The consensus of panelists at Friday’s U.S.-Mexico border manufacturing summit was that opportunities exist for the Rio Grande Valley to attract advanced manufacturing, as long as the challenges can be overcome.
Topping the list of challenges is the lack of a local workforce with the technical and vocational training necessary to lure companies here — not a new complaint by any means. Nonetheless, changes in how supply chains are managed and other economic shifts stand to position Brownsville and the region well.
U.S. Rep. Filemon Vela, D-Brownsville, and Rio Grande Valley Partnership President and CEO Sergio Contreras hosted the event, dubbed “Future Opportunities and Challenges for Manufacturing on the U.S.-Mexico Border” and held on the University of Texas Rio Grande Valley campus in Brownsville.
On hand were dozens of representatives from U.S. and international manufacturing firms, economic development organization officials and others. Two groups of panelists fielded questions from moderator Ron Garza, executive director of the Lower Rio Grande Valley Development Council.
The first panel featured Mark Kroll, dean of the UTRGV Vackar College of Business and Entrepreneurship; Danny Teixeira, general manager for Cardone Industries; Sergio Villarreal, general manager of Humanetics Precision Sheet Metal; and Jason Wolfe, president and CEO of NovaLink Inc.
The second panel featured Alexander Domijan, dean of the UTRGV College of Engineering; Gilberto Salinas, interim executive director of the Greater Brownsville Incentives Corporation; and Chris Wilson, deputy director of the Wilson Center’s Mexico Institute.
Introducing the panel discussion, Vela said the region has significant manufacturing sectors on both sides of the border, though they’ve faced challenges in recent years. While plenty of companies have floated the idea of bringing manufacturing operations to the Valley, a much smaller percentage has followed through, he said.
“The idea of coming down is different than actually coming down and making that investment,” Vela said.”
Kroll noted that manufacturing is concentrated south of the border while support services — logistics and customs brokerage firms for instance — are concentrated on the Texas side, though the Valley has a chance to bring more manufacturing to this side of the border.
Citing a recently completed study of manufacturing supply chains in the Brownsville-Matamoros region, Kroll said the top 80 to 100 maquiladoras in Tamaulipas produce and ship $6 billion to $8 billion worth of goods each year. As much as 80 percent of that value, or 80 cents of each dollar, is in components made elsewhere, often at plants hundreds of miles away, he said.
The Valley’s opportunity lies in making some portion of those components locally. Maquiladoras would benefit from having suppliers so close since, after all, time really is money in the world of business, Kroll said.
“There are a lot of trucks on our roads bringing components to Matamoros,” he said. “We think there’s a significant opportunity to capture some portion of that 80 cents, make it here instead of someplace else. Our focus is on what we need to do to make it more hospitable for advanced manufacturing.”
Teixeira of Cardone Industries, a large auto part remanufacturer that supplies all major U.S. parts retailers and has operations in Brownsville, Harlingen and Matamoros, said the Valley also has an opportunity to become a significant distribution hub, a sector dominated by major metropolitan areas.
“That helps manufacturers because it’s all about speed,” Teixeira said. “We can respond faster than anyone.”
He noted that China recently lost its wage advantage over Mexico and said that’s another factor that could benefit the U.S.-Mexico border region.
When it comes to workforce, manufacturers need more workers trained in technical and vocational fields as opposed to engineering, which is sometimes overemphasized, he said.
Wolfe of NovaLink, which makes a variety of products, including textiles, in Mexico for several companies and has a distribution/warehouse operation in Brownsville, noted that U.S. textile mills flocked to China, pulling cutting and sewing jobs with them, though he said he’s in talks with a company about bringing a fabric mill back.
Supply-chain thinking has changed, Wolfe said. Manufacturers want short, fast supply chains now instead of having to wait weeks or months for goods to be shipped from overseas, he said.
“There’s no better place to do it,” Wolfe said. “The Valley is primed for it.”
GBIC’s Salinas, reiterating comments he made during the panel discussion, said the Valley is in the middle of three major automotive corridors: the Midwest with the Big Three automakers; the Southeast, where new auto plants have been popping up in states like Alabama, Georgia and Tennessee; and the emerging automotive corridor in Mexico, spanning from Puebla north to San Luis Potosi and Monterrey.
That puts the Valley region in a strategic position to capture business from the automotive sector, he said, possibly even putting it in the running for an assembly plant some day. Succeeding with that, however, depends on thinking regionally, which means partnering with McAllen, Salinas said.
“If and when this happens, a Brownsville-McAllen initiative will require us to inventory all of our region’s assets, including those in Mexico; decide on a location where we can have access to at least 1,000 shovel-ready acres; and ultimately design an all-inclusive incentives program and a human-capital (workforce) program.
“At that point in time we can compete for a plant, perhaps not as massive as the recently announced Toyota-Mazda deal, but we need to start somewhere.”