McAllen Economic Development Corporation

U.S./MEXICO BORDER MANUFACTURING: KEEP YOUR OPTIONS OPEN

Advantage #2: Contract Manufacturing

Expanding or relocating into the U.S./Mexico border offers a large selection of competitive advantages for companies looking to stay ahead of the competition. Likewise, those selections are also presented in different packages, with different amounts of investments in machinery, and/or labor.

Contract Manufacturing, is a popular choice among companies looking to test the efficiency of this international model.
Under a contract manufacturing operation, a company and the contracted entity will define the terms under which a product will be produced. The distribution of responsibilities or contributions between both parties may include:

CLIENT
• Existing supply chain or assistance identifying new sources of raw materials
• Equipment/Tooling
• Start-up Procedures
• Manufacturing process
• Volume/Price commitment
• Delivery schedules

CONTRACTED ENTITY
• Up-to-date regulatory compliances
• The sourcing of direct/indirect labor
• Customs accounts & traffic procurement
• Production & quality control
• Finished goods to spec requirements
• Manufacturing Resource Planning (MRP) management
• Established distribution & logistics services/sources

This option represents a smaller capital investment than the traditional “Maquiladora” or manufacturing plant setup. Depending on the chosen location of the contracted services, U.S. or Mexico, this may also allow companies to bridge any cultural gaps and minimize the learning curve of doing business in Mexico.

http://www.mcallenedc.org/contract-manufacturing.php

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MEXICO: BETTER MANUFACTURING OPTION THAN ASIA

Lower Cost of Shipping; Reduced Time to Market

Recent events and manufacturing trends have shown Asian countries to be losing popularity as manufacturing destinations. Meanwhile, Mexico has been rising as the preferred choice for manufacturers world-wide.
Factors like the increased cost of shipping from Asia to the U.S. versus the lower-cost distribution options Mexico provides have proven to capture the attention of manufacturing companies looking to not only remain competitive in today’s market, but grow at a profitable pace.

Reduced Time to Market

Mexico is a direct southern neighbor to the United States, the largest consumer market in the world. This becomes a key consideration of the supply chain where companies manufacturing in Mexico don’t need as much lead time for the product to reach the market.

In the case of the McAllen, Texas / Reynosa, Mexico international metropolitan area operations reduce their inventory costs by operating under a truly efficient speed to market model. Many existing operations may have two days’ worth of inventory, or in certain cases, hours’ worth of inventory, sourcing raw materials from the U.S. or Mexico. Companies purchase what they need, when they need it. A healthy number of reliable local suppliers provide these daily, even hourly deliveries. With this efficient and consistent delivery of materials, companies do not incur significant storage costs, nor have funds tied up on inventory.

However, if an operation is importing from Asia, delivery can take up to 3-6 weeks, forcing operations to order a larger inventory to meet forecasted customer demands. This results in additional storage costs and inventory that may not meet changing market demands.

Manufacturers or suppliers that are already located in McAllen / Reynosa are able to ship the same day, and get it delivered to their clients’ plants seamlessly.

Likewise, the days of sitting on large quantities of finished goods are a thing of the past. The minute the product order is received, it is built and shipped. Many of the companies in this international metropolitan area build to order.

manufacturing-in-mexico.php

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February 25, 2013 | McAllen, TX – FibeRio, the developer and manufacturer of ground breaking Forcespinning® nanofiber production systems, today announced it has completed a $13M capital raise led by two global strategic investors – SABIC Ventures B.V., Saudi Basic Industries Corporation’s corporate venture capital arm, and Aster Capital Partners, sponsored by Solvay, Schneider Electric, Alstom and the European investment fund. The funding will be used to accelerate the company’s commercial growth, introduce larger scale production systems to the market and execute on a growing pipeline of orders and global opportunities with industry leading customers.

“The support of two of the leading, knowledgeable strategic investors in this space, SABIC and Aster Capital, is a strong validation of the uniqueness of our Forcespinning technology and will help the company accelerate our growth, open new markets and enable new applications for all of our customers” commented Ellery Buchanan, CEO of FibeRio. “This collaboration will greatly accelerate our vision of the Forcespinning process becoming the world’s leading, cost effective process to produce nanofibers at scale never before achieved.”

Forcespinning is a disruptive, platform technology which enables leading manufacturers to produce nanofibers on a truly commercial scale in a cost effective way using a wide range of polymers and an environmentally sensitive process. Forcespinning is the only fine fiber production system capable of both melt and solution spinning from lab scale to full industrial scale production. Unlike electrospinning, Forcespinning does not require materials to contain certain dielectric properties for processing which limits the materials that can be produced into fiber. Nanofiber applications are used in a variety of markets including filtration, nonwovens, battery separators, textiles, biomedical and conductive applications.

