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Tecma Talks to the Tijuana Economic Development Corporation

Tecma Talks to the Tijuana Economic Development Corporation

The CEO of the Tijuana Economic Development Corporation, Rigel Navarro, discusses opportunities for foreign investors in one of North America’s most dynamic border regions, as well as explains how his organization delivers assistance to companies that pursue them.

Tecma Group of Companies:

Hello and welcome to another installation of Tecma Talk podcasts. These are conversations that we have with folks that are experts on issues dealing with manufacturing in Mexico that are both internal and external to the Tecma Group of Companies. Today we have the great pleasure of having an external expert with us. His name is Rigel Navarro, and he is the CEO of the Tijuana Economic Development Corporation. How are you today, Rigel?

Rigel Navarro:

Hello.  Very good thank you for having me.

Tecma Group of Companies:

Rigel, could you tell us a little bit about yourself to start out, and then about your organization?

Rigel Navarro:

Sure. Yes, it would be my pleasure.  I have been involved in economic development promotion activities for fifteen years now. I finished my studies with a major in international business.

Throughout my career, I have been working in a wide range of activities related to the promotion, business development and attraction of foreign direct investment.  This, for the most part, has been related to industrial affairs.  However, I have also been involved in real-estate development and tourism.  One thing, in a way, has complemented the other.  Industry, and tourism, have been things that I have worked on, but, as of now, I have been the CEO of the Tijuana Economic Development Corporation since the beginning of this year (2015).  Prior to that I was employed as a senior business development executive.

Tecma Group of Companies:

If I understand what you have just mentioned correctly, it is the major mission of the Tijuana Economic Development Corporation to work to attract foreign investment to the City of Tijuana, mainly with respect to industry and manufacturing?  Would that be correct

Rigel Navarro:

Yes, right.  That’s correct.  The Tijuana Economic Development Corporation is structured as is a chamber of commerce, or as a business trade organization. We have a membership that is comprised of companies that pay to participate. This is similar to what members of chambers of commerce and business organizations typically do.  The members of the Tijuana Economic Development Corporation elect their board of directors. We have thirteen members of the board of directors and one chairperson that serves for a two year term.  The organization is private and non-profit that facilitates business matchmaking that is necessary to attend to the needs of incoming industry.

We typically work in the area of foreign direct investment. That is economic circumstances usually drive our way.  However, if there are needs related to national, meaning Mexican investment, that would like to set up manufacturing, or an industrial process, in the City of Tijuana, we are glad to serve requirements in that area, as well.

Tecma Group of Companies:

For folks that may not be familiar with Tijuana, and the surrounding area, what are the major industries that have set up there over the years?  Could you please provide an overview from an economic perspective?

Rigel Navarro:

Sure.  Manufacturing has been present in the City of Tijuana since the early 1960s. This is when the first manufacturing firms established themselves in the city in order to take advantage of the proximity that exists with the State of California in the US. So in the beginning, the origins of manufacturing investment in Tijuana were from Southern California.

Basically, things started with very simple, manual assembly related to the electronics industry. Over the years, industry moved from manual to the more and more technically complex. Today, Tijuana provides a good environment to engage in high-mix, low-volume manufacturing that services several industrial sectors. For a certain period of time, television manufacturing in Tijuana was quite big. It still is. Both consumer and industrial electronics represent the activities of approximately one hundred and twenty companies that are operating in Tijuana under the IMMEX, or maquiladora, business model.

The second largest, and now the fastest growing manufacturing activity in Tijuana, is in the area of medical devices.  Tijuana is home to forty-one companies that manufacture medical devices.

Medical device manufacturers employ about 38,000 direct labor workers. This industry is a significant engine of job creation in Tijuana.  This is followed by a very healthy local presence of aerospace establishments. Finally, we also have a significant automotive industry presence.

There are some other sectors within the City.  These include outdoors and recreational product manufacturing, sporting goods, furniture, home and garden product manufacturing, metal fabrication an plastics, as well as others.  To have a good picture of Tijuana, you’d have to recognize the manufacturing concentration of electronics, medical devices, aerospace and automotive.

Tecma Group of Companies:

Over the years, Tijuana has been an attractive destination for foreign direct investment from Pacific Rim countries. Can you tell the listeners which Asian countries in Tijuana, and what kind of activities are they involved in?

