Chihuahuan Frontier

Chihuahua City: The second best city to do business in Mexico 

Contenido

Gerardo Perez Castillo walks down Libertad Street in the historical section of Chihuahua City. At the corner, a traffic display informs him that he has 30 seconds cross the six lanes of Venustiano Carranza Avenue.

Perez is heading to his job at Foxconn, a company assembling cell phones for Motorola and one of the 80 foreign assembly plants operating in the city’s seven industrial parks.

Chihuahua City took solid steps to industrialize during the last 35 years as it let loose from the State’s traditional livestock and mining industries.

Today, 14,961 businesses of every industry operate in the city and its outskirts.

The reason: according to Mexican Cities-Competitiveness 2007, a study by the Economic Education and Research Center [CIDE – Centro de Investigación y Docencia Económica], Chihuahua is Mexico’s second most competitive city.
 
When Chihuahua’s transformation began, the city’s historic section mirrored the local economy: many of its buildings were mere ruins or derelict, and the others harbored ill-reputed cantinas with their wake of thefts, street brawls and prostitution.

Unemployment was rampant. In contrast, 400 kilometers north, Ciudad Juárez was raising as an important industrial magnet, where companies from all over the world established operations generating thousands of new jobs.

In 1973 a small group of local businessmen got organized to change the situation and created Chihuahua State Economic Development [DESEC - Desarrollo Economico del Estado de Chihuahua], a civil organization that set to design concrete strategies calling for the three levels of government to allow for an easier creation of new businesses in the city.

And they succeeded. The first international company arriving at Chihuahua City was Ford Motor Company, which opened one of the most advanced engine assembly plants of the time.

It was followed by other international firms like Honeywell, Lexmark, Lear Electric Systems and Goodyear.

That industrial thriving was aided by Luis Lara Armendariz, who saw an opportunity in the boom of foreign investment and created Parques Industriales de Chihuahua, a group that offers first-class industrial facilities to the most demanding foreign companies.

For a better service, he created another firm, American Industries, which provides customers with cost-reducing services as raw materials, suppliers, workers, supervisors, managers and accountants.

Essential tool

“A good deal of the city’s industrial and commercial success stems from a long-time state and local government collaboration regardless of which party is in power”, said Roberto Braham Velasco, the city’s economic development director.

For instance, Governor Jose Reyes Baeza Terrazas is from the Revolutionary Institucional Party, while Chihuahua City Mayor Carlos Borruel Baquera is from the National Action Party.

The State Industrial Development Department specializes in servicing companies from the electronics, aerospace and automotive industries, while the city’s Economic Development department focuses on IT.

Both agencies work together to offer investors all kinds of incentives.

Key to Chihuahua’s economic expansion has been the State Economic Development Act, designed to set up favorable conditions for companies to establish operations at the shortest possible time according to each region’s attributes.

For example, Ciudad Delicias, located in a livestock region, regulation favors development of the diary industry.

But no all investments come from abroad. Businessmen as Federico Terrazas Torres, president of Grupo Cementos de Chihuahua (GCC), don’t balk at venturing out to conquer other markets, as GCC did in [the rest of] Mexico, the United States and Bolivia, where the company sells 4 million tons of concrete products each year.

Another example is the Almeida family, who owns Interceramic, a company with five plants (4 in Chihuahua and 1 in Texas) producing slabs, tiles, furniture and bathroom accessories and a distribution network of more than 200 stores throughout Mexico and the United States.

Stable staffing

In Chihuahua City, the Regional Development Council [Consejo de Desarrollo Regional, by universities, business chambers and authorities], maps out an orderly growth for the city and monitors performance of the state and local governments.

The State government offers high-tech companies the Specialized Workers Training Center [Centro de Capacitacion para Obreros Especializados], which trains workers according to the industry’s most demanding requirements.

Taking part in that training are Universidad Autonoma de Chihuahua, Instituto Tecnologico y de Estudios Superiores de Monterrey, Universidad Regional del Norte and the Universidad Tecnologica de Chihuahua.

Business executives have incentives to move to the city, too. Or if they are just staying on a temporary basis, they can enjoy their stay: 4- and 5-star hotels, large hospitals, malls, golf courses, state-of-the-art theaters and restaurants.

Eduardo Villa Maciel, the city’s assistant director for investment, said the supply of qualified workers, labor stability and a low personnel turnover are magnets for investors.

“Companies look for workers and technicians who stay not just two or three months, but five or six years with the company. And here they find that without a problem”, he said.

The city has about one million people (825,000, according to INEGI, the federal statistics agency), with 40 per cent making up the economically active population, compared to the national average of 30 per cent.

According to the CIDE study, the city’s poverty level is lower than the national average.

“Up to 14 per cent of workers earn more than five minumum wages, compared to the national 7 per cent average”, Villa Maciel said.

Manufacturing and export industries are those affording the most jobs in the city, with 43,375 workers; they are followed by electric and electronics companies (14,642); automotive components (7,618); and aerospace (3,263).

Besides, many thousands more work in the commerce and services sectors.

And public works have turned the city into a developing tourist center.

“We were a very expensive tourist destination for many Mexicans, because there were only a few flights available”, said Enrique Toledo García, state tourism director.

That changed with low-cost airlines. In 2006, 763,000 passengers arrived in the city, and 854,000 last year. That means a growth rate of 16.5 per cent in just one year.