CLICK FOR ARTICLE–> FORBES ARTICLE: McAllen Ranks #1 for Recession Recovery
FASTCOMPANY: “Introverts of the workplace are having a moment. The office furniture company Steelcase teamed up with Susan Cain, author of the bestseller, Quiet: The Power of Introverts in a World That Can’t Stop Talking, to create a series of five spaces that address the need for more focus and privacy at work.” -Mimi Zeiger (Fastcompany Magazine)
What’s so cool about Steelcase and living in McAllen, TX or Reynosa?
Steelcase owns and operates a 300,000 sq. ft. manufacturing facility that employs over 950 people in Reynosa. Not to mention, 500-700,000 chairs are made to order daily. Here is a picture of a few of our McAllen city commissioners at the Steelcase plant in September, 2013. There’s a reason why the maquiladoras in Reynosa are so successful!
For rest of the story: http://www.fastcodesign.com/3031341/steelcase-and-susan-cain-design-offices-for-introverts
What you need to know:
- MX and the U.S. continues to grow despite “crime and safety” perceptions and sensationalism driven by the media
- MX benefits from the North America Free Trade Agreement (NAFTA): 44 free trade agreements, which is more than any other country
- By 2015, manufacturing-labor costs in Mexico are projected to be 19% lower than in China
- The U.S. has an advantage since products made in Mexico contain 4 times as many U.S. made parts
- Many factors are driving the economic growth
- The Rio Grande Valley has a unique advantage with two options to choose from (US/MX) for manufacturing purposes, import/export, and competitiveness
China’s low-cost labor force wages, weak yuan, and high investment helped make it a manufacturing and exporting hub.
But over time, as the yuan appreciated, wage inflation ticked up, and supply chains became more complicated, multinationals started exploring other options.
In what’s been dubbed the American manufacturing renaissance, many U.S. companies have been reshoring operations.
However, another big beneficiary of rising Chinese labor costs and U.S. economic growth has been Mexico. This has come despite concerns about crime and safety.
Mexico benefits from the North America Free Trade Agreement (NAFTA). At 44, it also has more free-trade agreements than any other country. Mexico also benefits from having its natural gas prices tied to those in the U.S. where prices are substantially lower relative to the rest of the world.
Average electricity costs are about 4% lower in Mexico than in China, and the average price of industrial natural gas is 63% lower, according to a study by the Boston Consulting Group.
The same study found that by 2015, average manufacturing-labor costs in Mexico are projected to be 19% lower than in China. In 2000, Mexican labor was 58% more expensive than in China.
First, let’s take a look at what’s been going on in China.
The average urban, non-private-sector wage in China has climbed 14.2% per year between 2002 and 2012. While average wages in the private sector have grown at a slower pace, they too have grown. The key figure to watch is unit labor costs.
“As productivity gains slowed in recent years, the continued rapid wage growth has led to a robust growth in ULC – averaging more than 5% a year since 2008 in the urban non-private sector,” according to Tao Wang, a China economist for UBS.
Of course this is also in part because the yuan has appreciated over 25% against the U.S. dollar since January 2007. This appreciation (despite the recent modest depreciation) has hurt China, since “many of China’s competitors and trading partners saw their currency weakening against the green back,” writes Wang.
China’s unit labor cost has grown over 60% since 2007, in U.S.-dollar terms, which is the fastest growth among trading partners and competitors in part because of yuan appreciation, explains Wang.
In terms of labor-intensive manufacturing exports, China has lost market share to Vietnam and Bangladesh. But “in the transport equipment and parts sector, China has lost market share to Mexico in both the US and the EU,” writes Wang. This chart shows China has lost market share to Mexico:
And this is good news for the U.S., too. “It’s also good for America, since products made in Mexico contain four times as many U.S.-made parts, on average, as those made in China,” said Harold L. Sirkin, a senior partner at Boston Consulting Group in a report on Mexico’s growing cost advantage.
China’s ongoing economic growth and aging workforce means labor costs are likely to continue rising. All of this means Mexico will be a winner for years to come.
Read more: http://www.businessinsider.com/mexico-becoming-manufacturing-powerhouse-2014-4#ixzz2zvKIZ5o3
It’s time The Rio Grande THINKS and ACTS like a region. Research and development is where we need to be headed.
McALLEN, April 21 – McAllen Economic Development Corporation believes the new ideas coming out of the KAIST research park in Daejeon can lead directly to good paying manufacturing jobs in the Rio Grande Valley.
McAllen EDC leaders have just returned from a visit to South Korea’s fifth largest city. They were invited to visit the Korean Advanced Institute of Science and Technology to explain their concept of rapid response manufacturing, which means getting a product from design to marketplace in as short a time period as possible.
