Alan Russell grew up on a farm in Non, Oklahoma, where the major cash crop was peanuts and his family raised cattle, horses, pigs and chickens.
His vision: to follow in his family’s footsteps on a grand scale.
“On a small farm, you did a little of everything – like a small business,” Russell says. “It was a very fulfilling lifestyle and wonderful as a place to grow up.
“I had grandiose ideas of how to irrigate vast pieces of land across the country and make a difference in that industry.”
Instead, Russell would become a commercial airline pilot and, later, a founder of Tecma, an outsourcing firm that has become the largest in the region and one of the largest along the U.S.-Mexico border.
Founded 33 years ago in El Paso by Russell and some of his friends, Tecma now employs about 8,000 people and operates 75 plants in Mexico. The company provides facilities, workforce, cross-border transportation and logistics support for companies that operate in Mexico.
Despite a mounting trade war and tariffs imposed by the Trump administration that has some U.S. companies caught in the crossfire, Russell is confident the maquiladora sector will weather the storm.
With so much attention on trade, Mexico and the North American Free Trade Agreement, Russell says Trump’s trade moves have actually improved their business, spurring more companies to inquire about doing business in Mexico.
Russell said Tecma is aggressively looking for more growth opportunities and believes there is an opportunity to help more companies manufacture in North America, specifically Mexico, as costs rise in Asia.
Russell, 63, flew for Continental Airlines for 10 years. He remains an active pilot and owns a vintage biplane.
He sometimes commutes to work in a helicopter, landing on a helipad atop the company’s headquarters in Central El Paso, and flies himself around the world to meet with clients.
How did he end up pursuing aviation instead of agriculture?
“They had an aviation program where I went to collage,” Russell says. “My advisor happened to be a WASP – a Women Airforce Service Pilot during World War II. You can imagine her personality from those days to be able to do something like that. She was very passionate.
“She introduced me to aviation.”
He fell in love with flying and graduated from Southern Oklahoma State University with a bachelor’s degree in aviation. “The first time I’d ever been on an airplane was my first flying lesson,” he says.
Russell sat down with El Paso Inc. and talked about President Trump’s trade moves, working conditions in Mexico and going three years without a paycheck.
Q: You couldn’t be much farther culturally from your roots than you are now – from rural America and a farm to the border and a multinational company.
I couldn’t have written the script – I couldn’t have imagined it – but it’s been a fun journey.
Q: How did you come to leave commercial aviation and found Tecma?
During the recession in the 1980s, airlines were hit hard, and I was looking for the next opportunity. El Paso had became home, and I wanted to stay here.
Through my relationship with Dick Azar, who was a community leader, and Willy Farah of Farah Manufacturing, we started looking for an opportunity. In the end, we determined that one of the most dynamic places in the world and one of the fastest-growing industries in the world was right here on the border where our two cultures collide.
The concept originally was to do contract manufacturing in Mexico and compete with the China model.
Q: How did it go?
I didn’t have a salary for probably three years after we started the company.
When we tried to source the components to make products, we found that the Chinese would sell us the finished product for basically the same price. We started looking for products that we could compete with – anything big that was hard to ship from China, was time sensitive or had high duty rates.
It was tough. Probably anybody with sanity would have given up.
Q: Why didn’t you?
I couldn’t give up because I had everything invested. I was convinced it could work, and my partner, Dick Azar – a great partner – stood next to me.
In the early ’80s, President Jimmy Carter passed a law aimed at improving energy efficiency that targeted vehicle fuel efficiency.
For every action, there’s a reaction. Ford, in this particular case, moved the assembly plant for the LTD and the Grand Marquis vehicles to Canada. That helped create a situation where the vehicles were considered imports and, therefore, did not go into the fleet average for fuel economy.
One of the suppliers came to El Paso. This was before the internet and before reliable cellphones. They found us in the phone book in a hotel room under contract manufacturing. They were from Ohio, and the idea of crossing into Mexico was just a real extreme foreign concept to them.
We signed a joint venture with them. It was very successful. It was our first shelter, as we called it. We put an umbrella over them to protect them from the complexities of working in a foreign country.
We were able to refine our model and pursue what is now referred to as the Tecma shelter model.
Q: What is the “for dummies” version of what a shelter is?
We put an umbrella over our client, and we host them in Mexico. We do everything for them except for three things; they bring the equipment, materials and the technology.
Q: How fast is Tecma growing today?
It has been consistent 20-percent growth per year.
Q: What’s driving that?
China is not as competitive as it was with continuous increases in cost.
In addition, the American manufacturing community grew tired of traveling so much and dealing with the time zones – missing their children grow up. They spend two weeks a month in China. They come home, and it takes another two weeks to get acclimated. And then they’re gone again.
Q: This whole idea of Mexico competing with China has moved forward in fits and starts. Is it working?
About three years ago, the lines crossed for the first time in modern history where we can land a product out of Mexico onto a shelf for the same cost or better than it can be landed from China.