Rigel Navarro:

From the Pacific Rim, and specifically from Asia, up until the early 2000s we had a very strong and healthy Japanese investment presence.  It is important to recall that, during that time, Japanese companies held the leading market share in terms of television sales. These companies took advantage of favorable logistics conditions, and the quick turnover to market of their products with respect to the United States market. The second largest Pacific Rim country investment group, and now one of the strongest, in Tijuana is from South Korea. The leading company from this country is Samsung. They manufacture a total of approximately seventeen million television sets a year.  Most of these are destined for the US market. The third group that has a very strong presence in Tijuana has always been the Taiwanese. These three countries, put together, comprise the majority of Asian investment in Tijuana.  Presently, South Korean investment has shown the most stability, with slow, but stable, growth.  A good example of this is that of Hyundai and Samsung.  Hyundai is manufacturing container truck beds, while Samsung continues its production of television sets.

Tecma Group of Companies:

You mentioned that in the 1960s, companies from California, Southern California, in particular, were the first to take advantage of what Tijuana has to offer to manufacturers.  One would imagine that there is still a very healthy and dynamic relationship that exists between the manufacturing economies of Tijuana and of Southern California today. Does this still hold true, and, if so, could you tell us a bit about the relationship between the two regions?

Rigel Navarro:

Our first partners have always been, and always will be companies from the States.  The US has always been a great partner for us, especially because of the location of our region.  We are not on the mainland of Mexico.  We are not on the main stretch of the border between the US and Mexico.  So, we are right next to the State of California. For natural geographic reasons Tijuana and Baja California has always been a good manufacturing location for California companies to develop their businesses.  Still, now, California is one of the top sources for foreign direct investment that flows into Tijuana. A full eighty percent of the US investment that is in Tijuana comes from California. This is because California is still one of the states that is highest in terms of the concentration of manufacturing in its economy.  Due to these things, the advantages that the “Baja Norte” region has to offer: location, labor, quality, and, not to mention, cost savings have been the things that have made the California and Baja California partnership a longstanding and a successful one.

Now, how do take advantage of existing synergies?  Usually, in California, activities such as product development, research and development, distribution, marketing and the management of establishments takes place in the US. While the cost advantage of manufacturing and the ease of moving products from across the border in Tijuana, as well as the presence of a good supplier base, make related activities attractive to be performed there.  The complementarity of the resources found on both sides of the border enables this region to produce and move a large volume of manufactured goods. The revenues of companies are enhanced due to Mexico’s cost structure and the proximity to market advantages that Tijuana offers to California firms.  The use of these resources by companies that have chosen to do so has been to their great advantage.

Tecma Group of Companies:

Tecma Talk podcasts are generally introductory in nature.  We often touch upon some very broad topics. In the case of your organization, the Tijuana Economic Development Corporation, your role is to take investors, whether they are from California, the Asian countries that we just mentioned, or, even, from some other state “by the hand” and provide them with the information that they need to make their manufacturing business cases. If people want to get into contact with you and the Tijuana Economic Development Corporation in order to take advantage of your expertise, how would you recommend that they best do so?

Rigel Navarro:

The best that the Tijuana Economic Development Corporation has to offer to the industrial and to the business community is the information resource.  When potential investors comes and is looking to establish operations in Tijuana for whatever growth reasons, we can provide them with the most information that is available on the topic.  That’s where the Tijuana Economic Development Corporation comes in.  We provide data on costs, as well as information on business practices and standard procedures related to the daily operation of a manufacturing facility in Tijuana.  There is no cost to the assistance that we provide.  It is completely without charge.  Sometimes things eventually get to the point at which prospective investors have to procure specific services in order to move their projects forward.  This is when the Tijuana Economic Development Corporation recommends the services of its members as appropriate and as is needed. Our members are professional and reputable companies that focus specifically on attending to the needs of industry.  This is the second area in which our business organization can add-value for potential foreign investors.

The Tijuana Economic Development Corporation can also help companies to perform the analysis that must be performed in order to make solid decisions. The best way to get a hold of us is through our website at www.tijuanaedc.org.  The website contains a lot of valuable information and is very interactive.  Also, companies can call for us to meet with them while we are on our frequent visits to Southern California, and other parts of the US when there are industry trade shows on our events calendar.  If there is something that requires immediate attention,  businesses with questions and needs can contacting the “staff directory” section on the Tijuana Economic Development Corporation website.

Tecma Group of Companies:

Thank you for talking with us today.  The more one learns about the diversity of the industrial base in Tijuana and Baja California the more that it is obvious that the region is a very interesting one for manufacturers. Again, I want to thank you for joining us and to wish you a good day.

Rigel Navarro:

Thank you for your time, and thank you for letting us discuss economic opportunities in Tijuana an how the Tijuana Economic Development Corporation can help companies that seek them out.

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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