They were also on hand to see a memorandum of understanding signed by the City of Daejeon and the City of McAllen.
“Close your eyes and picture a 381-acre research park that employs 10,000 professionals with PhDs. This is what is happening at the Korean Advanced Institute of Science and Technology,” said Keith Patridge, president and CEO of McAllen EDC.
Here is the wording of the agreement:
The City of McAllen, a major advanced manufacturing center for North America, and Daejeon Metropolitan City, a global leader in science and technology, have agreed to work together in a spirit of friendship to promote closer partnerships in the fields of economy, science and technology. The cities will work together to provide economic opportunities in business, trade and investment based on a principle of reciprocity. The cities agree that this initial MOU from the mayor’s letters between the cities on May 11, and May 27, 2011 is the first stage of developing closer relationships between the two cities in the years to come. 31 March, 2014.
KAIST was formed 40 years when the South Korean government decided to make Daejeon its national research center. It is now one of the leading research universities in the world and only accepts the top one percent of graduates. Its research park sits on 381 acres. In 2012, KAIST issued 1,381 patents.
In a lengthy interview with the Guardian, Patridge said MEDC wants to engage with the residents of the Valley to see if university research, coupled with rapid response manufacturing is the way to go. If so, he believes, the Valley can learn a lot from KAIST and Daejeon. He said a collaborative agreement McAllen and Daejeon that was signed during the trip to South Korea could be the first step.
“Is this what we would like for our region? We want to know what our citizenry thinks. What we are doing now at McAllen EDC is not for today. It is for 40 years from now.”
Patridge said McAllen made a long shot bet on the maquila industry 30 years ago and it paid off handsomely. He wonders aloud if its leaders today want to make the same long term commitment on advanced manufacturing and allied research. If so, he said, the Valley could benefit from the ties McAllen and the University of Texas-Pan American are making with the City of Daejeon and KAIST. He said KAIST officials have identified ten or 12 Korean companies that would be a logical fit for the McAllen area.
“While we were there, the folks at KAIST said, look, we do a real good job of coming up with ideas, of discoveries but we do a lousy job of commercializing them. We discover something, it goes on the shelf and then we go on to discover something else. They said you guys (in McAllen) are focused on applied research and commercialization. We would like to form a cooperative, commercialization agreement with McAllen and UTPA,” Patridge explained.
“Universities all over the world have been trying to get this kind of relationship with KAIST. A lot of it has to do with the relationship Miguel has. We worked with them. We developed this agreement and we signed it. The goal is to bring new technologies and technology companies from Korea to McAllen and then as we develop commercialization and new companies we take them from here to Korea. It becomes a two-way fertilization of ideas. It is a natural fit.”
The Miguel Patridge refers to is Professor Miguel Gonzalez, dean of the College of Engineering and Computer Science at UTPA. Gonzalez accompanied the MEDC officials on the trip.
Patridge explained the rationale for developing relations with KAIST.
“We have been rightly focusing on education and training and UTPA and STC do excellent job. But, if we keep doing a good job with our educational institutions but there are no jobs it is a zero sum game. Forty years from now we will still be in the same place we are today.
“If we start producing PhDs and we do not have research for them, we are going to be spending a lot of money for nothing. We will lose those students. We need research and the opportunity to create new companies. We are putting the building blocks in place now. We are fortunate to work with Korea, with one of the leading institutions in the world. Everyone would like to have the relationship but we have the relationship.”
The City of Daejeon has a population of 1.5 million people, not much more than the Valley. However, it is much wealthier. It has an annual budget $2.8 billion a year. Its gross domestic product is $27 billion. “The national government has put a lot of money into research in Daejeon,” Patridge said.
Patridge said the City of Daejeon only has about two Sister City agreements. “They are very guarded about who they enter into agreements with. We feel honored to have been selected.” McAllen Mayor Jim Darling and UTPA President Robert Nelsen had hoped to be on the trip to Daejeon but were prevented from doing so by pressing matters at home. They hope to go on a future trip. Darling did appear in a video about McAllen that was presented to Daejeon officials.
The City of McAllen and McAllen EDC have been making regular visits to Korea since 1990. On the first trip were then McAllen Mayor Othal Brand, then McAllen City Commissioner Jan Klinck, then McAllen EDC President Mike Allen, and Patridge. Patridge said it was because of the beautification of the Korean cities they visited that made Brand insist on his city be spruced up by its parks and recreation department.
“Korea was much different back in 1990. It was an emerging country. It was still a bit wild and wooly. We were told not to drink the water in the hotel room. But it was absolutely beautiful, as clean as can be. It was just after Korea hosted the 1988 Summer Olympics,” Patridge remembers.
