McALLEN Prime Site for Integrated Operations

Eight years ago, when Jabil – a leader in electronics design and production – looked for new locations, McAllen and Reynosa fit the company’s requirements.

“I found this region to be an ideal location based upon the ease of logistics and the ability to recruit top flight talent- in the areas of both technical skills and leadership,” said George (Chip) Bailey, Director of Operations for Jabil Reynosa/McAllen.

Jabil now has three facilities throughout McAllen and Reynosa and consistently has increased its workforce and production.

“I found this to be a great investment for the growth –and success- of our market services business,” Bailey said.

Many global companies in addition to Jabil have had sustained success in the greater McAllen/Reynosa bi-national community thanks to the stable labor environment, qualified workforce and reliable infrastructure, said Keith Patridge, President/CEO of the McAllen Economic Development Corporation. McAllen/Reynosa continues to offer prime opportunities for investment, particularly in advanced manufacturing and warehousing/logistics. This area offers companies logistical advantages by using the Mexican ports and distribution routes throughout North America via truck or rail, Patridge said. McAllen/Reynosa is strategically located in the middle of North America’s population center, therefore providing companies with direct, quick and efficient access to one of the largest consumer markets in the world, he said.

“The McAllen economy continues to grow and diversify,” Patridge explained to MEXICONOW”.Despite the challenging economic times, McAllen EDC is currently working about 40 projects between McAllen and Reynosa and our diversified economy has permitted companies to hire and re-hire workers in the local advanced manufacturing sector and the maquiladoras. Plus there are still huge opportunities for retail in McAllen”.

Activity on the U.S. side continues to increase, specifically in the metal fabrication, component supplier arena for die casting, plastics injection and electronic assembly as companies rationalize their supplier base, Patridge said. In addition, numerous growers have established distribution facilities for produce from Mexico and Central America in McAllen’s extensive cold storage and produce handling facilities. In addition to new clients, many existing companies such as Panasonic and ALPS have located additional divisions in McAllen. New companies in the market include Steelcase Furniture, HCP and Topline, which recently established operations in Reynosa.

With several new committed companies and ventures under way, McAllen continues to rank high in terms of job growth and being ‘recession-proof,’ according to the Brookings Institute. Also, Forbes ranked McAllen as one of the strongest cities to not only survive the recession but one of the few cities in the United States that continued to increase jobs and grow the local economy. One of the most telling rankings, Patridge explained, is from KPMG, a global firm of audit, tax and advisory services. KPMG ranked Mexico as the most competitive nation for industry based on costs and McAllen ranked as one of the most competitive cities in the United States and Canada.

“In today’s economy, companies are looking at the bottom line and where they can be the most efficient and the most competitive.

We believe McAllen/Reynosa represent the best option,” Patridge said”.Here you have access to two competitive markets and have the flexibility of using two countries to help create a successful and competitive business model”.

During this time of economic uncertainty the McAllen/Reynosa region offers companies a unique flexibility, which Patridge emphasizes to companies interested in the community.

“Where else can an enterprise plan for the future of a single plant or business with access to the best of two legal systems, two tax systems, two labor systems, two labor pools, two different yet complementary cost structures, two regulatory systems, and two sets of global trade relationships?” Patridge said”.If the costs of a particular operation in the business get out of line on one side of the border you can move that operation to the other side without moving the remainder of the operation.

This is why more and more companies are splitting their operations with one part on the U.S. side and the other on the Reynosa side of the border. It is this mutual dependency and benefit along with strong family and traditional ties that have made us so successful”.

Many companies also utilize the McAllen Foreign Trade Zone, located within minutes of the three international bridges that directly connect to Reynosa’s 10 industrial parks. Operational since 1973, the McAllen Foreign Trade Zone provides full-service logistics solutions, including 24-hour security for companies. The approximate 800-acre site was the first inland, non-seaport foreign trade zone to open in the United States and currently serves more than 100 clients from 42 countries.

“The current economic environment has been challenging for many companies,” said Mark Garcia, Vice President of Operations for the McAllen Foreign Trade Zone”.Companies are now finding out as they look at supply chain alternatives that Foreign Trade Zones can have a positive impact on their bottom line”.

