MAY 2008
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Silicon Border: High-Tech Haven
M
oore's law tells us that the performance of high technology products doubles approximately every two years. Almost every measure of every electronic device, processing speed, memory and resolution of digital displays, are all improving at exponential rates. As the price of performance declines, the costs for technology manufacturers to fulfill Moore's law are increasing dramatically. R&D, manufacturing and assembly and test costs continue to rise with each generation of new products. It's no wonder much manufacturing for high technology products has moved to Asia where wages and infrastructure costs were significantly less.
Significantly, the en masse move to Asia has created other issues for high technology manufacturing. Competition in Asia for land, skilled workers and infrastructure has resulted in ever-increasing costs, negating some, if not all, of the initial advantages. In addition, the concentration of manufacturing in one area of the world has heightened both the geographic and geopolitical risk for high technology companies. Supply chains now stretch half way around the world and 10-12 time zones away, compromising a company's ability to communicate rapidly internally and respond quickly to customers and to the needs of the market. For companies who desire to serve the North American market, the world's largest, there has to be a better answer. Fortunately, recent developments have proven there is. Many high technology manufacturers are beginning to explore the feasibility of manufacturing in Mexico. Once a haven for low-level assembly work, Mexico is finding favor with technology manufacturing companies from a variety of industry segments. In addition to the low cost for assembly and manufacturing labor, universities across Mexico are turning out engineers in a variety of disciplines. Engineers whose cost is half to one third the cost in the U.S. and competitive with the cost of engineers in Asia. With a population growing at almost 10 percent annually and with fully one third of all Mexicans under the age of 35, the Mexican government is aggressively courting technology companies to locate manufacturing and design facilities south of the border to employ its increasingly educated and sophisticated populace. A sign of that increasing sophistication: Mexican universities have 20 percent more engineering students enrolled than have U.S. universities. Manufacturing on the North American continent with a cost structure competitive with Asia, Mexico offers the additional benefit of supply chains that can respond to customer requirements in hours, rather than days or weeks. Take for example, the Silicon Border Science and Technology Park, www.siliconborder.com, located on the border just west of Mexicali in the state of Baja California, Mexico. Just a few hours from major international airports in Tijuana, San Diego, Long Beach, Los Angeles and Phoenix, design, assembly, test or manufacturing facilities can respond rapidly to market needs. From Silicon Border companies can provide "transparent" next-day delivery to most of North America. Additionally, the park provides a high-quality infrastructure, exceeding that found at most U.S. sites. Abundant low-cost power and water are available within the park without the expensive connection fees seen in so many projects. The Silicon Border Science and Technology Park is modeled after successful projects such as Hsin-chu in Taiwan. Silicon Border incorporates the best features of the most successful parks while avoiding any mistakes they may have made. The infrastructure design takes into consideration the needs of high technology companies. The build-out of that infrastructure is being done by the park developer to insure state-of-the-art infrastructure is available. As a result, semiconductor, solar, medical device, flat-panel and other high technology manufacturing can compete effectively with locations anywhere in the world. Mexico's Free Trade Agreements with the U.S. and 42 other nations makes it the best choice for Japanese, Asian and European companies to locate a manufacturing facility to serve the North American market. U.S. companies can take advantage of "Maquiladora" provisions and locate facilities within Mexico while maintaining a low tax profile and enjoying the full provisions of NAFTA. With a border crossing proposed for the northern edge of the park, companies locating within Silicon Border will find crossing from the U.S. into Mexico and Mexico into the U.S. quick and easy, making access to the US transportation infrastructure effective and inexpensive. Universities from both the U.S. and Mexico have plans to locate a portion of their engineering campus within the park. With engineering becoming an increasingly more common, and more popular, focus of studies in Mexican universities, a highly trained and motivated workforce is available for companies locating within Silicon Border. The Mexican government is providing aggressive incentives to technology companies to locate their R&D, design and manufacturing facilities in Mexico. Both corporate and payroll tax holidays, training grants, research and development tax credits and low interest loans are among the benefits to qualified technology companies locating within Silicon Border. In short, the time has never been better to explore the opportunities that await technology companies to manufacture in Mexico. World-class infrastructure, low costs, a minimal tax profile and proximity to the North American market all combine to make Mexico and Silicon Border Science and Technology Park the ideal place for R&D, design or manufacturing. |
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