San Luis Rio Colorado tries to spur maquila industry

Jun. 16th, 2012
Cesar Neyoy

SAN LUIS RIO COLORADO, Son. — This border city across from Yuma County is trying to regain thousands of factory jobs that it lost to the globalized economy of the past decade. The economic benefits of returning jobs would ripple across the border to the Yuma area, say economic developers in San Luis Rio Colorado. But for that to happen, they say, the neighboring cities must join in a coordinated effort to market the region — not communities in particular — as a location for the maquila industry. In the 1990s, San Luis Rio Colorado was home to more than 20 maquiladoras, or assembly plants, where workers converted raw materials brought from the United States into finished products that were then returned for sale in the U.S. and elsewhere. Collectively, they employed nearly 20,000 people. But after 2000, an increasingly globalized economy caused many of those jobs to go overseas, mainly to Asia where production costs were lower. But economic developers say they are seeing signs that some of the jobs may be coming back as San Luis and other Mexican border cities seek to gain a more competitive footing. “We speculate that the companies that left for Asia will begin to return to Mexico in the short-term and mid-term,” said Carlos Mexia, executive director of San Luis Rio Colorado’s Economic Promotion Commission. “The United States found out that those companies that left hurt its economy, and it is trying to bring them back to the country, or at least to the continent.” The commission — or COPRESAN, as it is known by its Spanish acronym — was created in 2009. It has since helped bring four manufacturing plants to the border city, creating nearly 2,000 jobs in the process. Every new industry that comes to San Luis Rio Colorado means the possible opening of a complementary warehouse or distribution center in the Yuma area, that, in turn, offers jobs and otherwise help spurs the economy, said Mexia. “The majority of people who are employed here have an economic impact in the Yuma area, because they shop there. Supported financially by (but independent of) the city government in San Luis Rio Colorado, COPRESAN is similar in structure and function to the Greater Yuma Economic Development Corp. “We have a very good working relationship with GYEDC,” Mexia added. “We are constantly working together with them in projects. It’s indispensable to have the support of an organization like them, because they are well-versed on the subject of Arizona’s advantages over California” for new industry. Among the fruits of that collaboration, he added, was the arrival in 2009 of the electronics firm OpTech Technologies, which employs 600 people in San Luis Rio Colorado and almost 40 in a twin plant in the Yuma area. “That’s a clear example of that collaboration. (The company) had a foot in Mexicali. They were going to establish themselves there and in Calexico (Calif.), but the difference in cost gave us an advantage.” But Enrique Orozco, projects director of the International Industrial Park in San Luis Rio Colorado, says that spirit of collaboration needs to be reinforced. “We need to change the mentality of those people in the United States who see us with envy because a company comes here. That company’s finished product will go back there, and the companies that come to San Luis need to establish offices, distribution centers and warehouses in Yuma. So the investment and economic benefit is shared.” Beginning 2000, nine maquiladoras left San Luis, taking with them about 8,000 jobs as companies sought to cut production costs by retooling overseas, according to COPRESAN. One of them, Exportex, a textile company, alone had employed 4,000. The Exportex building was occupied by another textile firm, T-Mex, which anticipated opening up an equivalent number of jobs. But it ended up employing half that number before closing in 2010 and moving to Bangladesh. Orozco said one of the factors in the T-Mex departure was the cost of water, an essential element in textile production, although Mexia says water prices in San Luis Rio Colorado are cheaper than in Mexicali and Tijuana, two Baja California cities that compete with San Luis Rio Colorado for industrial investors. In any event, more than decade after the exodus of maquiladoras, San Luis Rio Colorado is again becoming an attractive site for companies looking to set up shop, Mexia said. “Global competition has made us more competitive. There are still challenges relating to education and costs, but we have many strengths and advantages relating to fiscal certainly and political stability, as well as to our proximity to the United States — not just geographical proximity but cultural proximity.” In the intervening years, he added, new federal and state laws and programs have given the city the ability to offer financial incentives in the form of tax breaks and subsidies to industries that locate in San Luis Rio Colorado and create jobs. Mexia and Orozco agree that the city’s efforts to attract industry will eventually benefit from the opening in 2010 of the San Luis II commercial port of entry, located about five miles east of the existing crossing that had handled both commercial and private vehicles traveling between the countries. The new crossing is reserved for commercial traffic, allowing tractor-trailers to make more expedited crossings with products and materials from one nation to the other. At present, San Luis II is handling traffic at only a third of its capacity, a figure that Mexia and Orozco attribute to the recession. South of the border, the widening of Federal Highway 2 — which links Sonora with the rest of Mexico — and the recent opening of a highway along state’s west coast should make San Luis Rio Colorado still more attractive as an industrial site and as gateway for commercial travel, Orozco said. And since 2000, Mexia said, the opening of six new post-secondary academic institutions in the city help ensure San Luis Rio Colorado has a work force capable of filling any jobs created by new industry. Orozco said efforts to promote San Luis Rio Colorado have become all the more urgent, given that only about 500 of 4,900 available acreage in the International Industrial Park is currently occupied by maquiladoras. Today, the tenant of longest standing in the park is the Bose assembly plant that employs more than 1,300 people who assemble stereo speakers. It set up shop in San Luis Rio Colorado more than two decades ago. The second-oldest is SANA, which packages food products in its San Luis Rio Colorado facility.

Cesar  Neyoy

Bajo El Sol
Jun. 16th, 2012