Garcia continued: “Foreign Trade Zones were designed to promote international trade and enable our local manufacturers to be more competitive, so we’re very fortunate to be in a position to help them leverage those benefits and continue to be a valuable part of our community”.

JVC electronics located its refurbishing center, as well as part of its engineering division and call center to the McAllen Foreign Trade Zone in 2003.

“When we considered relocating to the McAllen area, several primary factors appealed to us – access to a large, eager and capable workforce, training available from a vibrant local educational system and access to valuable networking within the robust maquila industry,” said Neal Rozelle, general manager for the McAllen operation.

“These and more have proven to help us improve the efficiency of our operations far beyond what would have been possible elsewhere,” Rozelle continued”.Our presence here has enabled us to better meet increased competitive challenges”.

For the past 22 years, the McAllen EDC has emerged as the bi-national one-stop shop for companies looking to relocate, open and/or expand. McAllen EDC continues to seek out new ventures and has established new initiatives aimed at recruitment, supplier development and infrastructure improvements.

Patridge explained: “The McAllen EDC has a very strong BRE (Business, Retention & Expansion Program) where staff constantly communicates with managers and suppliers to strengthen our local supply chain. We want to ensure that every company in McAllen and Reynosa experiences success and growth”.

McAllen EDC has helped coordinate supplier expos for companies interested in localizing their supply base and has developed new marketing programs for our local companies including social media and networking events.

“The team at the McAllen Economic Development Corporation has been an outstanding benefit for us because they have been able to build a strong manufacturing sector along with all the supply services required in the region,” said Don King, President of AMMEX Products, Inc., a full-service shelter operation with locations in McAllen and Reynosa.

King has worked with the McAllen EDC to build his operation since opening about 20 years ago. AM-MEX offers strategic advantages for companies who want to operate within the Maquiladora framework, but minimize risk. King said his company is a shelter with corporate offices in McAllen as well as a full distribution center with 3PL services. In Reynosa, AM-MEX supplies services to diverse industries such as the entertainment, automotive and office supply industries, King said.

“Our success relies on our loyal and capable labor force as well as our management,” he said”.Also, the location is strategic for us”.

Eugenio Hernandez Flores, Governor of the Tamaulipas, shared this message: “In Tamaulipas we are fully committed to the idea of attracting world-class investment like yours. We stand on our reputation in education, health, communications and we also feature a productive infrastructure in order to offer a competitive setting for those who decide to invest in our State”.

Alfredo Gonzalez Fernandez is the Secretary of Economic Development and Employment of the State Government. He chatted with MEXICONOW. He said: “Since the beginning of this administration we have been giving a strong impulse to the integration of the industrial groupings by the application of diverse promotional programs. We are always looking for the consolidation of these groupings such as auto parts, electric – electronic and the development of new products for the aerospace industry.

Raul de la Garza is the Plant Manager at G-Shank”.We started out with 12,500 sq. ft. in 1994. Today we have more than 40,000 sq. ft. and we keep growing. We serve markets such as aerospace, automotive, electric, electronics, appliances, photographic cameras, and many more. Our current labor force consists of 65 employees working 48 hours per week. Five of these employees are from our headquarters in Taiwan and our Mexican workers are being developed so they will have the skills required to manage by themselves”.

Dan McGrew, President of RAMAC (the Association of Maquiladoras and Manufacturers of Reynosa), said Reynosa’s location along the NAFTA Corridor makes it one of the most productive and efficient cities in Mexico to conduct business. Also, it is an important access point to the East Coast Markets.

“Reynosa is a city that has a good planning and development program,” McGrew said”.Also, the city keeps the infrastructure in good condition. Reynosa has three international bridges, which eases the flow of people and freight between the two cities”.

RAMAC is working in partnership with McAllen EDC to provide all customer services required by the maquiladoras within the city, McGrew said.

“We are working with our committees to develop diverse training programs and we have also deployed a secure internal communication network linking the diverse plant managers,” he said.