Hans Kolnaar of SABIC Ventures commented “FibeRio’s unique processing technology not only increases our market reach, but offers SABIC an opportunity to move further down the value chain with innovative fibers for our customers.”

“We view the cost effective production of nanofibers at scale as a key technological focus for the nonwovens marketplace for a wide variety of applications in the filtration, energy, medical, hygiene and textiles markets. Thanks to our sponsor, Solvay, we were able to validate that FibeRio has a unique breakthrough technology to accelerate nanofiber growth for all levels of production. We are excited to partner with a company that will be driving the deployment of nanofibers for the foreseeable future” commented Pascal Siegwart and Todd Dauphinais, partners at Aster Capital in a joint statement.

The combined breadth of resins represented by SABIC and Aster cover everything from commodity polymers such as polypropylene and nylon to high performance materials including fluoropolymers, polysulfones, polyethylene imines, and liquid crystal polymers among others. A number of these materials have never been made into nanofibers before and can offer materials performance advantages to FibeRio Forcespinning equipment customers. FibeRio, SABIC and Solvay will all benefit through the integration of a wide range of resins with Forcespinning technology.

FibeRio’s existing shareholders also participated in this financing round, including the University of Texas System – UT Horizon Fund, the University of Texas – Pan American, the State of Texas, Silverton Partners and Cottonwood Technology Fund I. As part of this financing, James Wilson, of SABIC’s Innovative Plastics Strategic Business Unit, and Todd Dauphinais of Aster Capital will join the FibeRio board of directors.

About FibeRio
FibeRio Technology Corporation provides the technology and capital equipment to transform the materials market through the unlimited availability of cost effective nanofibers. Founded in 2009, the company has already delivered several large scale industrial Forcespinning units to industry leading customers across the globe. The company is headquartered in its manufacturing facility in McAllen, TX. For more information, please visit www.fiberiotech.com or call 956-207-5448.

About SABIC Ventures
SABIC Ventures is the global corporate venture capital arm of SABIC, based in the Netherlands. Its primary goal is to seek out innovative technologies and businesses consistent with the company’s global strategy. Its investment focus includes functional materials, alternative feed stocks for chemicals and materials and alternative energy technologies. SABIC Ventures invests directly in seed stage, early stage and late stage companies.

For more information, please visit www.sabic.com/ventures

About SABIC
Saudi Basic Industries Corporation (SABIC) ranks among the world’s top petrochemical companies. The company is among the world’s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

SABIC recorded a net profit of SR 29.24 billion (US$ 7.80 billion) in 2011. Sales revenues for 2011 totaled SR 189.90 billion (US$ 50.64 billion). Total assets stood at SR 332.78 billion (US$ 88.74 billion) at the end of 2011.

SABIC’s businesses are grouped into Chemicals, Polymers, Performance Chemicals, Fertilizers, Metals and Innovative Plastics. SABIC has significant research resources with 16 dedicated Technology & Innovation facilities in Saudi Arabia, the USA, the Netherlands, Spain, Japan, India and South Korea. The company operates in more than 40 countries across the world with around 40,000 employees worldwide.

SABIC manufactures on a global scale in Saudi Arabia, the Americas, Europe and Asia Pacific.

Headquartered in Riyadh, SABIC was founded in 1976 when the Saudi Arabian Government decided to use the hydrocarbon gases associated with its oil production as the principal feedstock for production of chemicals, polymers and fertilizers. The Saudi Arabian Government owns 70 percent of SABIC shares with the remaining 30 percent held by private investors in Saudi Arabia and other Gulf Cooperation Council countries.

For more information, please visit www.sabic.com

About Aster Capital
Aster Capital is a leading energy and environment technologies focused venture capital firm sponsored by Schneider Electric, Alstom and Solvay, global leaders in the energy and chemicals industries, and the European investment fund through the Competitiveness and Innovation Framework Programme. They have jointly invested in Aster’s second $135 million investment fund. With a total of $200 million under management, Aster aims to proactively leverage the expertise of these sponsors to support its portfolio companies in their further development. Aster Capital has offices in Paris, San Francisco, Shanghai, Tel Aviv and Tokyo.

For more information, please visit www.aster.com

[For interviews or custom quotes, contact Kial Gramley at kgramley@fiberiotech.com 

or call 956-207-5448 ext. 12]

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The New York Times

By THOMAS L. FRIEDMAN Op-Ed Columnist

MONTERREY, Mexico

IN India, people ask you about China, and, in China, people ask you about India: Which country will become the more dominant economic power in the 21st century? I now have the answer: Mexico.

