Brownsville Economic Journal (Winter 2012 issue) by Brownsville Economic Development Council

Vol. 1, No. 2 / Winter 2012

Economic

Opportunity

Borderplex reaches out to attract emerging South American industries

Esco Marine

Foreign investment

Moving forward

Automotive industry

Shipbreaker puts Brownsville on the map in the ship-recycling industry TxDOT announces more funding for I-69 project

TS-IA alliance will travel to China on economic mission

Brownsville car dealerships expand to attract manufacturers

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Brownsville targets South American emerging industries in an effort to bring them to the region

On the Cover: Panama, Colombia, Ecuador, Peru, Chile and Argentina are six of the emerging industries in Latin America that have achieved success. Design and illustration: Jorge I. Montero

5 10

Esco Marine helps Brownsville own the U.S. naval ship-recycling industry.

SpaceX nears site location decision for launch area; prepares second scoping meeting for early 2013. The West Rail Bridge, the first built by U.S. and Mexico in 100 years, is near completion.

Get your motor running: Brownsville car dealerships expand to attract manufacturers

PRESIDENT’SCORNER

Forbes ranks Brownsville MSA No. 7 in job growth

Jason Hilts

President & CEO

Forbes Magazine ranked the Brownsville MSA No. 7 in Job Growth in the nation, a long way from when this area was ranked on the bottom half of the 300 MSA’s for job growth and creation. Among the many reasons behind the Brownsville Borderplex’s growth, this region of 1.2 million has a diversification of attributes which are not present in other medium size cities in the United States. Beginning with infrastructure, not many cities have access to six modes of transportation, which includes highway, international rail, access to barge and deep water traffic, air freight and of course, international bridges into Mexico. The area also is getting ready to post I-69 shield signs along US77 and in the near future, along FM511 and SH550 toward the Port of Brownsville. The growth in our job market also has been boosted by the international presence of such major manufacturing facilities as Singapore-based Keppel AmFELS, which has landed several major contracts and added hundreds of jobs to its yard at the Port. The ship recycling industry also is picking up at the port in addition to the maquiladora industry across the Rio Grande in Matamoros. In turn, the added businesses growth on the Mexican side is spurring logistical and warehousing activity in Brownsville. Our unemployment rate has decreased in recent months by 2.5 percent. Forbes Magazine projects our region to continue on a track of 3 percent annual job growth, cost of living continuing to be one of the most affordable in the United States, and also climbing on its current No. 64 ranking of Cost of Doing Business and No. 71 Best Places for Business and Careers. Like the old adage states … We’ve come a long way. But I like to say that the best is yet to come. EJ

Brownsville Economic Journal Winter 2012

EDITOR IN CHIEF Gilberto Salinas gsalinas@bedc.com

COPY EDITOR Sylvia Rodriguez srodriguez@bedc.com

CONTRIBUTING WRITERS Jorge I. Montero jmontero@bedc.com Tony Vindell

COVER DESIGN & LAYOUT Jorge Montero jmontero@bedc.com PHOTOGRAPHY BEDC Editorial Team Brad Doherty SOCIAL MEDIA Michelle Lopez mlopez@bedc.com

CORPORATE CONTACT Lizzy de la Garza ldelagarza@bedc.com CIRCULATION Sylvia Rodriguez srodriguez@bedc.com

ECONOMIC JOURNAL The Show KVEO Channel 23 (Cable Channel 8) In High Definition where available 11 a.m. CST Sunday mornings, monthly, check website for listing EDITORIAL OFFICE Brownsville Economic Development Council 301 Mexico Boulevard, Suite F1 (ITEC Campus) Brownsville, Texas 78520 Tel. (956) 541-1183 / Fax: (956) 546-3938 VISIT US ONLINE www.bedc.com

FROM YOUR MOBILE DEVICE

The Economic Journal of the Brownsville Borderplex is published on a quarterly basis and distributed according to the fair-use doctrine of U.S.