McAllen has always had a long tradition of friendship with their neighbors in Mexico thanks to the unique strategic relationship between the two cities.

“Much like most cities in the world built on a river,” Patridge commented, “(the river) does little to impede the flow of commerce, relationships, families and/or trade.

Most people,” he added, “who reside in the area think little of driving across the river just as they do in other river cities. Think about it–where else in the world do you have a single city where the south side of the metro area is one of the most competitive manufacturing locations in the world and the north side of the same metro is the largest consumer market in the world”.

To continue the growth in McAllen and Reynosa, Patridge said the focus remains on the unique requirements of individual companies rather than general trends.

“Our profile extends across many industries and several unique manufacturing and logistical strategies. Generally, if the company will ship most of their production to the U.S. or Canadian market, if delivery is time sensitive, if they will be relocating a number of skilled personnel with the plant, if they are not very labor intensive, and if they will be a high electrical power user then McAllen/ Reynosa will be a cost effective option”.

Aerospace and the associated support and research operations continue to gain strength in the McAllen/Reynosa market. There are numerous manufacturing plants that support the Aerospace Industry such as GE Engine Services, Ametek and Eaton. With component manufacturing and the overhaul of jet engine components, McAllen and Reynosa provide a good base for existing companies and future businesses looking for a region with a cost competitive manufacturing model and a good talent pool, Patridge said.

In addition to a young workforce and strong manufacturing and supplier base, the McAllen/Reynosa region offers companies firstclass industrial parks, numerous crossing routes and direct access to the Latin American and North American consumer bases. On the U.S. side, McAllen has Sharyland Plantation, a beautiful, 6,000-acre mixed-use master planned community that offers a variety of high-end homes and industrial sites so people can live and work in a harmonious way. This live, work and play community connects to a 16,000 acre mixed-use development in Reynosa via the new Anzalduas International Bridge. This area represents a bi-national master planned industrial, commercial and residential community.

Most of Reynosa’s industrial parks are located within a two-mile range from the Anzalduas and Pharr International Bridges, which is a convenient benefit for employees and managers who may live in McAllen and work in Reynosa, Patridge said. Companies and managers have easy, direct access to their parks from the United States. The Anzalduas International Bridge opened in December 2009 to serve as a direct link between Monterrey and McAllen. This new bridge complements the existing bridge system of the Hidalgo- Reynosa International Bridge and the commercial Pharr-Reynosa Bridge. City and McAllen EDC staffs continue to work with federal, state and local officials to further develop new ways to improve the flow of people and commerce across the bridges.

Anzalduas represents one of the newest investments on behalf of the United States and Mexico to improve cross-border trade and the movement of people between two countries. For several years the McAllen EDC worked with the Texas Department of Transportation to build overpasses on Interstate-Quality 281, which are currently under construction. When completed, this could save up to an hour of travel time heading north from McAllen, Patridge said.

Also, Reynosa city officials are constructing new east-west roads and overpasses that help alleviate congestion from downtown to the Monterrey highway.

“This is the time to invest in Reynosa where opportunity in the real estate is really solid,” McGrew said”.Reynosa is an excellent buyer’s market”.

King, who has been in McAllen and Reynosa since the mid- 1980s, agrees.

“Forbes Magazine recently ranked McAllen as one of the top 10 productive growth cities in the U.S. and a lot of this credit goes to their closeness with Mexico,” King said”.McAllen and Reynosa share the fact that both cities have strong comprehensive training processes in their respective university and institute sectors along with an excellent logistic support base”.

In the future, Patridge said he predicts McAllen/Reynosa becoming the leader for advanced and rapid response manufacturing and mass customization production, while creating jobs for residents in diverse industries.

“McAllen Economic Development Corporation responds to all leads and all industries, including manufacturing, design, logistics-warehousing, call centers, health-education sectors and retail,” Patridge said”.The McAllen/ Reynosa region has remained strong because we do not rely solely on one industry. We maintain a diverse economic sector based on skills, not trends or clusters. We feel this allows us to maintain our long-term competitive advantage in a rapidly changing marketplace”.