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Economic competitiveness of the State of Baja California

Economic competitiveness of the State of Baja California

The Secretary of Economic Development of Mexico’s westernmost state, Carlo Humberto Bonfante, speaks to Tecma about the economic competitiveness of Baja California.

Tecma Group of Companies:

Welcome to another installment of Tecma Talk podcasts, in which we speak with individuals that are outside of the Tecma Group of Companies, as well as those that are inside that have various fields of expertise and knowledge, so that folks that are looking at manufacturing in Mexico as an option will be able to educate themselves in some very critical factors involved in that effort.

Today, we are very pleased an privileged to have with us the Secretary of Economic Development from the State of Baja California, Mexico. His name is Carlos Humberto Bonfante. Good day to you, Mr. Secretary.

Carlo Humberto Bonfante:

How are you? Nice talking to you, and all the people that are listening.

Tecma Group of Companies:

I guess that we will do what we do most of the time, sir. We ask people that participate in these podcasts to give a little information about themselves so that the listeners understand the context from which each of our guest speaks. So, if you would give a little bit of your personal background, we would love to hear it.

Carlo Humberto Bonfante:

Yes, of course. My name is Carlo Bonfante. I was born in San Diego, California in the United States some sixty years ago. I was raised in Ensenada and came to study in California colleges. I’ve been a businessman all of my life and have experience as a leader in the industrial and the business community. I was invited to join the State Government by the governor, Francisco Vega de la Madrid. Most of the contribution that I make is takes the form of guidance regarding economic policy, and efforts to implement programs for small business and businesses that want to export, to eliminate barriers to economic development, and to support major infrastructure projects, while, at the same time, working to increase the economic competitiveness of the State of Baja California.

I am involved in each one of those issues, and am enjoying things since the day I was invited to become a part of the government. This is because I see that the governor will bring a lot of vision,as well as a lot of business experience to make things happen in Baja California. This will encourage businesses to come to the State, and, of course, attract investment.

Tecma Group of Companies:

For those of us that pay attention to these kind of developments, there have been a lot of things going on in Baja California. Let’s start looking at things, initially, from a broad perspective. Can you give us an idea of what the overall composition of the economy of Baja California consists of?

Carlo Humberto Bonfante:

Sure. Baja California has a diversified economy. It is attached to the economy of the United States through its geographical location. Therefore, a lot of its stability and economic growth depends upon the stability and growth of the US internal market. Also, we have many export opportunities that with one of the leading states and its economy, which is, of course, California. Most of the activities that affect economic competitiveness in the State of Baja California are industry, agro-industry, and, of course, tourism. In addition to industrial and agro-industrial products, we have medical tourism, as well as one of the leading aerospace manufacturing clusters in Mexico. Also, the automotive industry has become a booming opportunities for a lot of companies coming from overseas to establish themselves here for cost advantages and the economic competitiveness of the State of Baja California. In addition to labor rates, Baja California is competitive in terms of energy costs, as well as the environmental and other regulatory environment it has put in place. Also, the two hundred mile border that it shares with the United States makes Baja California attractive in economic terms. It is safe to say that the manufacturing industry is the main component of the economy of Baja California. It makes up twenty percent of the State’s GDP.

In terms of the industrial competitiveness of Baja California is concerned, the export manufacturing sector plays an important role. In 2012, for instance, export manufacturing reached a value of US $31.7 billion. This number represents twelve percent of Mexico’s total exports. This data proves the economic competitiveness of Baja California an its open and global economy.

I see that with renewable energy exploding today. Thus far, there has been about forty different projects to which we have issued invitations to to become a formal generator of energy through aeolic, combined cycle, solar, thermo-solar and other technologies and types of systems. That alone by being integrated into the energy network of the United States, and, at the same time, having a local market inside Mexico gives us a splendid opportunity for these companies to establish themselves and to be profitable.

Tecma Group of Companies:

It is interesting to hear about the major components of economy. You mentioned that economic competitiveness in the State of Baja California results from tourism, which may come as a surprise to many, agro-industry, and just tourism in and of itself. Then, of course, you also mentioned that manufacturing is twenty percent of the State’s GDP, pointing out that automotive and aerospace are prominent. It is our understanding that medical device manufacturing is starting to pick up and is a center of interest for businesses in Baja California. Can you talk a little bit about the medical device industry in Baja California, and also about each one of the major manufacturing centers in Baja California. Obviously, there’s Tijuana, but there are other places where companies can locate industry in Baja California. Is that correct?

Carlo Humberto Bonfante:

Tijuana represents about fifty-one percent of the entire state economy. Also, we have Mexicali, which is the capitol. It is an agricultural valley, as well as a very industrial community. The population of the City of Mexicali is about one million people, all together. This compares to Tijuana, which has over two million residents. At the same time, in terms of agriculture, most of the export products that go to different markets that include including the UK, Europe, Africa and other places. Besides that, Mexicali has abundant electricity, water, access to rail and labor, which is the main asset that any location can have. Linkage with universities enhances the economic competitiveness of the State of Baja California. This feature is attractive to a lot of industries. For instance, transformation industries like building cars and tractor trailers, we have a Kenworth factory in the town as well as several automotive suppliers. These circumstances and their presence has enabled the State of Baja California to become a very big industry player. Besides that, paper, asphalt and other big transformation processes take place in Mexicali because of the conditions that I just mentioned. Tijuana, at the same time, is becoming a world capital in the manufacture of medical devices, the assembly of TV sets. Of course there are a lot of firms that services these industries, as well as those of automotive and aerospace. The addition of Hyundai and Toyota, in the latter, for instance, has made economic competitiveness of the State of Baja California much stronger.