The relationships forged on that and subsequent visits are starting to pay off now, Patridge said. In fact, one of the reasons for the latest trip was so that Korean officials could learn about the rapid response project being undertaken by the North American Advanced Manufacturing Research and Education Initiative, which McAllen EDC and UTPA are part of.
“There is a whole strategic plan behind this that I am not going to get into but it would make a lot of sense if we could tell you about it. The folks from KAIST come over once a year, bringing companies that may be interested in building a manufacturing operation here, and then, once a year, we go over there and take our companies to see Daejeon,” Patridge said.
So what comes next?
“We have to develop our research park. We have to have a top quality university, which we are developing, and we have to have a research component. And, we have to get our first building for the research park. It costs money and so the question is, how do we fund it? It is unlikely that it will come from the federal government. How do we get the citizenry of McAllen to invest in this? How do we explain we could be the KAIST of Texas?
“We have to tell people what the potential is and see if they want it. This is another of those watershed moments, like the maquila concept. It is up to the citizenry of this region but we believe it is an investment in our grandkids. That is what we have got to think about it,” Patridge added.
FULL STORY & SOURCE: http://riograndeguardian.com/business_story_working.asp?story_no=25
PRESS CONFERENCE: Feb. 11, 2014
The Maquila Association also known as (INDEX) and the McAllen Economic Development Corporation met the morning of February 11 to introduce INDEX’s new president, Carlos Vera (Plant manager at Brunswick in Reynosa) for 2014 and update the community on the recent Mexican tax reform.
McAllen EDC commented on indicators of positive growth for the Reynosa/McAllen area due to the large auto supplier base in the McAllen/Reynosa area and the expansion of the auto industry in general. Security was also addressed and both organizations (MEDC/INDEX) expressed their diligence towards constant communication between maquiladora managers and government.
The new INDEX president, Carlos Vera also stated that they are hosting more meetings to be better prepared and brainstorm ideas to keep safety certain among parks.
MEDC asked Carlos Vera a few questions:
MEDC: How has and will the tax reform impact McAllen and Reynosa?
Carlos Vera, INDEX: It did not affect us the way we thought it perhaps could. All the modifications to the decree alleviate most of the impact and i do not think at this moment it will impact us in the future. Our position at the national level is stronger and we will keep working to strengthen our relationship with the authorities for future lobbying on fiscal or labor reforms. To be blunt, Mexico has to switch to a friendlier model to do business for foreign corporations before anything. After that is laid as the foundation we will soon see the positive impact any reform could have on the manufacturing/maquiladora industry. As for McAllen, they will be affected positively when the mid level people choose to purchase their home supplies in the USA instead of Mexico based on the tax rate increase from 10% to 16%.
Carlos Vera, INDEX: My vision is to have a very strong association with active members bonding joints internally and externally with the communities of Reynosa and McAllen, helping to grow the society, culturally and educationally.
MX TAX REFORM DETAILS & UPDATES
Presidential decree published on December 26, 2013
Miscellaneous rules published on December 30, 2013
Published on January 1, 2014
- Companies certified with Rule 3.8.1., NEEC and tax warehouses.- April 1 through 30
- Northeast (including Reynosa).- June 3 through July 3
- North Pacific.- April 15 through May 15, North Center.- July 7 through August 7, Center.- August 7 through September 8, West and South.
-September 22 through October 22
Manufacturing today is no longer the dirty, dark, and dangerous world it may have been during the early years of American industry. Indeed, advanced manufacturing has the potential to symbolize the broader manufacturing resurgence underway in America as well as play a driving role in the country’s overall economic recovery.
A good deal of progress has been made in recent years in restoring global competitiveness, jobs, and excellence in innovation in this sector.
SOMETHING TO THINK ABOUT (SOUTH TX RESIDENTS): We will benefit from the manufacturing sector in various ways. With more industry, comes more homes, with more homes, comes more retail. It’s a domino effect and we are in the HOTTEST spot in America to host an industry such as manufacturing. We are outgrowing our area, and in no time, we will have to start building up.
UTPA and STC who have the latest technology courses, certifications, and degrees are producing thousands of graduates who are well suited for the manufacturing industry. The talent pool is here. With the new university merger, the healthcare industry and product manufacturing plants will locate to benefit from what we call, an “international MSA” and the massive pool of trained and skilled workforce.
- STEM Education: To maintain its technological edge on the global stage, the United States will need sustained and long-term investment in STEM education to encourage the youth of today and tomorrow to pursue the engineering, science, and computer science-driven careers that will be needed to fill jobs in America’s manufacturing sector. The long-term timeframe must also be met with immediate STEM-career training initiatives to prepare workers to take the job openings in this field that currently sit unfilled. Attracting students to these fields and to careers in manufacturing also requires a more positive image of the sector and better collaboration between industry and educators.