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ESCO MARINE ship-breaking

GUEST EDITORIAL

yard in Brownsville

Photos courtesy of Esco

Esco is one of five large ship-breaking operations clustered at the end of Brownsville’s 17-mile shipping channel inland from the Gulf.

How this Texas town owns the U.S. Naval ship-recycling industry

Welcome to Brownsville, where a thriving ship-breaking business makes old steel new again

n a recent Friday morning, workers in the Esco Marine shipbreaking yard in Brownsville, Texas, were dismantling a 1944 U.S. Navy repair ship. This was the latest arrival in a BEDC.com

steady convoy of aging military vessels, Maritime Administration ships, and merchant boats that have docked here, as a final stop, for years. Here in Brownsville, off the southern tip of Texas near the Gulf of Mexico, these old vessels get a kind of “decent retirement,” in

the words of Esco's CEO, Richard Jaross. This means asbestos and other hazardous materials will be cleaned out. Some of the salvaged equipment will wind up on eBay. And then thousands of tons of steel will be stripped and recycled and sent to smelt shops and steel mills a few hours away by rail in Monterrey, Mexico. Much of it will eventually return to the U.S. as remnants of old war cruisers and merchant marine ships reborn as auto parts and appliances. Winter 2012

Brownsville’s role in this process- ship-breaking, not to be confused with ship-building- has given the border city of 200,000 with an Hispanic majority a unique economic niche. Esco is one of five large ship-breaking operations clustered at the end of Brownsville’s 17-mile shipping channel inland from the Gulf. And there are only eight companies certified to dismantle Navy ships in the country. This fall, the Navy is contracting three decommissioned Cold War-era super aircraft carriersBrownsville Economic Journal

Brownsville has become the country’s shipbreaking hub thanks to its port and the affordable land around it, its proximity to steel-processing plants further down the food chain, and its work force

and the Constellation--and they will likely take their retirement here. Those aircraft carriers everyone has been waiting for could each contain 60,000 tons of scrap metal (as well as the promise of hundreds more cutting and welding jobs). By law, none of those Navy ships can be sent for scrapping overseas, which is why this work continues in Brownsville when so much other recycling and salvaging has gone abroad (just look at what happens to your discarded computer and cell phone). The U.S. government, for obvious reasons, doesn’t want a Chinese company dismantling the Navy’s fleet. After all, the same is true of ships and circuit boards and game consoles: You can learn an awful lot about something by taking it apart. Brownsville would represent a dramatically different destination from some of the Navy’s previous retirement plans to “recycle” ships by

sinking them at sea, in the hopes of creating artificial reefs. “Every warship I’ve taken apart has had a story to it,” Jaross says. “They all have meaning because the lives of many people were put into building that ship, maintaining it, and fighting at sea with it.” Esco Marine has recycled the U.S.S. Des Moines, a heavy cruiser built at the tail end of World War II, as well as a twin-hulled submarine rescue ship, combat support ships, and troop transport vessels. Brownsville has become the country’s ship-breaking hub thanks to its port and the cheap land around it, its proximity to steel-processing plants further down the food chain,

Brownsville Economic Journal Winter 2012

and its work force. Bay Bridge Texas, which relocated earlier this year to Brownsville from Chesapeake, Virginia, cited the local labor pool among the factors in its decision. “The rest of U.S. has a scarcity of welders,” says Gilberto Salinas, executive vice president of the Brownsville Economic Development Council. “For some reason, our welders don’t want to leave town.” Jaross cites one other reason why Brownsville dismantles what others construct. “You have a community here that welcomes the business. A lot of places, if a scrap yard comes in, they don’t want that there,” he says. “No one wants it in their community. It’s like having a coal operation.”

