Welcome to Tecma Speaks, a look at U. S. Mexico business and opportunities with Alan Russell, President and CEO, this is Michael Hissam.

Alan you just returned from Washington D.C. You went as part of a joint delegation from the Greater El Paso Chamber and the city of El Paso. This delegation with whom you traveled went to the capital for the purpose of addressing border wait times and other trade obstacles related to commerce with Mexico. It is a pain to be waiting in those lines but you’re saying there’s a big economic impact. Tell us more.

Alan Russell: It’s amazing when you break it down into dollars and cents. Today border wait times at the five busiest southern ports of entry, average over one hour. You ask what is the economic impact of that? This results in an average output loss of a $116 million dollars per minute of delay. In 2008 these delays cost the U.S. economy nearly 26,000 jobs and $6 billion in output; $1.4 billion in wages and $600 million in tax revenue, annually. Now think of this, by 2017 average wait times will probably increase to 100 minutes or more, costing the U.S. more than 54,000 jobs, $12 billion in output, $3 billion in wages and $1.2 billion lost tax revenue annually. This is not some local study. This is from the Department of Commerce and a 2008 study.

Those numbers are serious but taking a look at the roster within your delegation, you would have to say this is a high powered group, who went with you to deliver that very strong message?

Russell: Mayor John Cook from El Paso headed the delegation along with the Greater El Paso Chamber President, Richard Dayoub. Additionally Judge Veronica Escobar and Kathleen Walker and Jack Chapman, two very prominent El Paso lawyers, that deal in border issues, such as visas and immigration were also along, 10 of us in all.

With whom did you meet in the nation’s capital?

Russell: We started with the U.S. Customs and Border Protection, then we went to the U.S. Chamber of Commerce, on to the Department of Homeland Security; we went to Senator Tom Udall’s office, senator to New Mexico and the final was the Department of Commerce.

No doubt you had a daunting schedule. You went through that list but what about the focus of those discussions. What can you tell us?

Russell: Our focus was truck crossing times, pedestrian crossing times, visa processing times and what these delays cost as I mentioned before in real dollars.

Your team has sent the message. Others have tried to send the message over the years to the governments, both in Washington and in Mexico City. But taking a look at this effort, to what extent do you believe progress was made?

Russell: It was Washington, we have to take the approach that it is one voice and one ear at a time. It is hard to measure the success of these type meetings, I admit, but we must be persistent. We must assure with every security measure established on this border that commerce is taken into account. I will say that every office I mentioned gave us their full attention and listened to what we had to say. However, the raw facts: Physical security trumps economic security and no more greater is that division evident than when we are in an election year.

You mention the community, this border community, over one city, the two cities across from each other, El Paso and Ciudad Juarez, if it were one city in the U.S. it would be in the top five or six in population, we know about the economic and trade data but when it comes to those border crossing issues for the commercial and non-commercial sectors – then what’s the answer, what did your group suggest be done to alleviate this problem?

Russell: I don’t think we will ever alleviate it; I’ve got to be realistic. We are 26 years into this from my perspective alone and in some cases are talking about the same things over and over. However, progress is being made with the one area at a time that I mentioned.

   First, we use the facilities that we have more efficiently. Technology has evolved. The bridges and ports of entry that we have were never designed to facilitate the kind of commerce that we are seeing today. We have the technology to improve what we have without going to the expense of brick and mortar.

   Homeland Security, very proactive, I was impressed. They’ve made improvements; they have added security measures and fast lanes that we are not taking advantage of. In El Paso alone we are down in the 30 percent utilization of some of the capacities of these programs they’ve put in place. There’s a system called the Pedestrian Gate System at the Bridge of the Americas, Ready Lanes in all three bridges and others. We have got to get the word out. We’ve got to educate the public that are using the bridges and the importers that are using the bridges to use them more efficiently through the facilities that we have and improve the technology.

One thing that happens in El Paso as people try to be more efficient, they turn to the media. The media says the bridge time is this or the bridge time is that, depending on the bridge. And then you get in one of those lines and you are in a rush and you’re finding that, “No, I’m in a situation and I can’t get there in time!” What about that?

Russell: It’s hard to go to a government agency and tell them we’ve got to improve bridge wait times and they will say, “What are the wait times?” You go ask someone and they’ll say “I listen to a full CD on my car stereo before I got through.” Witnesses are the worst possible accounting measure. It’s got to be valid data for any government agency because we have to measure the success of the programs that are put in place. There are whole lot of discussions around how do you measure border wait times. We measure it when our truck or our car comes to a stop and then that’s when we start waiting. That might be a half a mile inside the Mexican border. How is a U.S. government agency going to measure that time? But there’s technology abound that is doing so. Secure Origins here in El Paso has the technology through GPS to immediately start delivering data live on border wait times.

