, and that figure is expected to grow at about 5 percent a year through 2020.
Mississauga, Canada's sixth-largest city, is the most active market in the Greater Toronto area, according to Sullivan. The Mississauga Gateway Center is among the largest distribution facilities there, with two phases offering nearly 2 million square feet of space. From an international perspective, Mississauga is the Canadian headquarters for 59 Fortune 500 companies and facility locations for 104 Fortune 500 companies. Mississauga is also home to 51 Global Fortune 500 Canadian headquarters.
Mississauga provides a cost-competitive base with solid infrastructure in the heart of a major air, road, and rail network. The city is home to Canada's largest international airport and just a day's drive from one of North America's richest markets with access to 164 million consumers. Mississauga's American sister city is Detroit. The distribution market there is not growing as rapidly, but is still a perennial stronghold, along with Vermont's Newport City and locations near the 18 ports along the North Dakota-Canadian border.
Japan-Based Bridgestone Rubber-BSA Opens Biorubber Process Research Center In Mesa, Arizona
Prysmian Group Plans $8.2 Million Expansion At Abbeville County, South Carolina, Manufacturing Center
Latest Trends in the Industrial Real Estate Sector Here to Stay
A New Approach to Energy Savings for Your Next Manufacturing Plant
Where's the Talent: Jobs Outlook in the Fastest Growing U.S. Cities
2021 Gold & Silver Shovel Awards Project of the Year: CREE Wolfspeed’s Wafers Key to Charging of EVs
A Turnkey Approach to Manufacturing Location Decisions
2020 Top States for Doing Business Showcase Their Pro-Business Environments