Close to Mexico, Close to Home
nmpartnership.com

July 22, 2008

New Mexico is ideally located to be the key link in the supply chain between the twin plants, or maquiladoras, in Mexico and their supplier partners in the United States. The state is crossed by major interstate freeways, I-10 and I-40, as well as BNSF and Union Pacific rail lines. The commercial border crossings of Santa Teresa and Columbus/Palomas are efficient and convenient.

However in many cases those supply chains are stretched too thin for today’s just-in-time manufacturing processes. When issues such as quality control arise, the thousands of miles between maquilas and their suppliers make it impossible to quickly troubleshoot and resolve those problems. Which is why we’ve developed the Maquila Supplier Program.

The program is run by the Economic Development Department’s Mexican Affairs Office, whose executives work directly with the management of Maquila suppliers to identify the products and services that are most crucial to the plants’ operations. In some cases, the Mexican Affairs Office can connect the maquila with existing vendors in New Mexico, and in others the Office will work with maquila managers to attract their existing key vendors (typically in the American Midwest) to southern New Mexico.

For Maquila managers, the benefit is a closer, more responsive vendor. For participants in the program, the Mexican Affairs Office also leverages the awesome New Mexican technology base to give a real competitive edge to maquiladoras. For example, a plant could be searching for improved packaging, better assembly line methods, or even a new product opportunity. With access to such institutions as the Los Alamos National Laboratory, Sandia National Laboratories, New Mexico State University, and New Mexico Tech, the plant management can kick-start their projects and quickly bring them to fruition.

For maquila suppliers, a move to southern New Mexico brings them closer to the massive Mexican market, with its 2,826 foreign-owned, export-manufacturing maquilas, of which U.S. firms own 79 percent. Maquilas constitute only 25 percent of Mexico’s export manufacturing facilities, they account for 55 percent of Mexico's industrial manufacturing, with inputs of components, supplies, and machinery, worth $88 billion annually.

Why locate in New Mexico versus other border states?

• New Mexico has a strong working partnership with Mexico, particularly with the state of Chihuahua and Ciudad Juarez. New Mexico has many strong, historic family ties with “old” Mexico, and New Mexico Governor Bill Richardson has strengthened that relationship considerably. He instituted the New Mexico/Chihuahua Commission, which regularly meets to break barriers on issues such as border crossings, water and environment, and transportation. Governor Richardson also hosted Mexican President Vicente Fox in Santa Fe.
• New Mexico’s incentives are comprehensive, and the state and local authorities are accessible and easy to work with so that those incentives are put quickly to work building profitable businesses.
• When considering New Mexico or Texas, apart from our efficient border crossings, New Mexico has significant tax advantages. For example, the franchise fee in New Mexico is a flat $50/yr, whereas in Texas it’s based on the business’ value. Property taxes in New Mexico are assessed at a lower rate than those in Texas, leading to lower overall cost of property ownership. These are just a few of the advantages New Mexico-based companies have over their counterparts in Texas.

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