Economic development campaigns are more often meant to bring in gleaming biotech campuses. Ship-breaking, however, has very little in common with the coal industry. “This is a business,” Jaross says, “where we’re recycling things and creating resources for the future.” In a sense, then, these are green jobs. Salinas estimates that, in all, the steel industry tied to the port makes up as much as a quarter of the city’s economy. All of the steel coming to town in the form of hulking Navy vessels (as well as oil rigs and other ships) has made the port of Brownsville the third largest importer and exporter of steel in the country. “San Francisco has Silicon Valley, New York has everything, Austin has their little niche,” Salinas says. “But here we are. Yeah, there’s Pittsburgh, but then there’s Brownsville, Texas, where we have been and continue to mold our lives based on steel.” This article was written by Emily Badger and appeared in the October edition of Fast Company Magazine BEDC.com

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Binational trade

LOGISTICS

Cargo aboard specific Mexican trucks and bound for the United States will soon be inspected by American officials south of the border.

New cargo agreement

Photo by Brad Doherty

Cargo aboard specific Mexican trucks and bound for the United States will soon be inspected by American officials south of the border as part of new cargo agreement.

U.S. and Mexico joint iniciative would allow transport to avoid long waits at ports of entry Written by Jorge I. Montero

According to a recent story in the Texas Tribune, cargo aboard specific Mexican trucks and bound for the United States will soon be inspected by American officials south of

the border. This will allow transport to avoid long waits at ports of entry. The announcement was made by Mexico’s ambassador to the United States, Arturo Sarukhan, during his visit to San Antonio where he attended the NAFTA20 conference held there in November.

Brownsville Economic Journal Winter 2012

The Tribune reported that Sarukhan said the initiative would be a giant step toward eliminating hours of long waits for cargo companies approved for the program. “Whatever is sent over the border does not have to stop,” he told a panel at the NAFTA20 conference. “And this is going to be huge.” The exact date and port of entry sites where the program is set to begin are unknown, but Sarukhan mentioned that the initiative would be offi-

cially announced soon by both countries. According to the Tribune, Sarukhan said that the post9/11 environment has led to the gridlock witnessed at most land ports because cargo inspections are not “intelligence based” but instead indiscriminate. The Mexican diplomat added that companies have to apply and be vetted by both governments before they are approved to be part of the new program. EJ BEDC.com

LOCALINDUSTRYCORNER

Building our human capital, positioning ourselves for greater business development

Lizzy de la Garza

Dir. of Business Retention & Expansion

BEDC.com

Education and economic development are interdependent. Our community cannot develop and grow if the two aren’t working hand in hand. Educators need to know what kinds of careers and occupations are in demand so that they know how to adjust curriculums, what areas of study to focus on, and what kinds of skills they need to cultivate amongst their students. Employers need to realize that in supporting educators via internships and mentorships, they are investing in the future workforce and building their human capital, which will yield a large pool of qualified employees, hence a high return on investment. For many years the business community and the education system have acted as strangers, working in silos and at times even oblivious to the other’s world. At the surface it’s understandable because at the end of the day each has their own goals and metrics that hold them accountable. However, if you take time to assimilate the work at hand and focus on the ultimate goal, you realize that the two are part of the same world and need each other to be successful. With that said, the BEDC is being very proactive in regards to educational and workforce initiatives. Over the past year, BEDC has been an active player in the work of Partners for Postsecondary Success (PPS). Many would side with Kenny Rogers and agree that, “You got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.” However, the Brownsville community also knows “when to go All In,” and that is what many community leaders, including the BEDC, have committed to do. “All In” is a community-wide effort on a mission to double the number of young adults with postsecondary credentials with labor market value by 2025. “All In” is about advancing education, creating careers, and transforming Brownsville. The BEDC and the Greater Brownsville Incentives Corporation have also supported

