Recent development in Nogales, Sonora, Mexico, includes the 200,000-sq.-ft. (18,580-sq.-m.) Molex plastics plant. The company consolidated three leased facilities in the new location.

Mexico's Border Region Offers Opportunity

Mexico, through NAFTA and through its sheer geographic position, is intimately tied to the U.S. economy. The country has felt the sting of the U.S. recession, but like the U.S., appears ready to emerge into better times. The maquiladora industry, which dominates border regions, has grown at an annual rate of 10 percent for the last 10 years.
        Doug Hazen, director of business development for Kitchell Mexico, a division of Kitchell Contractors, cites several factors affecting companies doing business on the Mexican side of the border. One is increased sophistication of the labor market.
        Hazen says that while Mexico has historically been seen as a low-skill, low-wage country, it has now become a high-skill, low-wage country. He says the skill level of plant managers, engineers and other technical personnel has risen dramatically over the last 20 years. Also, labor rates for low-skilled labor have had double-digit increases for the last two years and are projected to continue rising rapidly. And a strong peso is making it less advantageous to export from Mexico.
        "The low-skill, low-wage jobs are moving out of Mexico to Asia, and mostly, China," Hazen says. "We will see more sophisticated facilities in Mexico and more sophisticated equipment going into those facilities, which will require a higher degree of technical expertise to run. This involves new product development and rollout.
        "It is much easier to find technical expertise and work out the kinks in a product in Mexico than it is around the world in Asia," he continues. "While much of the traditional assembly work is leaving, we see it as a positive sign."

        Finsa is a large Mexican construction firm celebrating its 25th anniversary. It has developed industrial parks throughout the country and one each in Texas and Argentina. These parks total about 33 million sq. ft. (3 million sq. m.) and are dedicated to manufacturing and warehouse space. Many of the parks are along the border running from Matamoros in the east to Tijuana and are driven by maquiladora operations.
        Sergio Arguelles Gonzales, Finsa president and CEO, says his company offers services ranging from site selection to third party construction to design engineering. Companies locating along the border do so for proximity to the U.S. market and freight savings.
        "U.S. managers can also live on the U.S. side of the border," Gonzales says. "The border will always be a player if your market is the U.S. There is good infrastructure along the border and a good labor force."
        The trend in Mexico's State of Sonora, which borders Arizona and New Mexico, has been toward location of mid-sized technical companies, says Roberto Dagnino, Sonora's director of industrial promotion. Recent development spreads across the state, including the area around the capital of Hermosilla, about 180 miles (290 km.) from the border.
        "Sonora has made large investments in its technical universities which are preparing a good level of qualified labor," Dagnino says.

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