Yucatan's excellent telecommunications infrastructure is facilitating its development of Mexico's newest Information Technology corridor. CITI Centro is the country's first IT business incubator. The Merida facility has state-of-the-art technology and connectivity, with space for 900 to 1,000 technicians.

Other Industries, Other Places

Food and beverage is just behind automotive when it comes to top Mexican industries. Grupo Modelo is building an export plant between the Coahuila cities of Nava and Zaragoza on 74 acres (30 hectares). An investment of $500 million will include the addition of 1,500 employees. Within four or five years, employment is projected to reach 6,000. But the amount of investment, say company officials, may vary based on the quantity and quality of water.
        Lucas, a candy company, opened a new plant in Montemorelos, Nuevo Leon, with 100 employees at the outset and projections of 1,200 in two years. Investment in the plant was $19 million. The company recently merged with M&M's Mars in order to extend its international reach. The factory exports 40 percent of its production.
        Grupo Herdez started up its operation in the San Luis Potosi industrial park, making Barilla pasta products. Ernesto Ramos, executive director of administration and finance for the company, says that the project will involve a $20 million investment, half for the land and construction and the other half for equipment. The company established a relationship with Barilla in Mexico in 2001.
        Griffith Labs has begun production at its $7-million food ingredient facility in the Atitalaquia industrial park in Hidalgo. The plant will see an additional $1-million investment in 2004. The company has invested $15 million and has 500 employees at its plants in Nuevo Leon, San Luis Potosi and Hidalgo, and plans to invest in another region of Mexico in the near future.
        French company Lafarge is investing $120 million in a cement plant in Hidalgo, expected to open in 2006.
        Steel wire product fabricator DeAcero is building a third plant in 2004 in the Coahuila city of Ramos Arizpe, investing $25 million. In 2002, the company invested $9 million, followed by an investment of $32 million in 2003. The complex wants to increase its output by 50 percent.
        Toyota Tsusho subsidiary Techno Steel Processing launched its new steel cutting plant in the FINSA Industrial Park in Monterrey. Company officials expressed their view that the country will need more and better energy, so it's ramping up its service to producers of transformers and electric motors.
        Also in Monterrey, Nashville, Tenn.-based ClientLogic has just established a new customer contact center that employs 300 and could add up to 400 more, servicing both U.S. Hispanic markets and Latin American markets with a combination of bilingual voice and e-mail support services.
        Grupo Lamosa is investing $21 million in San Luis Potosi in a ceramic flooring operation, as well as a new plant in Benito Juarez in Nuevo Leon. Total 2003 investment totaled $60 million.
        Even in the midst of textile dropoffs, Eagon Jeans will be making those jeans at a new maquila in San Pedro, Coahuila. JRA de Mexico will be doing the same for customer Jordache at its new facility in Yucatan.
        Eastman Kodak has moved 35-mm. film production from its home of Rochester, N.Y., increasing exports from its Mexican affiliate by 40 percent, or $300 million worth of product. Other production has been moved to China. The new Mexican production will require 250 more employees at the Zapopan plant, near Guadalajara, which also makes single-use camera, X-ray and graphic arts films.
        Finally, displaying the increased sophistication of the Mexican manufacturing environment, Mundelein, Ill.-based Medline Industries has opened a 217,525-sq.-ft. (20,208-sq.-m.) surgical procedure tray manufacturing plant in Nuevo Laredo, where it has had operations since 1988. Those operations, which make suction catheters and other kits, have been moved into the new complex, which employs some 700 people. It is the company's sixth manufacturing plant.
        The company's maquila strategy is borne out by its concurrent U.S.-side investment: an expanded distribution center in San Antonio, Texas, some 2.5 hours to the north. The firm's ReadyBath division opened a 145,000-sq.-ft. (13,471-sq.-m.) plant in Waukegan, Ill., earlier in 2003.

Yucatan Positioned
For Many Markets

That same medical products sector has spawned success in Uman, Yucatan, in the industrial corridor outside the commercial capital of Merida. Ormex, an orthodontic and endontic supplies division of Glendora, Calif.-based Ormco (part of Sybron Dental Specialties), located there in 1982, when it was part of American Dental Specialties. Today, Ormco also operates plants in Mexicali and Tijuana.

Endodontic products are manufactured at Ormex in Yucatan using CNCs and robots for assembly and laser marking.