RGV LEAD (Linking Economic & Academic Development, formerly known as Tech Prep) with the necessary funding to launch and manage the Brownsville Career Center Project. RGV LEAD relies on the business/education connection to design job-specific curricula to prepare students for occupations currently in demand and those projected to be in demand. The Project has been identifying targeted occupations and correlating those occupations with BISD, TSC, TSTC, and UTB programs of study. Recently, the BEDC was invited to present at their annual conference, which was an invaluable opportunity for both sides. Many educators were not aware of the business development or projects in the pipeline, so hearing about career opportunities for their students was an exciting, eyeopening experience. The BEDC has been honored to be a panelist at different events, including the Regional Workforce Summit and the Texas Workforce Commission Annual Conference. Having heard about the great partnerships in Brownsville and our efforts to attract SpaceX, they invited the BEDC to make a presentation, in which we spoke about the paramount implications of SpaceX and how Brownsville is using its local resources and assets to leverage an emerging aerospace industry. As a community we need to build and continue to enhance our infrastructure, particularly our human capital, in order to retain, expand, and attract new business. Other panel speakers included representatives of XCOR Aerospace, Boeing Company, Texas Engineering Extension Services, and Texas Workforce Commission. Plain and simple, educators need business because these are the people that provide career opportunities for their students. Businesses need educators because they depend on them to produce an educated, skilled workforce. Working together we can build bridges to success. Winter 2012

Brownsville Economic Journal

SPACE

Aerospace company makes advances in construction of launching area 10

Brownsville Economic Journal Winter 2012

By Staff Reports

BEDC.com

Eyeing location

SpaceX nears site location decision for launch area; Cameron County among prospects

AEROSPACE INDUSTRY

were considered but SpaceX narrowed the list down to 1, Cameron County. "It’s exciting that we made it this far," Salinas said. SpaceX already has an active launch pad at Cape Canaveral Air Force Station in Florida and is developing a new launch site at Vandenberg Air Force Base in California. The company also operates a rocket development facility in McGregor, Texas. In September, The Brownsville Herald reported that SpaceX has been purchasing property in Cameron County since June. According to information The Herald found in public documents, the company has acquired at least three lots in the Spanish Dagger Subdivision, located on the southwest of Laguna Madre Beach Subdivision, under the name Dogleg Park LLC. That is besides the property that SpaceX is contemplating for the launch site. “Though SpaceX’s purchase of real estate in the area is great news, in no way does it mean they have made Brownsville the lone finalist for a launch site,” Salinas told The Herald, adding, “It is not uncommon for major corporations to purchase real estate during the site selection process in different locations before their final decision.” Salinas noted that SpaceX continues to regularly visit the area, meet with local leadership and conduct their due diligence of the potential site. EJ

Buying land

Courtesy photo

According to the Federal Register, SpaceX proposes to build a vertical launch area and a control center to support up to 12 commercial launches per year.

t could literally be out of this world!

Cameron County is one of three sites in the running for a rocket launch site. Space Exploration Technologies, better known as “SpaceX”, is eyeing a location near Brownsville for future launches of the Falcon 9 vehicle and other commercial space vehicles. “It’s being called the commercial Cape Canaveral," said Gilbert Salinas, executive vice president of the Brownsville Economic Development Council. The proposed area is privately owned. It’s located at BEDC.com

the eastern end of State Highway 4, about three miles north of the Mexican border on the Gulf Coast and about five miles south of Port Isabel and South Padre Island. The area is an undeveloped zone. It’s an empty field full of sand and grass. Authorities say the wildlife most vulnerable could be sea turtles, snakes and sandpipers. “That is what they need. They need a whole lot of nothing out there to launch,” Salinas said. The Brownsville Economic

Development Council, Governor Rick Perry’s office, city and county officials have been working with SpaceX for over a year. The project was kept secret until early April when details of the project emerged in a Federal Aviation Administration (FAA) document detailing an environmental review that must be completed before any construction is done. According to the Federal Register, SpaceX proposes to build a vertical launch area and a control center to support up to 12 commercial launches per year. “The BrownsvilleCameron County area is the only site in Texas under consideration,” Salinas said. The other two sites are in Florida and Puerto Rico. Up to 14 sites in Texas Winter 2012

Brownsville Economic Journal

Scoping meeting

SpaceX ready to move project forward; expects to have environmental impact results in December

