Tecma University

Back to blog page

Union Pacific multi-modal facility in Santa Teresa to energize the border region

Union Pacific multi-modal facility in Santa Teresa to energize the border region

The Tecma Group of Companies speaks to former Delphi Corporation director of communications, Michael Hissam, regarding the new multi-modal facility in Santa Teresa, New Mexico.

The Tecma Group of Companies speaks to former Delphi Corporation director of communications, Michael Hissam, regarding the new multi-modal facility in Santa Teresa, New Mexico.

Tecma Group of Companies:

Hello and welcome to another edition of Tecma Talk Podcasts. These are recordings on subjects that deal with manufacturing in Mexico, or related issues. Joining us for this session is Michael Hissam. Michael, among other things, I’ll let him expand, has been the director of communications for Delphi Automotive in Ciudad Juarez. Currently he is a contributor to the border trade publication “Juarez Now.” I want to thank you for joining us today, Michael. How are you?

Michael Hissam:

I am doing very well, thank you very much, great to be talking to you about one of my favorite subjects, which is the Paso del Norte region, as they would have it in life after spending 20 years right there in El Paso and in the Ciudad Juarez, I am now a university instructor in western Pennsylvania, but many of the so-called real world examples come from there and my students find it quite fascinating, so good to be with you, Steve, and fire away, let’s have a good chat!

Tecma Group of Companies:

One of the things that prompted me to give you a call is an article that you wrote recently for the maquiladora publication that I just mentioned in the Ciudad Juarez and El Paso region, and it has to do with some logistics changes that are going to take place. Can you give us a little idea of what’s going on in that regard?

Michael Hissam:

You may have been prompted by one story, I believe that’s the third or fourth I wrote on that subject over the past 3 years or so. The subject—Union Pacific Railroad—and they’re about to have a grand opening for a huge facility just north of Santa Teresa, New Mexico, and that will be late in May. It’s a 400 million dollar project, and it’s a 22 hundred-acre site, it stretches 12 miles. A whole lot of activity to allow a huge improvement in logistics, and as I see it in covering this story it’s just the beginning of what’s going to be going on out there and that of course will have a major effect economically in a multi-modal facility in Santa Teresa. You’re looking at El Paso and you’re looking at Ciudad Juarez because in my work dealing with journalists for 20-something years, there you don’t see a border, it’s one region and that’s it. So this thing with Union Pacific, this is big news, this is major.

Tecma Group of Companies:

So it’s a big, and according to the article that you penned, at least the one out of the three that I happened to enjoy reading, it’s a multi-modal facility in Santa Teresa, in other words the train is obviously taking the cargo from points north and points south and offloading onto trucks. That’s going to provide agility in the sense of logistics that perhaps wasn’t in existence before. Obviously, you know, Union Pacific today, a very, very large project as you said there, how did they beat the deadline that they had set for themselves because it was a huge project. Also, what kind of dollar investment did they make in this particular facility?

Michael Hissam:

Well when I first covered the story, I spent considerable time out there. I met with the Union Pacific officials, and I have to give credit to their media relations people who were there with the data that was needed. You know the original word was 2015, and as I went back through my notes there was actually a slight delay for whatever reasons back then, but once they broke dirt, they said “2015, okay.” They just started, and I talked to them and asked them how they pulled it off? They were saying, look once they got into this thing, they started doing the grading, the service roads and everything there, and as we’re speaking, recording here, in late April, they’re just completing the intermodal ramp in the fueling facilities. They’ve actually started something, so if you were to ask me, El Paso does have that nice weather. I’m in Pennsylvania, many cloudy days, El Paso, you may get 15 cloudy days a year, it can get hot but I was there when the dust blew, I was there on a tour going up and down the tracks with them and I mean for miles it was heavy equipment. They tackled it, and it’s nice to report that somebody was coming in early on a project and not coming up with excuses for delays. So they’re there, it’s about to happen.

