Regardless, the decision eventually gets to which state or city in Mexico a company wants to locate in. That’s where the incentives are, at the state and city levels.

Like United States, the main incentives for investment, foreign or domestic, are not offered at a federal level. States and cities compete in Mexico, as they do in the United States, with their individual or combined packages of tax breaks, training grants, services and assistance with land purchases to bring the economic benefits of investment to their own neighborhoods.

The economic development departments in Mexico’s 31 states offer most incentives, with sweeteners added by various city governments within each state. The incentives vary by the resources and tax structures of each state. Many packages are open to any and all industries, but a few states can afford to target incentives to certain industries to attract wages that pay better than the norm in Mexico.

As can be expected, incentives are lower in high-demand areas of Mexico, such as the northern industrial belt. Better incentive packages therefore can be found in Central Mexico, South Mexico and in outlying areas of North Mexico's large industrial centers.

While Mexico's federal government does not offer incentive packages per se, foreign companies should realize that the federal government has moved mountains to make the entire country attractive to foreign investments.

The Mexican government followed the North American Free Trade Agreement in 1994 with a network of more than 35 additional free-trade agreements, countries ranging from nearly all of Latin America, the European Union, Israel and several Asian giants, including a pending agreement with Japan.

Mexico last year enacted, in a competitivess measure, lower tariffs for components and raw materials used by a dozen industrial sectors to soften the effect of North American rules of origin requirements as mandated in NAFTA. (NAFTA rules of origin stipulate that certain percentages of North American content must be included in products to receive preferential NAFTA duty treatment.)

The federal government also delayed until at least 2007 the possibility of a higher taxation scheme for foreign-operated plants.

Of course, Mexico has a key attraction, regardless of government policy: A demographic profile of young workers in a nation of more than 100 million population.

"Close on your incentives first," ahead of committing to land purchases or leases, said Nick Criss, Mexico director of industrial services for Cushman & Wakefield, during the 2003 MexCon conference held in San Antonio. "The incentives are not automatic. Once you say you are coming, there are no incentives."

The following states are a sampling of state inducements in Mexico. Usually, the incentives are based on the size of the investment and the type of industry.

Chihuahua

The state of Chihuahua is dominated industrially by two cities, the border city of Ciudad Juarez and the central capital city of Ciudad Chihuahua.

The state of Chihuahua seeks companies in aerospace, biomedicine, software clusters, electric/electronics and automotive, including auto parts, said Laura Maria Ruiz Vazquez, promotions director for the state secretary of industrial development.

Existing companies include Ford Motor Co. and Philips Electronics.

Philips has 11 plants that produce televisions, electronic components, monitors; all of them for export.

“The reason why we can be very competitive is not only the strategic location of the state, but also the quality of the local suppliers," according to the company.

Chihuahua's incentives are open to new investments and those expanding existing plants. They include up to a 45 percent reduction of the payroll tax and the public registry tax for the cities of Juarez and Chihuahua, and up to a 95 percent reduction of the same taxes outside of Juarez and Chihuahua.

City governments in the state add a 50 percent reduction of property taxes and land title transfers and in the cost of zoning permits. Job training scholarships are available for up to 60 days, depending on the complexity of the process. The state also assists in supplier development, personnel recruitment and human resources.

Durango

Like Chihuahua, Durango is a northern industrial state dominated by its capital city of Durango, with a population of about 500,000.

The state incentives include a four-year payroll tax exemption, which is the only state tax related to production. There is a state subsidy on leasing industrial space to bring the rate down to $3.33 per square meter monthly, said Alma Barajas, investments promotions director for Durango.

Training scholarships are given for the length of time needed to develop required skills. A 75 percent exemption is given on the public registry fee and 50 percent to 75 percent reduction in county fees for land title transfers, public lighting, sewage, solid waste collection and inspection fees.

The state also will help with government and utility red tape. If needed, it will also help with site leveling, construction, paving of roads and access lanes, utility extensions, artesian wells, water collectors and railroad spurs.

“[Durango] is developing a grand vision project for the next 25 years," said Miguel Rincon, chief executive of Corporacion Durango. "Such a project is being elaborated by Pricewaterhouse Coopers and, on it, the great competitive advantages of the state will be reassured."

Jalisco

West of Mexico City, the state of Jalisco and its capital city of Guadalajara have become known as the Silicon Valley of Mexico with its plethora of global computer and electronic giants operating.

Jalisco offers incentives through a one-stop processing center operated by the state's Secretariat of Economic Development. The center assigns each prospective business an account executive responsible for obtaining documentation and permits, and processing the paperwork at federal, state and municipal agencies.

The incentives themselves are in job training and infrastructure development (including electricity lines and drainage) and are granted based on the number of jobs created, wages paid, the amount of investment and the level of use of local suppliers, said Juan Michel, investment and business development at the secretariat.

Morelos

Located south of Mexico City, Morelos operates 29 research centers, including those for public health, water, electricity and energy.

The economic development secretary's office in Morelos is working to develop the state's software industry. Biotechnology is another goal with a genomic institute set to open in 2004.

Morelos expects industrial development investments of more than $150 million this year and for state exports to reach about $350 million.

Baja California

Anchored by Tijuana and bordering on California, the state of Baja California said it has captured 79 percent of Mexico's Asian investments in electronics.

That makes it part of the high-technology corridor that begins in Seattle and travels south Portland, Ore., Silicon Valley, Calif., Los Angeles and San Diego.

"We received full support from the government of Baja California and more important, our Mexican employees are a highly skilled work force," said Chang Ho Choi, president of Samsung at Tijuana Park.

The Baja Export program supports other industries, too, including food and beverages, gifts and crafts, furniture and construction materials.

David Hendricks is business columnist for the San Antonio Express-News.