MX Manufacturing - US border region
Manufacturing in the Mexico-US border region
The border region is the main driver of Mexico’s popularity as a manufacturing base for both US and Canadian companies since the inception of the Maquiladora system. This enables foreign companies to own their own manufacturing facilities in Mexico and ship in raw materials for processing and then return the finished components free of duty.
Opportunities for manufacturing along the border region remain strong as it is more attractive than other developing countries servicing the North American market. It has a highly-skilled workforce and the USCMA free trade agreement means there are most often zero tariffs. Mexico shares its border with California to the west, Arizona, New Mexico, and Texas to the east.
Mexican companies are competing globally in industries such as electronics, aerospace, automotive, auto parts, medical devices, metal, mechanical, plastic injection molding, etc. Some opt for lower-cost assembly/contract manufacturing operations while others focus on Maquiladoras.
State of Baja California
Baja California borders both California and Arizona. The state economy is dependent on agriculture, mining, tourism, and Maquiladoras. The state is famous for manufacturing industries such as aerospace, electronics, medical devices, cable assembly, and many others. There are more than 200 manufacturers operating in Mexicali alone, as its strategic advantage sitting on the border with San Diego just a few miles to the north is unparalleled.
Global manufacturers such as Goodrich Aerospace, Intuitive Surgical, Triumph, Honeywell, Johnson Outdoors, and Skyworks are well established here along with other global competitors. It is interesting to note that 90% of US medical device companies are located here. Three well-known manufacturing cities are Mexicali, Tijuana, and Tecate.
Mexicali
The capital Mexicali is a major manufacturing city located on the US border. It has a very diverse workforce of both assembly as well as professional locals. There are very clear pathways for Mexican students to take advantage of the size and scale of manufacturing in the region. One example is Honeywell’s Flight Control System testing lab. Students study locally and move directly into the lab for practical experience.
Gulfstream Aerospace Corporation established itself in the region in 1988. The company assembles 70% of jets in Mexicali, providing over 2000 jobs. In January 2019, Burrana (previously known as digEcor) acquired the IFE (Inflight Entertainment) business of Collins Aerospace, hence becoming the third-largest IFE player. Consolidations such as these provide significant opportunities as the volume and scale of manufacturing increases in this region.
Tijuana
Tijuana is located on the US-Mexico border with the Pacific Rim. It is one of the most important manufacturing hubs due to its decades-long co production agreements in Mexico. It is the global hub for electronics and is a preferred location for manufacturing driven by partnerships with universities, foreign direct investment, and constant binational government support. More than 600 manufacturers are based in the region with 185,000 manufacturing industries alone.
Aerospace, defense, electronics, automotive, medical devices, appliances, cable assembly, and contract manufacturing make up the bulk of industries here. With the evolution of advanced technology plasma, LED and LCD, 19 million high technology TVs are produced annually. Tijuana has taken the new name of CaliBaja Mega Region and promotes itself as the ideal location for OEMs, assembly operations, and turnkey contract manufacturing.
Tecate
Tecate Mexico Pueblo Magico (Magical Town) is located in the east of Tijuana. It is a major manufacturing hub for aerospace, defense, electronics, ceramic, plastics, medical devices, appliances, cable assembly, contract manufacturing, and automotive industries. Main industrial parks include Parque Industrial Tecate and Parque El Bajio.
Tecate is also famous for beer brewing and bottling plants. It is smaller than other manufacturing cities such as Tijuana and Mexicali, attracting manufacturers with less traffic hustle and bustle. As to be expected, this city has access to modern infrastructure and services.
There are around 150 manufacturers operating in the city with a workforce of 10,000 people. The highly skilled labor force is bilingual and bicultural. Manufacturers enjoy direct access to the Tecate Port of Entry. Tijuana International Airport is only 30 miles away, making for easy travel for business and management teams.
State of Sonora
This state has a very long border with theUS. It is the second-largest Mexican state in terms of landmass at 69,249 square miles. Sonora is known for its desert landscapes and mountain peaks of the Sierra Madre Occidental mountain chain. It has excellent transportation infrastructure and diverse industries, all of which result in one of the healthiest economies in Mexico.
Its strategic positioning has turned the state into a trade corridor between Mexico and the US. It has four international airports, the railroad service of Ferromex, a large road network extending across 3,000 kilometers, as well as six maritime ports.
Hermosillo
The capital city of Sonora, Hermosillo has a close association with the neighboring cities of Empalme and Guaymas. It is a three-and-a-half-hour drive from Nogales on the Arizona border. There are six high schools, six universities, and three technical trade schools. Each of these schools has a strong connection with local industry as with many manufacturing cities in Mexico. Local businesses work with educators to ensure there is a clear pathway from the skills taught to those in demand in the workforce.
