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hrough a pilot program occasioned by the NAFTA open border policy and blessed by the U.S. Dept. of Transportation in February, 100 Mexican trucking companies may soon be allowed full access to U.S. highways. What does this mean for border- focused logistics operations?
   It might mean relatively little, given the combination of crossing delays and a general long- haul trend toward rail.
   At least that's what several railroad companies, many ports and dozens of economic developers on both sides of the border have in mind. Leading the charge is Union Pacific Corp., which remains "the only railroad serving all six major gateways to Mexico."
   In October 2006 the railroad announced a $150- million improvement to one of those gateways, in the form of a terminal in Strauss, N. M., just west of the industrial parks of Santa Teresa.
   "This proposed facility will enable us to improve efficiency and expand our operations in the southern New Mexico/western Texas region, which is a part of our critical Sunset Corridor," said Union Pacific Corp. President and CEO Jim Young, referencing the L.A.- to- El Paso route that the railroad is planning to double- track in its entirety.
   "This project not only builds industry and creates good jobs, but also lays the groundwork to attract light manufacturing, warehousing and distribution facilities, which could potentially reshape the economy in southern New Mexico," said New Mexico Gov. Bill Richardson.
   The deal involves the relocation of a terminal from El Paso, just across the Rio Grande, and the relocation of 285 jobs. It also involves a laundry list of promises from all parties:

   • UP must begin construction of an intermodal ramp at the new terminal no later than 2015. The ramp is projected to process a minimum of 100,000 container units annually.
   • During final- days conference negotiations in Washington, D.C., U.S. Senators Pete Domenici and Jeff Bingaman secured $14 million for the project through the Safe, Accountable, Flexible, and Efficient Transportation Equity Act of 2005 (H.R.3). Sen. Bingaman said negotiations are also under way on expanded hours at the Santa Teresa port of entry.
   • "Through efforts of the Governor and action in the 2007 session of the Legislature, New Mexico's gross receipt and compensating tax for locomotive fuel must be removed by July 1, 2009, as a condition for building the proposed 934- acre [378- hectare] railroad facility," read a release from the Omaha- based railroad.
   • Gov. Richardson committed $5 million to improve a county road connecting the Pete Domenici Highway in Santa Teresa with the new Union Pacific facility in Strauss.

   Both the fuel tax and road obstacles were efficiently removed from the railroad's path in early 2007 by the New Mexico Legislature.
   The eight years, however, until the intermodal facility deadline are a yawning chasm of time, given heavy user demand.

New Mexico Gov. Bill Richardson and Union Pacific executives in October 2006 celebrated the announcement of a new UP terminal in Strauss, N.M., near the Santa Teresa industrial parks and the borderzone economy of Greater El Paso/Juarez.

Claude Billings, vice president of Verde Corporate Realty Services, says his firm is talking to Union Pacific and the State of New Mexico about ways to get expanded rail service in Santa Teresa up to speed a bit sooner.
   The land that will be home to the facility is held by the federal Bureau of Land Management and the New Mexico State Land Office. UP said the process to acquire the property could take up to 18 months, with construction beginning sometime in 2008 and an anticipated completion of the facility before the end of 2010. The announcement comes as the railroad continues to pursue its new $90- million intermodal terminal in San Antonio, 2.5 hours north of the busiest border crossing in Laredo.
   Though certain functions will be transferred to Strauss, the railroad's El Paso facilities will remain open: "This is a win for the entire border region, including New Mexico and our neighbors in west Texas and Chihuahua," said New Mexico Economic Development Secretary Rick Homans.
   The project occurs as the American Association of Railroads advocates more such public- private partnerships for freight rail infrastructure. According to a January 2007 policy paper released by the AAR, the annual post- depreciation spend on infrastructure and equipment by U.S. freight railroads has hovered between $14 million and $17 million since 1995, inching upward since that time.
   "Rail is going to be more important," says Billings, because of the dollars that can be saved, literally, over the long haul, with short hauls still reserved for the trucks. "El Paso, right now, is seeing 60 trains a day," he says. "By 2010 that will be 90." UP's east- west traffic is also ameliorated by interchange agreements it has recently worked out with other Class I railroads operating east of the Mississippi River.    The project comes at a time when Sen. Domenici is co- sponsoring a bill to upgrade border crossing security. The bill authorizes at least $580 million over five years, including $100 million annually for port- of- entry improvements and $30 million in FY2008 to support Customs- Trade Partnership Against Terrorism Programs. In its assessment of infrastructure needs along both the U.S. and Mexican borders in 2001, the General Services Administration reported that overhauling both borders would cost $784 million.
   Security is already a going concern in the Las Cruces area,