Tecma Group of Companies:

Now you mentioned, that as an individual, that many, many years working in communications in the border area between Santa Teresa, El Paso, and Ciudad Juarez you’re dealing with three states and two countries there obviously—New Mexico, Texas, and the state of Chihuahua in Mexico and the US. What kind of economic effect do you see on that region, and on each one of those state entities?

Michael Hissam:

Well the economics just keep going and going and going, but specifically about the activity over there at Santa Teresa regarding Union Pacific and also in conjunction with some discussions I’ve had with state economic officials in New Mexico, they’re looking at an overall impact to the Land of Enchantment, New Mexico, somewhere around $500 million.
Remember as I mentioned earlier there was about $400 million infusion into the construction of this facility out there in the multi-modal facility in Santa Teresa area, and at last check they’re still standing behind those numbers. Now what I see is going beyond it. Flying over, which I have many times, you see this wide open space and you’re saying, “Geez, will it ever develop?” Well I’m starting to see a lot of potential. I Remember the first time I set foot in the area was back in 1979, and trust me the whole region is a totally different region now.
When they’re pegging in economics saying okay $500 million, what they’ve built and the few other ancillary things are saying no, no, no. It’s just starting, and I expect some good things to happen.
I want to take that thought a little bit further, Steve, about going further on economics. We’re talking about a quarter million, 250,000 or so of these inter-modal containers you mentioned, that’s on, that’s off and you start seeing the move into the supply chain. I’m just thinking if this thing comes to fruition, and it really goes economically as my gut tells me it will, it’s going to be quite an economic story out there.

Tecma Group of Companies:

Well that’s something when you talk about that kind of volume it can’t help but to have a positive impact on the economics of the region. What about international versus domestic activity related to Santa Teresa? What do you see happening on both sides of the fort?

Michael Hissam:

I see a lot happening vis-a-vis the border, and the economic activity.

There are some things that go international, and with the international you’re looking at things that commence say from Asia that can be unloaded eastbound. That’s a great opportunity there. You also have nearby, the offloading into the supply chain and so much of that will be going into Mexico. I’m seeing that supporting a lot of things. The international primarily, Asia to America, west coast ports onto rail, you see it in El Paso, we see the so-called cargo container stack, where it really picks up interesting the truck conversions because they’re going out on truck there, what else can one say with all that truck traffic? I think there’s something else that listeners need to keep in mind that, and I went back into history, you take a look at that Gadsden Purchase and the history books told us back in school, way back when, that they were thinking railroad, somebody, what is it? One hundred and fifty years ago, more than that, could see a possibility and is this really going to add to impedes it? There is no doubt about it. It’s just quite a story of growth, right now a lot of potential, but I’m seeing future growth, Steve.

Tecma Group of Companies:

Now with the growth obviously comes employment, and I’m sure that, I worked in New Mexico as the economic development director of an organization based in Las Cruces, New Mexico in the late ‘90s, and at that time Santa Teresa was pretty much just getting up on its feet. Today obviously there’s a lot more happening in that area in in the vicinity of the multi-modal facility in Santa Teresa. In addition to growth in Santa Teresa, I would imagine just across the other side of the border, in terms of manufacturing, we’ll see some things happen in San Jeronimo on the Mexican side. Would you agree with that, and, if so, what kind of employment do you see perhaps developing on that side of the border in San Jeronimo and on the other side in Santa Teresa? Can you give us a little bit on your thoughts with respect to that?

Michael Hissam:

It’s really a forecast and it’s an excellent question because we’re into the “who knows?”, but on the other hand, when one takes a look at the potential of the trends, you’re taking a great manufacturing center, which is in Ciudad Juarez, you’ve got great logistics—El Paso, you’ve got a lot of tech support—El Paso, you’re seeing so much recognition and based on what I’ve covered from Santa Fe, what I mean by that, that the state of New Mexico realizes the importance of the Santa Teresa area, and, exactly into your question, that there’s great economic opportunity.
From time to time I would get calls, hey Michael, there’s a new plant opening up or a new operation opening up in the Santa Teresa Industrial Park, and governor Martinez will be there. Okay, I’ve talked to her, I’ve talked to the head of economic development, John Varela, they are excited. Of course you can say that Governor Martinez is a bit of a homer in this case, she being from Doña Ana County and, that’s the Las Cruces area, she sees it too.