The City of Tecate is oriented more towards tourism, both leisure and medical. Of course, some high quality hospitals and certified diagnostic centers have been established there. This allows elderly people and people that come, on a daily basis, from California to get treatment in a comfortable setting. Tecate is a small town. At the same time, Tecate is expanding a couple of the industrial parks that are there with smaller scale investments and light industry. A lot of businesses, in Los Angeles, in particular, have been able to move their establishment from there to a division in Tecate. Rosarito is a beach town with beautiful seashore. There are a lot of opportunities to increase the economic competitiveness of the State of Baja California by estabishing retirement homes, clinics and different types of medical operations that, in conjunction with lecture tourism, it has become a very good and important destination. Then we have another nice, little town known as Ensenada, which is about sixty miles south of Tijuana. The now seaport has been built there. The old port is is being rebuilt with an expanded capacity for incoming and outgoing containers. The expansion is from one hundred and fifty thousand containers to five hundred and fifty thousand. Local authorities at the port are forecasting that this capacity will be available at the end of this year. We are also bringing rail between Ensenada, Tecate and other cities that is going to enable conditions for a lot of companies to establish in the area that require rail service from the port to satisfy their logistics requirements. Between these municipalities: Ensenada, Tecate, Mexicali and Rosarito, we connect the whole state through new roads. These will be able to support the transit of goods and products that will be shipped inside of Baja California, as well as to the United States. Our economy is a global economy. The people that live here have been born and raised, and some have studied, on both sides of the border. As a result of the shared culture on both sides of the border, what we call a “mega region” has been
created. The opportunities that we have with neighboring California shows us, on a daily basis, how we can be allies to create a strategic logistics platform to create greater competitiveness in the State of Baja California, and the region as a whole. We can have a better Baja California and reinforce California’s economy at the same time.

Tecma Group of Companies:

You called the area a “mega region,” which is a good description. The people there are rooted in the area which is good for industry and labor, as well as considerations having to do with turnover. With respect to the major industries that you mentioned: automotive, medical devices and aerospace, in particular. What kind of education is available to the labor force in the “mega region” that you cited as being the major ones.

Carlo Humberto Bonfante:

In order to promote competitiveness in the State of Baja California, we decided, almost fifty years ago, to have a strong linkage with the national universities. I can tell you that, per capita, Ensenada has five of the best scientific centers in Mexico in close proximity to one another. This us allows us to demonstrate to anyone that is interested in investing in Baja California that training is available. Primary, secondary and high school education, as well as college degrees including Master’s and PhDs can be pursued in our state. This increases to competitiveness of the State of Baja California relative to the other regions in Mexico. We are advanced in education and invest more than fifty-one percent of the State’s budged in education every single year. This us allows us to be a leader in this area.

Tecma Group of Companies:

Fifty-one percent of budget is pretty significant. The last thing that I would like to ask you is what are the services that your office offers to help those that are interested in benefiting from the economic competitiveness of the State of Baja California? Also, I don’t want to be remiss and ask this question: what kind of state and local incentives are their for businesses in Baja California?

Carlo Humberto Bonfante:

We have a tailor made program that is applicable for small business, as well as to large, strategic programs that can apply to automotive and aerospace suppliers that are interested n investing in Baja California. We have a web page on which are listed the state incentives. We generally evaluate each investment on a case by case basis. We consider variables such as job creation, and how the each case adds to a greater diversification of the economy. We anticipate that the cases of small companies will be much different than those of large ones. Sometimes big companies require certain things for the installation of their facilities. We provide services that facilitate the acquisition of the land that they need. This could be up to one thousand acres. For the small companies that want to move from Los Angeles to California, we have some packages of incentives that are very easy to access. The include training, some tax incentives, and water connection considerations. These allow us to to immediately offer a pretty good cost savings on installations. The offer in Baja California is very wide. We are very committed to do everything possible to obtain the investments of these companies. I feel that we have enough infrastructure statewide to be able to show investors what we are able to provide, as well as what capabilities there are in
each of the different economic sectors.

Tecma Group of Companies:

That is a lot of good information. If there are those who wish to contact you to learn more about economic competitiveness in the State of Baja California, because they like what they have heard in terms of there business, what would they do to get the ball rolling to move things along? Would they visit a website and fill out a form? Would they send an email to anyone in particular, or make a telephone call.

Carlo Humberto Bonfante:

They can send an email to me, or visit a website. The website is www.investinbaja.gob.mx. My personal email, as the Secretary of Economic Development is cbonfante@baja.gob.mx. Potential investors can call into the Office of the Secretary at any time. The number is 011-52-686-558-1050.

Tecma Group of Companies:

Thank you for taking the time for providing all of the channels through which listeners can communicate with both you and your staff. We look forward to speaking with you in the future to be able to help to spread the news about competitiveness in the State of Baja California. Thank you.

Carlo Humberto Bonfante:

Thank you to you, as well.

Remember, relevant and useful Mexico manufacturing content is available at one’s finger tips by downloading the Tecma Group mobile app from the Google Play Store, interested parties can also receive Mexico manufacturing information on a weekly basis by SMS Texting the word Tecma to 96000.

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