As Trade With Mexico Expands, Companies Flock to Santa Teresa

Santa Teresa’s industrial park is booming because of trade with Mexico, particularly serving the maquila industry. Construction of the $400 million Union Pacific railroad intermodal facility is seen under way earlier this month. (Roberto E. Rosales/Albuquerque Journal)

Santa Teresa is a place whose time has come.

New Mexico’s border industrial zone is booming like never before, as companies scramble to set up shop or expand operations to supply Mexico’s “maquila” assembly industry with raw materials and components, and to provide storage and transportation services to move finished goods from Mexico to markets in the U.S. and Canada.

By Kevin Robinson-Avila / Journal Staff Writer on Mon, May 20, 2013

Editor’s note: Kevin Robinson-Avila and photographer Roberto E. Rosales spent two days touring southern New Mexico, Santa Teresa and Mexico, accompanied by Economic Development Department Secretary Jon Barela for part of the trip, to compile these reports. 

Construction of the $400 million Union Pacific railroad intermodal facility moves ahead at Santa Teresa. (Roberto E. Rosales/Albuquerque Journal)

Construction of the $400 million Union Pacific railroad intermodal facility moves ahead at Santa Teresa. (Roberto E. Rosales/Albuquerque Journal)

All the activity is turning the zone’s two industrial parks, located just north of the Santa Teresa Port of Entry, into sprawling construction sites where tractors and bulldozers constantly haul and smooth dirt for roads, and long-necked cranes swing cement blocks and steel into place for new buildings.

On the parks’ northwest edge, construction workers labor alongside automated rail machines to lay down miles of new railroad tracks as they build two locomotive refueling stations and a massive intermodal transshipment terminal for Union Pacific Railroad. Once operational in 2015, the 12-mile-long facility will be Union Pacific’s largest refueling and transshipment center along the U.S.-Mexico border, managing cargo to and from destinations throughout North America.

Filling up fast

Jerry Pacheco, a long-time trade consultant and executive director of the International Business Accelerator at Santa Teresa, said the industrial parks are almost out of spec space for new businesses.

“About three years ago, we had tens of thousands of square feet of vacant space, but today, we only have one space of 16,000 square feet available because of all the new companies and tenant expansions,” Pacheco said.

Since last summer, four new businesses either located in the industrial zone or announced plans to do so, and four existing tenants expanded operations. In the next 60 days, four more companies are expected to announce plans to move in, increasing the number of businesses at Santa Teresa to nearly 50. That’s up from just 40 a year ago and 35 in 2011.

Michael Taylor prepares a shipment of steel to leave the facility at Southwest Steel Coil in Santa Teresa. (Roberto E. Rosales/Albuquerque Journal)

Michael Taylor prepares a shipment of steel to leave the facility at Southwest Steel Coil in Santa Teresa. (Roberto E. Rosales/Albuquerque Journal)

The parks now employ about 2,000 people, plus hundreds of temporary construction workers.

Pacheco, who has worked to promote Santa Teresa almost since the port of entry opened in 1993, said the industrial zone is finally poised to become one of the biggest trade centers along the Southwest border with Mexico.

“It’s been a long time coming,” Pacheco said. “In the 1980s and 1990s, businesses in the U.S. were pulling up stakes and moving into Mexico to supply the maquila industry. In that sense, New Mexico is becoming the new Mexico, with companies now pulling up stakes to move to Santa Teresa.”

All coming together

The industrial zone has had boom-and-bust cycles in the past, such as after 9/11 and following the recession in 2008. But a host of factors are coming together to provide greater, more -sustainable momentum today, Pacheco said.

The two biggest catalysts are the 2009 opening of a massive maquila factory by the Taiwanese giant Foxconn in San Jerónimo, just across the border from Santa Teresa, plus Union Pacific’s decision to locate its new fueling and transshipment center at the industrial zone.

