“Mexico is reinventing itself,” said John Grabo, director of marketing and international programs at the University of Arizona Science and Technology Park. “It is going from low skill and high volume to an emphasis on intellectual skills, such as software development and engineering.”
To understand the future, there is a need to talk about the past. The history of Mexico’s twin manufacturing plants breaks down into three stages, according to Jesus Canas, an economic analyst for the El Paso (Texas) office of the Dallas Federal Reserve Bank.
The first phase, dating back to the 1960s, consisted of plants with a large amount of low-skilled labor and almost no technology, such as the textile industry. Maquilas eventually evolved into a second stage of manufacturing, characterized by less assembly and more sophisticated equipment to make appliances and electronics.
Now, Mexico is enjoying a third generation of manufacturing investment: engineering and research, design and development centers.
Troy, Mich.,-based Delphi Corp. helped start the latest phase with its Mexico Technical Center in Ciudad Juarez, and the automotive supplier now employs as many workers in Mexico as it does in the United States.
Technical and research centers are also being planned for Ciudad Juarez by Valeo, the French automotive supplier, and Scientific Atlanta, a manufacturer of electronics products.
It is the first phase of maquilas that is leaving Mexico for lower-wage nations in Asia, not the second and third phases, a sign of the rising skill levels Mexico can offer foreign manufacturers, Canas said.
The industrial parks themselves are evolving accordingly to the advanced industries and services investing in Mexico.
Bermudez International in Ciudad Juarez definitely has its eyes on the next 10 to 15 years. It plans two industrial parks within a large development, south of the city’s airport known as El Barreal, specifically for the new industries coming to Mexico.
The first phase is a 682-acre park to be called Punta del Este I. Punta del Este II will be 1,155 acres.
“We’re looking at the new industries,” said Sergio Bermudez, president of Bermudez International. “We know the companies are coming.”
Neither will be a typical industrial park. Only about 16 percent of the parks will be industrial. Half will be housing and 9 percent will be commercial. The rest will be roadways, parks, schools and churches.
The housing will be for the industrial workers.
“It will be like a subdivision,” Bermudez said.
Automotive, electronics, software services and appliance makers are among the industries expressing an interest in locating in the parks, he said, either with new plants or expansions of existing factories.
The industrial buildings themselves will be new in certain ways. Some companies have left Mexico because the new equipment becoming necessary was too large for some of the older, original maquiladora buildings. Low ceilings were often a problem.
“We have buildings that are the necessary height,” Bermudez said. “Companies are asking for different kinds of buildings.”
Some areas of Mexico are also finding U.S. partners to help in their bids for investments in advanced manufacturing.
One coalition that formed last summer is Alpha Group International LLC, based in Tucson, Ariz., which promotes business parks in both Arizona and the Mexican state of Sonora.
The Alpha Group intends to prove that its technical expertise and connections on both sides of the border can result in quick and safe industrial startups.
“We believe the advantages of the Arizona-Sonora region are many and that Alpha Group provides fast access to them,” said Michael Hammond, founding member of Alpha Group and managing partner for PICO Commercial Real Estate.
The University of Arizona’s Grabo said there is a recognition that a transformation is coming to locations such as Sonora, Sinoloa and Jalisco.
“We are all looking at Mexico differently than 10 years ago,” he said. “Mexico was never looked at as a source of skilled, technical labor. Now it’s a source for North American companies looking for good people.”
The Arizona-Mexico partnership is not alone. A marketing collaboration has sprung up between McAllen, Texas, and Reynosa, Mexico, the Federal Reserve’s Canas said. This is likely to spread along the U.S.-Mexico border.
Stemming China’s Tide
The rising number of engineers in Mexico and their relatively low salaries are among the reasons why Mexican industrial parks draw research and development investments, said Jose Enriquez, sales and marketing director for American Industrial International.
The engineers are pouring out of schools such as Tec de Monterrey, Tec de Chihuahua and the Universidad de Nuevo Leon.
If products have frequent design changes, Mexico makes more sense than China, Enriquez said.
“Because of the lead time to deliver [from Asia], not much change is possible,” he said. “There could be a lot of obsolete inventory on the way.”
And there are predictions that companies that transferred jobs to China might be thinking about returning to Mexico.
“We’re hearing that a lot of companies have completed a cycle of learning in China,” said Monica Contreras, a spokeswoman for the Alpha Group. “There are predictions they will look to come back to Mexico because of issues like turnaround time and production. We are positioning ourselves for those companies.”
David Hendricks is a business columnist for the San Antonio Express-News.