One thing that we take a look at is about border wait times, and the economists say that here in El Paso we are actually into expansion let alone we’ve past recovery. But let’s go back further to the depths of the great recession, to what extent did it fall in line with the thinking that business is down therefore the wait times had to be down.

Russell: That didn’t happen that way. Part of it is increased security, increased staffing along the border. Security threats have slowed the border down even though the economy has slowed down. However when we look at actually the trade numbers, trade has not fallen in direct proportion to the economy or our great recession. In contrast as we start coming out of this recession we’re going to see wait times increase exponentially beyond our expectations if we don’t take action now.

I want to build from your references to the economy. I’ve heard you talk about something called a “perfect storm” as related to opportunities here in El Paso and our neighbors in Ciudad Juarez and Las Cruces. What does “perfect storm” mean in this case?

Russell: Let me clarify, in this connotation it’s a good thing. All of the stars have aligned for the first time that we we’ve ever seen. China is no longer the logical choice or the obvious choice when it comes to a U.S. company’s or a North American company’s manufacturing needs. Cost is going up in China. Every one of our clients that have plants both in China and in Mexico is seeing increased cost, as much as 20 percent last year. They expect 12 percent this first quarter and they don’t see it changing. The reasons: The currency exchange rate between China and the United States currency, transportation costs. Nobody is going to believe transportation costs is really going to go down any time soon, wage increases — minimum wage in China is going up. The Chinese people are demanding more. They are becoming a consumer nation which is driving cost up and then you take into account time on the water, the cost of money, the cost of inventory, near-shore is a much more viable option than off-shore.

   Take Mexico for instance. We’re coming out of the recession. The peso has weakened against the dollar. Our region has laid off, right here in Juarez, we’ve laid off a 150,000 workers and they’re ready to come back to work. We have more than 9 million square feet of empty manufacturing space. The lights are on. We don’t have to build buildings. We are near-shore, we are not offshore. All we’ve got to do is bring these companies into these border cities and start production.

That’s a compelling list of economic factors, but I think you have some further thoughts on that.

Russell: For the first time in modern history, the lines have crossed. In most product categories Mexico competes head-to-head with China in landed cost and it’s time to seize the moment.

When we take a look at this economic activity, rebound maybe to expansion, we see a lot of trucks crossing that border. What about the significance, especially of the northbound trucks — and those things are not deadhead — and the significance into the local economy as well the national economy?

Alan Russell: If something is produced in China, I would say that 98 percent of the content of that product comes from the Asian rim; some rare situations U.S. companies are exporting to China for component parts. When we produce in Mexico 90 percent of the content of the products that we are producing are being done with component parts and materials coming from the United States. Right here in El Paso, as stated by the University of Texas, for every five jobs created in Juarez, one job is created in El Paso. That does not take into account all the jobs being created by the production of materials, raw materials, component parts and direct materials that are put into these products. It has a tremendous economic impact on not just El Paso, not just on the border region, but all the states across the nation.

Economics can be complex, business can be complex, the wait-time issue for sure is complex. But if there is one single message, you would deliver to the U.S. and Mexico government agencies about the issue, what would it be?

Russell: Let us, the private sector put up the cost through joint public private partnerships, let us participate. Budget restraints are intense but bridges can be built, highways can be built, systems can be used. On our Canadian border today the Ambassador Bridge is privately operated and it is more efficient, more secure than we were seeing in any other possible mechanism. Let us move forward with more private sector-public sector joint partnerships to improve this situation.

We are recording this just one day after your return from Washington. Those airline flights between here and there give some time for thinking. Let’s wrap it up with some final thoughts.

Russell: We want the border protection agencies including Homeland Security to advertise more the initiatives they are taking to improve our cross border commerce. They are taking into account, they are giving it their best shot, but in some cases they’re not communicating very well. For instance they are beginning a radio broadcast at the Bridge of the Americas which cross border commuters and trucking companies can use to understand the wait times, understand the alternatives, how to use the Ready Lanes, how to apply for Sentri passes and improve the crossing times. We need to make the public more aware and move forward with these public private partnerships.

That is Alan Russell, President and CEO of Tecma. Tecma Speaks is a frequent presentation of Tecma. Tecma has been on the ground with border commerce for more than 26 years. Alan has led a relentless pursuit of developing this commerce in direct competition with the China alternative. Tecma currently performs manufacturing services for more than 30 U.S. companies in northern and central Mexico.

From Trans-National Executive Communications, El Paso, this is Michael Hissam.

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