Q: Do you hurt American jobs by helping U.S. companies manufacture in Mexico?
These jobs that we’re talking about can’t be done in the U.S. because of the cost. This is not instead of doing it in the U.S.; it is in addition to doing it in the U.S.
There’s a company in Iowa City and a company in Grand Rapids, Michigan – two very significant plants for us. They would love to grow where they are in the U.S. They can’t get enough people.
The unemployment rate in Iowa City has approached zero. They’re forced to move the higher-end product into the U.S. facilities where it can stand the cost and the lower-end product, which has trouble competing and has very little margin, to Mexico.
Bringing more manufacturing jobs to the U.S. is a difficult transition. Parents who have made their careers in a factory aren’t necessarily encouraging their kids to that lifestyle. They’re encouraging them to do other things.
Q: Has the type of products your clients make in Mexico changed over the years?
It has become more technical. The workforce is more capable.
Right now, we’re in the middle of five startups. One of those is an automotive remanufacturing process for automotive parts, one is an agricultural irrigation process, one is a company that makes trailer hitches, one makes ceramic electronic devices that are extremely sophisticated and one’s a medical operation.
Q: Is it harder to attract workers in Mexico these days, and have wages gone up at all?
During the Great Recession, manufacturers in Juárez laid off 83,000 people. The automobile industry came to a screeching halt, and the automobile companies told their suppliers, “Don’t ship anything for a couple of months. We need to catch our breath.” Many workers migrated back home.
Then, the automobile companies had record years, and the spike of recruiting employees just went vertical. For the last couple of years, it has been difficult to recruit. I believe that Tecma’s reputation and our longevity in the market has helped to give people confidence in us.
Wages have increased because of that demand.
Q: What does the Trump era mean for manufacturing in Mexico?
With Mexico being in the media so much and NAFTA being in the media so much, it has created more awareness. It has caused more businesses to inquire about the benefits of working in Mexico and their business options.
Q: Really? Tough talk on trade has boosted your business?
You would think that everybody would be sitting on the fence waiting to see what happens, but this is what we are seeing.
Q: What about the threats President Trump has made toward companies like Harley-Davidson that have announced plans to move operations outside of the U.S.
The companies that are in the news, they’re talking about billions of dollars. If you’re a small- to medium-sized company, you’ve got different dynamics. We’ve learned that if you wait on the politicians to make their decisions before you make a business decision, you’re not moving forward. They accept the risk and keep going.
Q: What risks do the threat of a trade war pose to your business?
I entered this business as an optimist, and I remain an optimist.
I see this all as a negotiation tactic to give the Trump administration a win because he promised a win in these categories. I think these other countries recognize that it’s posturing and negotiating.
Bear in mind that since Tecma was founded, we’ve been through multiple presidential changes on both sides of the border. Every single one of them has used trade as a way to get their base agitated and to gain votes.
The Trump administration is probably following through on those campaign promises more than any other candidate, but thus far it’s not affecting business.
Q: Are there manufacturers here that are holding back to see what happens with the NAFTA negotiations?
There are companies that are sitting on the sidelines, but there’s more that are moving on. We’re going to be talking about the NAFTA negotiations a year from now, and we’ve already been talking about it for a year.
Q: Working conditions and wages in Mexico have been a topic of the NAFTA negotiations. Is that something that needs to change?
I would enjoy taking you on a factory tour. You could pick the factory, and then I would take a tour of a factory in the United States and see who’s treated the best.
What about the minimum wage? The incoming president of Mexico, Andres Manuel Lopez Obrador, is focused on increasing the wage of the worker in Mexico. He wants to increase the minimum wage. If you increase the minimum wage too far or too fast, you may reduce employment versus the opposite effect that you’re looking for.
Q: How much do workers make in Juárez?
Our industry’s paying about 130 pesos (about $6.90) per day – more than the 88 pesos minimum wage. That’s based on a seven-day week. You pull that back into a five-day week, and it’s something north of a dollar an hour. That’s take home pay. The company pays basically two meals a day and all of the taxes, benefits, housing and medical around that wage.
Q: What’s next for Tecma?
We’re excited that we’re continuing to grow and expand. I made a commitment to our executives and middle management that we’re not going anywhere. We’re not for sale. We all have a pact that we’re together for another five years.
Q: Do you have your eye on any new acquisitions or investments?
I do. I’ve been watching and looking for opportunities, and anytime there’s uncertainty in the market, it creates opportunity.
Q: Tecma recently shuffled the executive ranks. Why and what does it mean for the company?
There’s always this issue that the entrepreneur who created and built a company sometimes needs to get out of the way and allow people – professionals that specialize in their field – to step in.
My team has been with me for a long time, some of them 25 years plus. Our CFO has been with us 10 years plus, and I felt like it was time for him to step up and lead the company. So Mark Earley became president. Our vice president of operations, Jose Grajeda, became chief operating officer.
It’s working. Everything’s accelerating, and it’s allowing me to do what I enjoy most, reaching out and talking to clients.