*blog developed from Huffington Post. For full article click: HERE
A BIG thank you to Embassy Suites Hotel in McAllen for hosting a fun mixer for us and our plant managers. Fire guacamole, bacon wrapped shrimp and some good wine swarmed the room as managers mixed and mingled. This is a very important gathering for our corporation because we are able to connect with our innovative plant managers and staff from Reynosa and McAllen in a relaxed ambiance. Embassy Suites gave away a hearty gift basket of champagne and snacks alongside a free one night stay and $40 gift certificate to Remington’s Steak House. Can someone say generous? We love our friendly business partners. Below are some fun pictures!
Business on the west side of McAllen is booming. MEDC strives to bring businesses and communities together with unique experiences, and a great quality of life and innovation. Today’s highlight of the morning was “Tilted Kilt’s” grand opening. CLICK HERE FOR NEWS STORY
Who would have ever thought? Now think to yourself. Does my vehicle run on an engine or a motor? How about those annoying “Check engine light” alerts that light up from time to time? A-ha…
Those are the things you can learn on just a simple tour of the South Texas College Technology Campus located on Ware Rd. in McAllen.
While a lot of the technology courses are hands on and practicum based, the difference between “pass or fail” is the reading and logic. A big misconception of these programs is that students think the programs are 100% hands on and don’t have to read or write. That becomes quite difficult when you’re given a work order and left alone with a deadline.
An other eye opening fact is the high demand and salaries. A STC graduate with a technology certificate averages $75,000 as their starting salary. (I know what you’re thinking.. I need to change careers!)
The truth is, the manufacturing and technology field is growing. What’s better is that it’s growing here in the Rio Grande Valley.
So…. What’s the difference between an engine and a motor?
A motor needs external power, like a blender. It won’t work unless it’s powered by something else.
An engine produces it’s own power due to the internal combustion and can run on its own.
(Rio Grande Valley, TX – May 21, 2013) The Rio Grande Valley continues to see population growth in the 2.5% range, increasing the demand for housing, according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
The Rio Grande Valley MSA registered an annual job gain of 7,300 jobs in the year ending February 2013, a 2.0% rate. The benchmark results show a gain of 8,800 jobs (2.4%) in Year-2012, and 5,700 jobs (1.6%) in 2011. Job growth forecasts project the Rio Grande Valley to see job growth in the 2.3% range for 2013. “The local recovery has struggled to gain momentum in the past year though the revised job numbers show employment growth, namely in the sectors of transportation, and retail,” said Randall Allsup, Metrostudy’s regional director of San Antonio and Rio Grande Valley markets. The Rio Grande Valley unemployment rate as of February 2013 is 10.7%, which is down 0.5% from a year ago.
The annual rate of new home growth in the Rio Grande Valley as determined by Metrostudy’s first quarter survey is 1,773 starts. This annual rate of 1,773 is down 365 units, or 17.1%, from the 1Q12 rate of 2,019. “The expectation is that the decline is temporary as the short and long term prospects for the market are good with job growth forecasts for 2013 in the 2% range, and close proximity to a recovering Mexico,” said Allsup. The Rio Grande Valley had 412 starts in the first quarter, down 19.7% from the fourth quarter of 2012. In the Rio Grande Valley the number of new home closings in the year ending 1Q13 was 1,767 down 386 units, or 17.9%, from the 1Q12 rate of 2,153. There have been 458 closings in the 1st quarter, down 12.8% from 4Q12.
Metrostudy’s 1Q13 survey found the level of new home inventory to be high relative to the number of closings in the same period. There were a total of 1,368 homes in inventory at the end of 1Q13, which represents an 9.3 months of supply based on the annual closings rate. Metrostudy documented 685 homes under construction at the end of the first quarter, a decrease of 54 units when compared to 1Q12. “The months of supply of finished vacant units, is the key indicator of the health of housing inventory. When finished vacant inventory in the Rio Grande Valley market approaches approximately 3.0 months, builders are generally forced to begin to offer some concessions in order to move the inventory of unsold homes,” said Allsup. The inventory of finished vacant units totaled 667 homes at the end of 1Q13, up 10% compared to the 1Q12 level of 609. Based on the closings rate for the first quarter, the current level of finished vacant inventory represents 4.5 months of supply.
“The Rio Grande Valley continues to see population growth. The increased demand for housing is currently being absorbed by an extremely tight rental market with occupancy levels over 95% and rents that continue to climb. The positive side to this is that climbing rents will help build demand for detached housing which has seen the sales pace in the resale market steady over the past few months and inventory levels are beginning to drop which will contribute to stabilizing home values, especially in more desirable areas,” said Allsup.
For information contact:
randall allsup @ 210.525.9549
Click here to access original article by MetrostudyReport and access more information on Metrostudy