Impossible, you say? Well, yes, Mexico with only about 110 million people could never rival China or India in total economic clout. But here’s what I’ve learned from this visit to Mexico’s industrial/innovation center in Monterrey. Everything you’ve read about Mexico is true: drug cartels, crime syndicates, government corruption and weak rule of law hobble the nation. But that’s half the story. The reality is that Mexico today is more like a crazy blend of the movies “No Country for Old Men” and “The Social Network.”

Something happened here. It’s as if Mexicans subconsciously decided that their drug-related violence is a condition to be lived with and combated but not something to define them any longer. Mexico has signed 44 free trade agreements — more than any country in the world — which, according to The Financial Times, is more than twice as many as China and four times more than Brazil. Mexico has also greatly increased the number of engineers and skilled laborers graduating from its schools. Put all that together with massive cheap natural gas finds, and rising wage and transportation costs in China, and it is no surprise that Mexico now is taking manufacturing market share back from Asia and attracting more global investment than ever in autos, aerospace and household goods.

“Today, Mexico exports more manufactured products than the rest of Latin America put together,” The Financial Times reported on Sept. 19, 2012. “Chrysler, for example, is using Mexico as a base to supply some of its Fiat 500s to the Chinese market.” What struck me most here in Monterrey, though, is the number of tech start-ups that are emerging from Mexico’s young population — 50 percent of the country is under 29 — thanks to cheap, open source innovation tools and cloud computing.

“Mexico did not waste its crisis,” remarked Patrick Kane Zambrano, director of the Center for Citizen Integration, referring to the fact that when Mexican companies lost out to China in the 1990s, they had no choice but to get more productive. Zambrano’s Web site embodies the youthful zest here for using technology to both innovate and stimulate social activism. The center aggregates Twitter messages from citizens about everything from broken streetlights to “situations of risk” and plots them in real-time on a phone app map of Monterrey that warns residents what streets to avoid, alerts the police to shootings and counts in days or hours how quickly public officials fix the problems.

“It sets pressure points to force change,” the center’s president, Bernardo Bichara, told me. “Once a citizen feels he is not powerless, he can aspire for more change. … First, the Web democratized commerce, and then it democratized media, and now it is democratizing democracy.”

If Secretary of State John Kerry is looking for a new agenda, he might want to focus on forging closer integration with Mexico rather than beating his head against the rocks of Israel, Palestine, Afghanistan or Syria. Better integration of Mexico’s manufacturing and innovation prowess into America’s is a win-win. It makes U.S. companies more profitable and competitive, so they can expand at home and abroad, and it gives Mexicans a reason to stay home and reduces violence. We do $1.5 billion a day in trade with Mexico, and we spend $1 billion a day in Afghanistan. Not smart.

We need a more nuanced view of Mexico. While touring the Center for Agrobiotechnology at Monterrey Tech, Mexico’s M.I.T., its director, Guy Cardineau, an American scientist from Arizona, remarked to me that, in 2011, “my son-in-law returned from a tour of duty in Afghanistan and we talked about having him come down and visit for Christmas. But he told me the U.S. military said he couldn’t come because of the [State Department] travel advisory here. I thought that was very ironic.”

Especially when U.S. companies are expanding here, which is one reason Mexico grew last year at 3.9 percent, and foreign direct investment in Monterrey hit record highs.

“Twenty years ago, most Mexican companies were not global,” explained Blanca Treviño, the president and founder of Softtek, one of Mexico’s leading I.T. service providers. They focused on the domestic market and cheap labor for the U.S. “Today, we understand that we have to compete globally” and that means “becoming efficient. We have a [software] development center in Wuxi, China. But we are more efficient now in doing the same business from our center in Aguascalientes, [Mexico], than we are from our center in Wuxi.”

Mexico still has huge governance problems to fix, but what’s interesting is that, after 15 years of political paralysis, Mexico’s three major political parties have just signed “a grand bargain,” a k a “Pact for Mexico,” under the new president, Enrique Peña Nieto, to work together to fight the big energy, telecom and teacher monopolies that have held Mexico back. If they succeed, maybe Mexico will teach us something about democracy. Mexicans have started to wonder about America lately, said Bichara from the Center for Citizen Integration. “We always thought we should have our parties behave like the United States’ — no longer. We always thought we should have the government work like the United States’ — no longer.”

Complete Article by THE NEW YORK TIMES

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“Fundamentally, you’ve got to overhaul the education system in Texas to get the pipeline of skilled workers back on track,” said Pauken, a long-time proponent of alternative educational opportunities. “That’s why there has to be more emphasis at the secondary school level for institutions like South Texas College and (Texas State Technical College) that provide an industry-certified training.”