I’m saying look everybody sees what could happen, there’s probably a bit more logistically, and I’m sure you will ask me about about that but it can be done, but when it comes to jobs this whole thing could open up something on the western side of Ciudad Juarez, that would be San Jeronimo, and of course the supply chain. Remember, Mexico is the improving and supplying chain but especially in what I’ve seen in automotive it can not sub-source or supply 100% so hey, U.S., there are opportunities there and you’ve got to go for it and I can see a lot of those products coming in through that area, crossing and supporting, good things can be happening over there.

Tecma Group of Companies:

The main project again is Union Pacific but you’ve mentioned some of the things you’ve reported on in the past–a second railroad involvement, is there anything you can shed light on with respect to that?

Michael Hissam:

Yes and in a way I’m kind of chuckling a bit. Some time back I received a phone call saying, “Hey there’s going to be dedication of a railroad,” and I said, “Yeah I’ve been covering this Union Pacific thing,” and they said, “No, there’s another railroad out there,” and I said “Are you kidding, what?” Sure enough there is what is called a short line railroad, the Santa Teresa Southern Railroad and it’s out on the Verde Industrial Park, the Santa Teresa park that I mentioned earlier, the governor was out there, Governor Martinez, Secretary Varela, the governor of Chihuahua, everybody is there to help dedicate this thing, and what it does is this provides a rail service to any rail–served customer.

If there’s a spur going into your location then you have an opportunity to put on rail, which would be the short line Santa Teresa Southern, and Santa Teresa Southern has an agreement so that they can tap into the, as I understand it, to the Union Pacific yards, which are about 3-4 miles up the road so to speak, or maybe a little bit less than that.
So also in talking I think, Steve, it’s interesting because I did an extensive interview with the executives from the short line railroad, Santa Teresa Southern, and they’ve had their eye on this place for about 5 years. They saw something coming. I think a lot of people did as the great recession came to an end to get everything back on track. A lot of things came into place, New Mexico changed some of the rules concerning the weight of trucks entering that would enable improved economics. The whole thing comes together there it’s just part of what I would really say is a developing thing, boy is it going to be something to see up the road. But, yes, there’s another little railroad out there.

 Tecma Group of Companies:

What I would like you to clarify, and again having had experience years ago as an economic developer, a lot of industry had a difficult time finding feasible sites in which to locate because of the lack of rail spurs of the kind that you just mentioned. So, what I would like to ask you is that if, as a result of the second rails that we just spoke about being involved, will there be an opportunity or facility with which companies that need those spurs can set up industrial buildings in proximity to them to take advantage of them to move goods north and south?

Michael Hissam

You know I don’t have a 100% answer. I don’t have all the details, however in driving through that Verde Industrial Park, and having been there for a number of grand openings, the key word is quick to market.

I can see great potential for those to tie in and go from there. I’m sure that potential investors looking at locating there in that Verde Industrial Park zone, saying, “Hey, how can I tap into this?” Because, basically, the halfway across the continent from the western part at least it’s a strategic location.
If I were an investor I’d be saying “Okay, it now looks as though I have another very useful and economical opportunity for shipping.” As we all know when you take a look at the total cost of doing business, you’re always looking where are the economics and there’s a time and a place rail can do a great job. So yeah, I just see a lot of opportunity and for those who have not been to the area, the view, and you’re saying Santa Teresa , I say well wait a minute, that, Steve, looking literally seeing, literally three states and two countries with better than 2 million people.
Many people, especially here east of the Mississippi, have no idea of the magnitude of that metroplex, as well as the total economics which I believe are taking a serious run at about $100 billion dollars a year in trade, in the total U.S. trade half a trillion or something like that and you’re looking just in that spot , you’re looking about $100 billion and that’s not chump change.

