One of the largest maquilas in the border region is working on plans to grow, and even as it expands, a brand new maquila is moving in next door, company executives have confirmed.
Taiwanese electronics giant Foxconn will consolidate some, if not all, of its North American operations at the company’s giant factory just down the road in San Jeronimo, Mexico, according to Francisco Uranga. He is Foxconn’s corporate vice president and chief business operations officer for Latin America.
Foxconn has operations in Chihuahua City, Guadalajara, Reynosa and Tijuana in Mexico.
“That’s the main idea for this campus eventually. How can we relocate all of those operations into one single operation that will allow us to be more efficient inhouse?” Uranga says.
Right now, the Foxconn factory complex is alone in a sea of sand and cactus, just across the border from Santa Teresa, N.M.
But Uranga told El Paso Inc. that construction on another maquila, adjacent to his operation but not owned by Foxconn, is expected to begin soon.
The new maquila is furthering hopes that the electronics giant will serve as a catalyst for growth in the region, transforming the desert into an oasis of industrial production.
“For Chihuahua, it is extremely important. We think that is the next area of tremendous growth,” said Alberto Chretín Castillo, the secretary of the economy for the Mexican state of Chihuahua, of Santa Teresa and San Jeronimo.
He was speaking at the annual NAFTA Institute/Supplier Meet the Buyer Trade Conference held last week at the Sunland Park Racetrack and Casino, in Sunland Park, N.M.
Castillo adds, “Foxconn was really the leader there, and I think there are a lot of grounds for growth.”
Eventually, Foxconn would also like to see some of its customers in China relocate here as well, Uranga says, but any consolidation, in Mexico or otherwise, will have to wait until the real estate market improves. Uranga says he hopes to see the market begin to stabilize next year.
“You can’t just change an operation overnight. If you are going to relocate something, it could take two to three years,” he says.
A global company, Foxconn is the single largest private employer in mainland China and produces everything from iPads to Dell computers. Open your computer and you’re likely to find a Foxconn label on one of the components.
Printing services company RR Donnelley & Sons, headquartered in Chicago, and Grupo Chihuahua, a major landowner in the region, are pushing ahead with plans to build a new maquila adjacent the Foxconn factory complex, Uranga says.
Not much has been made known about the facility. An official announcement has not been made, and RR Donnelley and Grupo Chihuahua could not be reached by press time.
But Uranga says, while Foxconn was not part of the deal, the new maquila will provide one of Foxconn’s customers, Dell, with some sort of high-tech labeling capability.
Before Foxconn moves ahead with more growth at its facility in San Jeronimo, Uranga says they would like to finish efforts to establish the area as a free-trade zone and prove the concept.
It would be the first land port on the U.S.-Mexico border operating under the model, according to Uranga.
He expects it will be up and running by the fourth quarter of this year. When it is, it will allow for a much smoother flow of goods in and out of the manufacturing plants and across the border.
Needed to complete Uranga’s vision are two elements: the $400-million rail hub that Union Pacific expects to complete in Santa Teresa in 2015, and expansion of the little airfield at Santa Teresa so it can handle Boeing 747 cargo planes.
“It would make this region the most competitive, attractive region along the entire border,” he says.
Foxconn put a campus in San Jeronimo because of its proximity to important markets in the United States, and easy access to the labor pool in Juárez, Uranga says.
Since Foxconn came to San Jeronimo in 2008, the campus has grown to 1.6 million-square-feet and, without building any more structures, has space for 400,000-square-feet of additional manufacturing space, according to Uranga.
But the company has only developed about a quarter of the 240 hectors it owns in San Jeronimo.
The facility’s 5,500 employees can produce as many as 50,000 computers in a day.
Feel the power
At the NAFTA Institute trade conference Thursday, Uranga told economic development officials that there is plenty of potential for recruiting suppliers to this side of the border.
Operations that consume huge amounts of power can be more competitive in the U.S., he says, because energy is so expensive in Mexico. And logistics and transportation infrastructure make sense on this side of the border, too, he said.
Jesus Cañas, an associate economist at the Federal Reserve Bank of Dallas, says the maquila industry has been recovering, but slowly. It’s added 1,100 jobs since the beginning of the year, but is still 38,000 jobs short of pre-crisis levels.
One of every four jobs created in the past decade in El Paso have been related to the maquiladora industry, he says.