With South Texas seeing more job opportunities in the energy, agriculture and manufacturing sectors, Pauken’s emphasis on vocational training can meet the needs of in-demand occupations, said Workforce Solutions CEO Yvonne “Bonnie” Gonzalez. Instead of pursuing an advanced degree immediately out of high school, employees who are trained for an occupation can get their foot in the door and then increase their education as they rise up the ranks.

Complete Article by THE MONITOR

The first generation graduates from STC’s General Manufacturing Production Technician Program. Back Row: Representatives from manufacturers, STC, Workforce Solutions, and MEDC.

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Previously ranked #3, McAllen moves up to the #2 spot in the Ten Least Expensive Urban Areas in the Cost of Living Index (COLI) released by the Council for Community and Economic Research.

The Cost of Living Index is published quarterly by C2ER.

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Household growth rates are slowing in Texas along with the national projections, yet the state tallies five separate metropolitan areas in the Top 10 for projected percentage increase in the number of households. The Austin, Fort Hood, San Antonio, Houston and McAllen/Mission metropolitan areas all have projected household growth rates above 6.6 percent for the five-year period.

“Projected household growth is a critical indicator for the economic prospects of a specific geographic area, and this data can help real estate, retail and a range of other businesses plan their growth strategy scientifically,” said John O’Hara, president of Pitney Bowes Software.

Complete SITE SELECTION Article

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More jobs and more warehousing expected!

The MEDC is backing a bill to allow overweight Mexican trucks to use selected roads in south McAllen, Pharr and Mission.

Increased trade is expected once the Mexico super highway is built, connecting Tamaulipas with Durango and the west coast port of Mazatlán .

Complete Article by RIO GRANDE GUARDIAN

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Texas Governor Rick Perry delivered his seventh State of the State address to the 83rd Legislature.

AUSTIN, January 29 – Gov. Rick Perry gave his backing to proposals to create a new university for South Texas in his State of the State address today.

He also spoke about the dramatic growth being experienced in South Texas and his proposals to fast-track technical certification of students in high demand industries.

Complete RIO GRANDE GUARDIAN Article

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Agreement to be formally signed Monday; flights commence March 15, 2013

McAllen, TX—The City of McAllen will formally sign an agreement Monday with Aeromar to offer nonstop air service from McAllen International Airport to Mexico City.

Executives from the regional Mexican airline, which is currently celebrating 25 years of service, will join McAllen Mayor Richard F. Cortez for the signing at a regular City Commission meeting on January 28, 2013, at 6 pm, at McAllen City Hall (1300 Houston Avenue).

Aeromar’s non-stop air service will commence on March 15, 2013 aboard CRJ-200, 50-passenger jets. The airline offers top notch customer care and is mainly focused on the business traveler. Flights will depart out of Mexico City to McAllen early afternoon and from McAllen to Mexico City early evening, with enhanced seasonal service during the Easter and Christmas vacation periods.

“One of the most effective economic development tools the City of McAllen can hope for is air service from important Mexican cities to and from McAllen,” said McAllen Mayor Richard F. Cortez. “Mexico City is one of the largest cities in the world and we are extremely pleased that Aeromar is offering non-stop service so that international travelers can easily visit our city.”

Through the partnership Aeromar holds with United Airlines, passengers can earn miles in the MileagePlus frequent flyer program and redeem for travel to over 1,250 destinations worldwide.

“For 25 years, we have been committed to the Mexican market by offering high quality air transport service. Today we are proudly announcing a new chapter for the company: our first international flight to McAllen, Texas,” said Ami Lindenberg, Aeromar President. “

“Aeromar is truly grateful that this City welcomes foreign investment and that it believes in the reliability and the constancy of our Company. This announcement is indeed a day for celebration and the start of much more to come for Aeromar. We are fully committed to this new partnership,” added Lindenberg.

To book flights, travelers can purchase tickets online by visiting www.aeromar.com.mx or by calling (855) 237-6627.

PHOTO and VIDEO opportunity: Media representatives are invited to the official signing, inside the City Commission Chambers, on the third floor of McAllen City, beginning promptly at 6 pm.

More About Aeromar

· Established in 1987 and celebrating 25 years of continuous service, Aeromar is Mexico’s most experienced regional airline.

· From its operations base in Terminal 2 of Mexico City’s International Airport, Aeromar serves a network of 25 domestic destinations.

· With a fleet of 14 ATR-42 and 2 CRJ-200LR regional jets, Aeromar operates 100 average daily flights. As launch customer of the ATR-72 600 in North America, Aeromar will add two of these new generation aircraft during Q2 2013.

· Aeromar stands out as an airline focused on customer service and on time performance, offering the best schedules and amenities for the frequent flyer, whether traveling for business or pleasure.

· Aeromar also offers vacation packages, special VIP flights and “FastPaq” cargo and courier service.

News Release Courtesy of City of McAllen’s Public Information Office

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