"I believe border security is essential. I would double the number of border patrol agents. I would have more technology. But I'm vehemently against this wall, which is idiotic. It makes no sense." – New Mexico Gov. and U.S. presidential candidate Bill Richardson, quoted in the Arizona Republic, April 14, 2007

which in March welcomed the announcement of an eventual 120 new jobs and a new $20- million distribution facility from home security system company LaserShield, which is moving the facility from Carlsbad, Calif., after already moving its headquarters in 2005.
   "LaserShield has benefited tremendously from the expertise we've been able to acquire since relocating our headquarters to Las Cruces," said LaserShield CEO and Chairman Anthony Dohrmann, noting the high number of employees touting post- secondary degrees from New Mexico state institutions.
   The project will rise on 10 acres (4 hectares) purchased from the City of Las Cruces for $256,500. Before construction begins, LaserShield must receive approval as a Foreign Trade Zone in order to distribute products manufactured in China. That approval process takes six month to one year.
   Las Cruces, home of New Mexico State University, is in the midst of its own rapid expansion. As of the third quarter of 2006, new commercial construction valuations were up by more than 102 percent year over year, and unemployment had come down a full percentage point, to 4.3 percent, in its nearly 88,000- strong labor pool.
   The proximity of the new Union Pacific project to its Santa Teresa properties is not lost on El Paso- based Verde Realty, which has big plans for industrial parks and a master- planned community of some 20,000 acres (8,094 hectares).
   Billings cites increased space occupancy throughout the U.S.- Mexico border zone, whether for the manufacture of refrigerators and appliances or more high- tech products. In El Paso/Juarez, Electrolux has started constructing its second 1.5- million- sq.- ft. (139,350- sq.- m.) building. Taiwanese computer company FoxConn (a division of Hon Hai Precision Products) and Lexmark recently completed facilities in Juarez. Verde recently completed a build- to- suit in Reynosa for Perlos to manufacture plastic cases for cellphones.    Rail indeed seems to be making a decided push to capture some of Mexico's northbound freight. But the fact remains that, in 2006, 75 percent of the $198 billion worth of goods imported into the U.S. from Mexico were transported by commercial truck, according to the U.S. Census Bureau. Laredo alone is projected to see 2 million truck crossings by 2010.
   A spot check of border crossing wait times on a mid- April morning showed wait times of 55 minutes and 20 minutes at Laredo's two commercial crossings, with seven of eight lanes operating at each, according to U.S. Customs and Border Protection. The new truck pilot program also grants U.S. trucking companies unrestricted access to Mexican roads. But some wonder whether insurance concerns might render that provision a non- starter.
   "Many smaller companies are coming to the U.S.- Mexico border region to be suppliers for major manufacturers," says Billings. "The more capital- intensive companies locate in the U.S. and the more labor- intensive companies establish operations in Mexico. This is generally driven by the lower cost of labor in Mexico, and companies tend to keep the financed capital equipment in the U.S.," says Billings.
   "I imagine rolling stock will have a similar approach," he says, "and the Mexican trucking companies may have a similar philosophy about their capital equipment. Safety and insurance issues continue to be topics to resolve."
   However, he notes, rough roads are not the issue they used to be on the Mexican side, thanks to new highways.
   Billings says current border crossing conditions allow Mexican drivers to deliver between two and four trailers a day to transfer stations on the U.S. side. He says the trend to watch for with open access is not so much incursion of one nation's truckers into the other country, but mergers and acquisitions by Mexican and U.S. trucking firms.
   The state of flux reflects the state of industry demand. That demand is alive and well in the McAllen, Texas- Reynosa, Tamaulipas border zone. The binational area was replete with logistics projects over the last year, helping McAllen alone attain Top Metros of 2006 status for its population niche in Site Selection's tally of corporate projects by territory.    The arrival of spring heralded the arrival of fresh funding for the New Mexico Spaceport, as Gov. Bill Richardson and the state's Legislature approved $33 million in immediate funding for the massive complex to be constructed just northeast of the border city of Las Cruces, outside of Truth or Consequences.
   "We have nothing but beautiful black sky ahead of us," said Rick Homans, chairman of the New Mexico Spaceport Authority and New Mexico Cabinet Secretary for Economic Development.

Customs & Border Protection Border Wait Times Mesilla Valley Economic Development Alliance McAllen Economic Development Alliance Spaceport America

   The Authority and the governor were going for $25 million more for roads in and out of the Spaceport as part of GRIP II, the Governor's transportation agenda, which he was pushing to get passed in a special session.
   Among the milestones already reached is an agreement with ranchers to "co- exist": The ranchers will support the State Land Office as it issues a separate business lease on 18,000 acres (7,285 hectares) to the Spaceport that will overlay the ranchers' agricultural lease.
   Dona Ana County, future home of the Spaceport, on April 3 approved a quarter- cent Spaceport tax that will generate approximately $6.5 million a year for 20 years, with a quarter of that dedicated to math and science programs in the county school system and the rest used to back some $50 million in bonds for the project's construction. Similar referenda in Sierra and Otero counties could generate another $1 million.
   Spinoff facility development has already begun. U.K.- based rocket company Starchaser Industries in February awarded its general contract for the first phase of its $100- million, 300- job Starchaser Rocket City development on a 120- acre (49- hectare) site just west of Las Cruces in Dona Ana County, where the company set up its New Mexico office two years ago.