Jon Barela, left, Economic Development secretary for the state of New Mexico, gets details from Danny King, Union Pacific construction projects manager, about the new rail yard. (Roberto E. Rosales/Albuquerque Journal)

Jon Barela, left, Economic Development secretary for the state of New Mexico, gets details from Danny King, Union Pacific construction projects manager, about the new rail yard. (Roberto E. Rosales/Albuquerque Journal)

 

Foxconn is now officially pegged as the largest maquila operating in Mexico, producing up to 55,000 Dell computers daily for the U.S. market. And, the company plans to expand its facilities to eight times its current size in the next few years, constituting a mega-magnet for supply, warehousing and transportation companies to provide goods and services from Santa Teresa.

Union Pacific, meanwhile, adds an entirely new advantage to the park that puts it on more equal footing with El Paso, where most regional commercial traffic has traditionally passed en route to and from Mexico and U.S. markets. The intermodal facility allows cargo containers to be seamlessly transferred between rail cars and trucks that leave from, or arrive at, Santa Teresa, easing shipping to and from Mexico, the U.S. and Canada.

‘A fundamental shift’

That provides a huge draw for trade-related companies. In fact, Pacheco said a number of El Paso firms have relocated to Santa Teresa since Union Pacific broke ground in 2011, and more companies are expected to follow suit.

“I believe we’ll soon see a fundamental shift of a portion of El Paso’s manufacturing base to Santa Teresa,” Pacheco said

Among other things, Santa Teresa also offers thousands of acres of land available for development, plus rapid transport through the port of entry. That compares to mounting congestion and declining space for growth in El Paso, plus long waits at that city’s border crossings with Juárez.

In addition, under Gov. Susana Martinez, New Mexico has worked closely with communities on both sides of the border to facilitate trade and promote infrastructure development, said state Economic Development Secretary Jon Barela. That includes monthly meetings between Barela and his Mexican counterpart, and close cooperation with the Border Industrial Association, a trade group that formed in 2008 and now has 70 member companies from Santa Teresa and Sunland Park.

Those efforts led to state approval last year of an “overweight” commercial zone for northbound trucks from Mexico to travel up to six miles into New Mexico with 96,000 pounds of weight, or about 16,000 pounds more than is permitted by federal law on U.S. highways. That was a central factor attracting new companies and tenant expansions since last year, because shippers can now carry their full load into the industrial parks without off-loading cargo at the border.

‘Enormous potential’

The state also appropriated funds for a number of infrastructure projects, such as $6 million this year for new water and wastewater facilities.

“We believe this area holds enormous potential for growth,” Barela said. “Our vision is to see New Mexico and the state of Chihuahua develop a world-class, one-of-its-kind, binational port that eventually will be home to hundreds, if not thousands of businesses.”

More dollars are flowing into the port of entry to accommodate growing commercial and passenger traffic, said New Mexico Border Authority Executive Director William Mattiace. In 2012, northbound commercial crossings reached a record 81,339 trucks, nearly double the number from four years ago.

The port will inaugurate two new commercial and two new passenger crossing lanes on May 24, Mattiace said. And, on May 3, it broke ground on a new, $12 million inspection station for northbound trucks.

Meanwhile, companies at Santa Teresa say they’re bullish about Mexico’s maquila industry, which, in the end, is the underlying factor driving the border boom.

The maquila factor

The maquilas suffered little from the drug-related violence that has rocked Mexico in recent years, but the 2008 recession had a huge impact.

Juárez-based maquilas lost about 85,000 employees during the recession. But most of those jobs have since come back, thanks in good part to “re-shoring” by companies that moved to Asia in years past but are now returning to Mexico to be closer to U.S. markets, said Manual Ochoa, vice president of the El Paso Regional Economic Development Corp., which tracks the industry.

Ed Camden, president of Southwest Steel Coil Inc. in Santa Teresa, said healthy maquila activity encouraged his company to double its factory space since 2011, from 55,000 to 110,000 square feet.

Across the street, Mallory Metal Products is also doubling its facility from 25,000 to 50,000 square feet.

“Our business is doing very well,” said Mallory executive administrator Alonso Maldonado. “It’s exciting to see all the growth in Santa Teresa.”

As Union Pacific and other firms set up shop, Santa Teresa is also gaining some powerful movers and shakers to attract more business to the zone.
“Union Pacific is a catalyst,” said railroad spokeswoman Zoe Richardson. “We’ll work with the state and local economic development organizations to recruit more investors and businesses to the area, because ultimately, our facility is successful only if we have customers using it.”