The city manufacturing base is automotive, but in recent times this has diversified into aeropsace, medical devices, and electronics.
State of Chihuahua
This state borders both New Mexico and Texas. It is the richest state in Mexico, due in part to its livestock production (Chihuahuan beef is sought after throughout Mexico) and mining. The State is the second largest silver producer in Mexico. The three most important economic centers in the state are Ciudad Juárez, an international manufacturing center, Chihuahua, the state capital; and Cuauhtémoc, the state’s main agriculture hub and an internationally recognized center for apple production.
Ciudad Juarez
Over 300 manufacturing companies operate in Ciudad Juarez with more than 40 modern industrial parks. It is centrally located with three commercial ports of entry. Two ports are in El Paso and one in New Mexico.
The Free and Secure Trade lane (FAST) is a dedicated truck lane in this city. As it is a border city so manufacturers have access to the main USMCA arteries. Ciudad Juarez has Delphi Aptiv Mexico Technical Center which is home to around 1900 engineers that focus on automotive engineering designs, R&D, and quality assurance.
Chihuahua City
The state capital of Chihuahua, located 250 miles south of El Paso, Texas with convenient access to rail, seaports, and airports. It has attracted 36 new aerospace plants since 2007. There has been significant investment in world-class infrastructure including combined-cycle and solar power plants that guarantee the availability and stability of electricity, as well as redundancy in natural gas pipelines, water, sewage, and IT infrastructure.
Along with aerospace, the city provides significant manufacturing capability in automotive and auto parts, IT, metal-mechanical, and plastics. It is a strong hub for medical devices with companies such as Conmed, Essilor, Cardinal Health, and Teleflex manufacturing there.
The city continues to investment in educational and R&D infrastructure. They are the largest provider of engineers per capita in the country. Each year, more than 5,000 engineering students and over 30,000 technicians graduate from local institutions so fit easily into the local work environment.
State of Coahuila
About 95% of Mexico’s coal reserves are found in Coahuila, which is the country’s top mining state. The automotive sector is dominant, representing more than half the state’s manufacturing production. It is the largest manufacturer of auto parts and the sub-leader producer of vehicles in Mexico.
Saltillo
Saltillo provides a strong workforce, essential infrastructure, and convenient access to the U.S. This city is located southwest of Monterrey, a further 180 miles away from the border of Loredo, Texas. This makes the city a logical choice for manufacturers looking for a Mexico base. Automotive and medical devices are popular here.
There are also traditional products including pottery, ceramic tiles, textiles, and woolen serapes (multicolor and traditional blankets used as shawls).
However, the automotive industry is the mainstay of the economy of Saltillo. In a comparatively short period, Saltillo trained workers to attract foreign firms to the area. There are many universities, research, and technical institutes here. According to an estimate, this city alone has 16 universities, 12 technical institutes, and a dozen research centers. With nearly 200,000 students, The area is developing a young and skilled workforce.
Many manufacturers are working in tandem with the education system to ensure their programs help. As a result, the talent pool here is among the best available in Mexico.
State of Nuevo Leon
Nuevo León is one of Mexico’s leading producers of iron, steel and chemicals. In recent years, the state government has been making efforts in attracting significant investments in aeronautics, biotechnology, mechatronics, information and communication technologies fields. It created the Research and Technology Innovation Park PIIT (Parque de Investigación e Innovación Tecnológica [es]), a technology park oriented in the development, innovation and research of sciences.
Monterrey
Monterrey is the capital city, located in the foothills of the Sierra Madre Oriental. It is considered the national capital of advanced industry with the highest per capita income and 3rd largest metropolitan area in Mexico.
A state cluster strategy was introduced back in 2004 whereby the government, private sector, and universities were brought together to support a broad spectrum of manufacturing industries. By 2018, Nuevo Leon had 13 strategic clusters including
- Domestic appliances
- Automobiles
- Agro
- Energy
There are many global manufacturers including aerospace, defense, electronics, automotive and medical devices. Major Mexican brands such as Pemex, Mexico’s oil company are based here. CEMEX, which is a global leader in the building materials industry, is headquartered in San Pedro, a couple of hours drive away.
There are around 3,000 companies are operating in Monterrey, with a workforce of 600,000 plus. Fifty large industrial parks provide a variety of manufacturing spaces for more sophisticated requirements.
Monterrey also gets the advantage of rapid access to North American transportation. In 2018, a large logistics support facility was introduced on the Laredo-Colombia border crossing. This eased the difficulty of transportation as the Colombia International Bridge has a daily capacity of 12,000 trucks. There are bonded warehouses and advanced cargo shipment screening technology to help facilitate this flow of trade.
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