Tecma Group of Companies:

Well, now that you’re going to have that improved infrastructure for logistics, obviously the biggest driver in the area is the maquiladora industry and, as a subset, shelter operations that work within the maquiladora industry, what do you see in terms of the growth of manufacturing in those two areas?

Michael Hissam:

I see a couple of things. First off it sounds like an “off the cuff statement,” “If you play your cards right you’re going to benefit.”
My view, pun intended, I’m looking beyond just that area. Let me explain and I will back up to the Ciudad Juarez maquiladora question. I have learned in covering this story that there’s quite a transformation going on in Mexico. We are seeing something called clusters. For example, Queretaro is into the aerospace air. Chihuahua picking up on air. There’s also medical, of course we see elsewhere in Mexico billions of dollars: Nissan, Volkswagen, Audi, everything. There’s a whole lot more activity so, when you have connections such as this, as well as if there’s a cluster of something associated with Ciudad Juarez, (of course that’s auto parts). What can the effect of this be? It all comes back to something I said a little while ago, it’s the total cost of doing business.

Now you take transportation is a subset, where the economics, this can be a great answer for certain manufacturers. I also like to focus on speed to market. The manufacturers I’ve talked to, the OEMs, demand speed there being the market from say the tier 1s or tier 2s. They want that component or subsystem “rapido” plain and simple. Anybody understands that in any language, they want it fast. This I think gives that whole area opportunities both ways—the maquiladoras in Ciudad Juarez to get their products out to market faster, or receive raw materials as needed. It just is speed to market both ways and I think this is really going to help the competitiveness of the region.

I did a little more research on the topic talk to a logists guru, down in Mexico, about logistics. His point is that rail is one of the quicker, and more assured ways in border crossing activity, especially north bound, because sometimes those lines can back up with trucks at border crossings. He said that rail offers some great opportunities there, and again, we’re getting into an area where both governments, business, everybody needs to work together to expedite the free and secure flow of legitimate business.

Tecma Group of Companies:

Well this has been an interesting discussion, especially learning the details about Union Pacific’s efforts and the existence of a very large multi-modal facility in Santa Teresa – San Jeronimo area that’s going to affect the entire region where the three states comes together with the two countries.

Many times when we do these podcasts we get questions that come directly to us, but what we’d like to do is refer them to the expert with whom we discussed the topic at hand. In this case, Michael, you’re very well informed on this project, if there’s somebody listening, and they’d like to question you directly with the details concerning it, how would they go about sending you a question or giving you a call to be able ask you about the details?

Michael Hissam:

I am also as a journalism professor. If the question needs additional detail, I will gladly and make the effortto contact additional sources. That I would do. I have a relatively easy email address. It is Michael.tnec@ymail.com. I always love to hear questions from your listeners, and I receive many of them from down there. In fact, I ecently helped moderate the Supply Chain Summit that Mexico now hosts. Sergio Ornelas and his team put on excellent content.

I’d gladly help your listeners in any way that I can. So I’m seeing a great future down there so play your cards right and don’t be afraid of success.

The Tecma Group of Companies:

That’s good advice for any endeavor. Thanks for joining us.

Photo Credit: Mike Willis

 

 

 

Share

Join discussion in this post

Get in touch

Fill out the contact form. One of Tecma’s team of trusted professionals will contact you promptly about advantages of manufacturing in Mexico.

Get in touch

Subscribe to the Tecma News Brief

This quarterly publication will be populated with content that is useful and relevant to readers that are contemplating Mexico investments, have operations already within the Republic, as well as to other individuals that have an interest in Mexico and its manufacturing sector.