        In 2002, the Ormex plant doubled its capacity to just under 60,000 sq. ft. (5,574 sq. m.), while growing employment to some 650 people. David Alpizar, general manager of the plant and a native Yucatecan, has been with the operation for nearly its whole existence, and says Merida was a strong candidate for the government's desire to expand the maquila program away from the overcrowded borderzone. Today it still holds that allure, with the added cachet of stronger markets elsewhere.
        "Merida has always been a commercial center for the Southeast of Mexico," says Alpizar. "Also, because we distribute to South America, it could be a strategic location for going south."
        In fact, the Uman location has proven ideal for shipping direct by air from Merida to European distributors too, where Ormco has a growing market.
        "We are located about five minutes from the airport, and we have special permits from the Mexican customs office to act as our own broker," says Alpizar. "So we do all the paperwork in house, and we take our cargo to the airport, clear customs same day in or out, and we almost literally put our cargo on the plane every day."
        The maquila community in Yucatan is made up of about 65-percent clothing manufacturers, says Alpizar, with around 20 percent of the balance made up of jewelry makers.
        Alpizar says the company has taken advantage of Yucatan's support for training, but has not chosen to take part in the country's new Going South incentives program just yet, as it requires certain job creation targets. Those were no problem for JRA de Mexico, however, which is opening a 375-employee jeans manufacturing facility in Yucatan to serve Jordache. In fact, JRA was one of seven companies around the country using the program in September and October 2003, generating 3,695 jobs in all. JRA's jobs total was topped by totals at Huejutla Internacional (1,300), Dasan Confeccion (1,000) and Southeast Screenprinting (400).
        The biggest change during his tenure has been the nature of that training: upward migration from packaging and labeling to CNC machine and robot programming and operation. Nevertheless, the average skilled labor wage in Yucatan is $1.41, or 72 percent of the Mexican average. He also notes the rapid development of both the Merida area's general commercial activity and its overall population, which he says is seeing a lot of immigration from other areas of Mexico. Situated as it is, Merida can play the dual role of industry center and supplier to the development of the "Mayan Riviera" to the east. The industry role is strengthened even more by the recently completed $120-million expansion of the Port of Progreso, which projects shipments totaling 4 million tons in 2005. The port boasts transit times of four to seven days to ports in Texas, Florida and New Jersey.
        Alpizar says the overall cost of operations amounts to some 80 percent of what it would cost in the Mexico City metro. He adds that electrical power has become much more dependable, but still remains relatively expensive. Yucatan officials say only 20 percent of the state's 1,084-megawatt capacity is utilized. President Fox's Plan Puebla-Panama – a program designed to unite southeastern Mexican states with other Mesoamerican countries – calls for power grid integration with Guatemala, and eventually with countries like Costa Rica, Honduras and El Salvador.

Internal Markets Beckon

Even in the wake of such failed interior efforts as the textile industrial park in Emilio Zapata, Morelos, companies continue to look away from the north of Mexico for opportunities driven as much by internal Mexican markets and adjacent Latin American markets as by border considerations.

See the SITES Mexico's Going South program www.pmhs.gob.mx Mexican Laws in English www.mexicanlaws.com Mexico's Maquila Directory www.maquiladirectory.com Mexican Association of Industrial Parks www.ampip.org.mx Team NAFTA www.teamnafta.com A.T. Kearney www.atkearney.com

        In the late 1990s, Mexican wages climbed. While negative in some aspects for the multinational corporate community, those higher wages have meant the incursion of more retail and distribution operations, providing their own economic drive. The "Wal-Mart indicator" serves some notice: at ithe company's third-quarter earnings announcement, spokesmen said Mexican sales were up 9 percent, and that the year's new stores thus far (19) would be outpaced by the final quarter's store openings (26).
        Pollina Corporate Real Estate, among others, touts interior Mexican locations such as San Luis Potosi, Tlaxcala and Queretaro for operations, given their lower costs, more stable labor pools and access to Latin American as well as U.S. markets.
        One project illustrating this trend is the 50-50 joint venture glass reinforcement plant being built by Owens Corning and Saint-Gobain in Xicohtencatl, Tlaxcala, adjacent to Saint-Gobain Vetrotex Americas facility east of Mexico City. "Locating this glass reinforcement facility in Mexico enables us to most cost-effectively meet the needs of our customers in the Americas," said Dick Lantz, President, Owens Corning Composite Solutions.
        It is this focus on Mesoamerica – as well as on the estimated Mexican middle class market of some 20 million – that is bringing some balance into an industrial Mexico so long dominated by an export-to-the-north mentality. As NAFTA matures and the Free Trade Area of the Americas takes its early shape, Mexico, backed by increasing infrastructure projects, actually has the potential to be an island of calm in a region sure to be buffeted by the winds of world commerce.