Auto industry dominates Texas-Mexico border trade

By DAVID HENDRICKS
STAFF WRITER

Editor's note: This article is part of an occasional series examining U.S.-Mexico trade and the economy along the Texas-Mexico border.

SAN ANTONIO — Anyone wondering which industrial sector is the most important in U.S.-Mexico border trade only has to see what the double-stacked freight cars are carrying on the rail lines parallel to Interstate 35 between San Antonio and Laredo.

Newly assembled cars and car parts, especially stacks of chassis, are the most visible and tell the story, even if they only show a fraction of what occurs along the U.S.-Mexico border.

Automotive investments are continuing despite Mexico's widely publicized violence.

Border business leaders uniformly said Mexico's drug-cartel turf wars and organized crime have not been barriers to auto industry activities and auto border trade.

"We lost a few factories that did not survive the U.S. recession, operations that were purchased or merged. But Reynosa last year added 4,000 jobs, even with the violence, at maquiladoras in all categories," said McAllen Economic Development Corp. President Keith Patridge.

"What violence? What organized crime?" asked Roger Creery, in an interview before recently resigning as executive director of the Laredo Development Foundation.

"What I can say is this: We've had several announcements of plant expansions. Foreign investments have been made in Nuevo Laredo and in central Mexico. Based on the amount of those foreign investments, business growth has not been negatively impacted by societal issues going on in Mexico," Creery said.

A powerful region
The Texas-northeast Mexico auto-manufacturing region has emerged over the past decade as the glue connecting automakers with plants in Detroit and the U.S. South to the concentration of assembly plants in central Mexico, such as those in León and Toluca and as far south as Puebla.

The auto supply chains run north and south, from Mexico to Canada, like an electric current, day and night. More of the auto industry flow passes through Laredo than any other U.S.-Mexico port.

In 2010, about $114 billion in international freight crossed through Laredo. Nearly half of it was auto-related, Creery said.

The next-largest category, mainly electronic products and components, amounts only to one-fourth the amount of auto freight, Creery said.

In 2008 and 2009, the U.S. recession hit the auto industry particularly hard. Laredo saw annual declines of 15  percent to 18 percent in auto freight processed through its port those years, Creery said. But the auto freight volumes recovered in 2010 and are on pace for a 10 percent increase in 2011.

Laredo's vast logistics operations of truck and rail bridges and Union Pacific Corp.'s rail yard handle freight for assembly plants and parts factories from central Mexico to Canada.

Bexar front and center
Bexar County has become the leader for the Texas-northeast Mexico auto corridor. The county's Economic Development Department in 2008 formed the Texas Mexico Automotive SuperCluster. The department since has marketed the region's workforce and location globally for further auto industry investments for the region.

San Antonio became an automotive city in 2006 when Toyota Motor Co. opened an assembly plant for the Tundra pickup truck models and expanded with production of the Tacoma pickup last year.

The employment numbers in the region are considerable, according to the latest numbers from the Texas Mexico automotive group.

More than 12,800 assembly plant employees work in two passenger-vehicle plants in Texas and three in northeast Mexico, operated by General Motors Co., Chrysler and Toyota. GM operates a plant in Dallas and two in Mexico. Chrysler operates a pickup truck assembly plant near Saltillo, Mexico, and Toyota's pickup truck plant is in San Antonio.

Another combined 5,700 assembly workers are employed at heavy vehicle assembly plants operated by Peterbilt, Navistar, BAE Systems, Marcopolo and Daimler-Freightliner in the same region.

More than 130,000 workers are employed at supplier manufacturing plants in the region.

Bexar County Economic Development Executive Director David Marquez said North American-based automakers and suppliers continue to study the region for further investment.

"The supply chain is recovering" along with the U.S. economy, he said.

Supplier hubs
Texas-Mexico border cities all have automotive supplier clusters, from El Paso-Ciudad Juarez to McAllen-Reynosa.

Thanks to being a logistics hub, Laredo and Nuevo Laredo have attracted a handful of supplier operations. Maryland-based Bowles Fluidics, which makes windshield washer fluid nozzles and hoses in a Zacatecas, Mexico, plant, distributes its products from a Laredo warehouse. MBtech, once associated with Mercedes-Benz, operates an automotive Laredo test track. In Nuevo Laredo, supplier plants manufacture radiators, heavy-equipment parts, auto seat treatments, among other original equipment parts.

McAllen's efforts to develop an auto industry footprint also have been successful. Over the past 23 years, the McAllen Economic Development Corp. has recruited 60 auto suppliers, mostly in Reynosa, whose clients cumulatively reach all North American and European automakers and many of those in Asia.

"We have a significant base," McAllen's Patridge said. "Site selection consultants have told us, 'We have never seen an area with so many suppliers that didn't have an assembly plant.' "

But landing an assembly plant has been elusive. According to a 2009 Dallas Morning News article, Mc-Allen lost a 2006 competition for a Kia Motors assembly plant to a site in Georgia.

"We were close on one, but there's another one we are still in the running for, although the project is not active now," Patridge said. "I'm not going to give any names."

Global impact
The recent Japan disaster could have a lasting effect in Texas and North Mexico.

The March 11 earthquake and tsunami, which closed some of Japan's auto parts factories and disrupted some North American assembly operations, caused auto- makers to rethink their supply chains, Patridge said.

The Japan disaster "is changing perspectives and strategies on where to put suppliers or plants to avoid disruptions from natural disasters and political situations," Patridge said. The auto- makers are more interested now in moving away from single-source suppliers and spreading the risk, he added.

More suppliers based around the world could invest in the Texas-North Mexico corridor.

Bexar County and the Texas Mexico Automotive SuperCluster have marketed the Texas-northeast Mexico region to India and China.

"This can be a great pipeline in the future" for investment, Marquez said.

dhendricks@express-news.net