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Maquiladora industry growth benefits U.S. border (and broader) economies

U.S. communities that are strung along the length our shared southern border with Mexico are experiencing how maquiladora industry growth benefits their economies.

One such municipality is Santa Teresa, New Mexico. Santa Teresa is located thirteen miles west of El Paso, Texas, and is a beneficiary of strong economic links with Ciduad Juarez, Mexico.

Dr. Roberto Coronado, the head of the El Paso branch of the Dallas Federal Reserve Bank, is an industry watcher that is making first hand observations as to how the migration of manufacturing from China to the U.S. – Mexico border region is having a direct positive economic impact on communities such as Santa Teresa. In addition to steadily increasing labor costs in the Far East, Dr. Coronado points to the fact that transportation costs from that part of the world “have been on the rise, and are still very elevated.” The resultant maquiladora industry growth benefits that this movement has generated includes an increase in warehousing, logistics, real-estate, insurance and staffing activities in places like Santa Teresa.

Santa Teresa, New Mexico is home to the San Jeronimo border crossing which was originally opened as the result of a bi-national agreement in 1992. Since that time private and public investment in industry and infrastructure in the area has grown at a significant pace. On the private side of the equation the Union Pacific Railroad recently announced that it will hold a grand opening celebration at the end of May to mark the completion of a $400 million intermodal transportation facility at the port.

Maquiladora industry growth also benefits Santa Teresa, New Mexico’s bigger neighbor: El Paso, Texas. According to president and CEO of the Tecma Group of Companies, Alan Russell, “More than 50,000 jobs in El Paso are directly attributable to the maquila industry in Ciudad Juarez.” In addition to that Russell points out the positive effect that maquiladora industry growth has El Paso’s industrial real-estate. He notes that, “More than 70 buildings in El Paso are occupied, or exist, because of the maquilas.”

In addition to the maquiladora industry growth benefits enjoyed by U.S. border communities, the migration of manufacturing from China to Mexico is also a boon to U.S. manufacturers in places that are geographically far removed from the border. Whereas the supply chains of manufacturing plants operating in China typically are made up of Chinese and other Far East-based manufacturers, Mexican maquiladora manufacturing operations obtain approximately ninety percent of the material inputs that are integrated into their end products from U.S. sources. This is good news for American manufacturers that ship to Mexico from all points in the U.S.

Read the primary source for this post at Albuquerque Journal.

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