AEROSPACE INDUSTRY

Environmental study near completion Written by Jorge I. Montero

A second scope meeting on the proposed launch site for SpaceX near Brownsville is scheduled to occur early next year after the Federal Aviation Administration’s Office of Commercial Space Transportation releases the findings of an environmental impact statement, which they expect to do so by the end of December. Besides the scoping meetings, the FAA requires an environmental impact statement “before anything could be done on the project.” The EIS process could take at minimum through the end of this year. The company plans to make an announcement in regards to a site location after the FAA’s decision on the EIS. After the FAA develops and releases the Draft EIS, it will open a public comment period of 45 days, during which they will hold a public hearing on the draft. The FAA will then address the comments made on the Draft EIS and will develop and release a Final EIS. The project is at the hands of the FAA as it continues to collect data from federal public agencies in regards to risks which would need to be mitigated in order to build a launch site near Boca Chica beach. The first public scoping meeting was held on May 15 at

Courtesy photo

Besides the scoping meetings, the FAA requires an environmental impact statement “before anything could be done on the project.”

the International Technology Education and Commerce Center in Brownsville where more than 550 people showed at the event and many of which personally met the SpaceX delegation of six which were on hand for questions about the project. Of the 550, about 75 signed up to speak, of which 73 spoke in favor of the project, one neutral and one negative. In April, the site selection of a proposed launch site for SpaceX became public after a notice of a public scoping

Brownsville Economic Journal Winter 2012

hearing in Brownsville was posted with the U.S. Federal Register. The Notice of Intent to conduct an Environmental Impact Statement was filed by the FAA’s Office of Commercial Space Transportation. Since, Brownsville has received considerable national attention and is being monitored closely by its competitors for the project – Puerto Rico and Florida. The notice states the site would support up to 12 commercial launches per year, including two Falcon Heavy

launches and ten Falcon 9 launches. Landing a launch site would create 600 jobs, infuse upward of $50 million in payroll to the region, help attract other companies in the aerospace industry, and ultimately, positively change the perception of Brownsville. It’s an exciting time for Brownsville residents but people need to support the project 100%. “If the people in Brownsville come out and say not in my backyard, that just might kill the whole deal. … The owner of the company has told us that he prefers to go into a community that would appreciate this,” Salinas said. EJ

BEDC.com

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Spacecraft tracking

AEROSPACE INDUSTRY

GBIC backs STARGATE

Radio frequency technology facility receives seed money to initiate research project headed by UTB professor

Spacecraft tracking facility on horizon for Brownsville

Brownsville might be destined for the aerospace business whether SpaceX builds a rocket launch site here or not. STARGATE, which stands for “South Texas Spacecraft Tracking and Astronomical Research into Gigahertz Astrophysical Transient Emission,” has a 90 percent chance of becoming a reality, according to Fredrick Jenet, associate professor of physics and astronomy at the University of Texas at Brownsville and director of UTB’s Center for Advanced Radio Astronomy. STARGATE is Jenet’s concept for a radio frequency technology facility that would give students and faculty access to cutting-edge equipment with commercial as well as academic applications, including satellite and spacecraft tracking. It would be located at Boca Chica in the same general area SpaceX is considering for a launch site. While the facility clearly would improve Brownsville’s odds of attracting SpaceX, STARGATE could go forward without it. At the same time, Jenet is negotiating with SpaceX — and other high-tech firms — about getting STARGATE built, he said. The Greater Brownsville Incentives Corp. at its Oct. 18 board meeting approved $500,000 in seed money for the STARGATE project. According to minutes from the meeting, the board stipulated that the approved funds be released “once a Memorandum of Understanding was executed between (UTB) and Space-X and once invoices were provided for the vari-

Brownsville Economic Journal Winter 2012

ous development stages (including purchase of land) of the project.” “This type of radio frequency technology research center is the type of thing that would make Brownsville very attractive to any high-tech company, including SpaceX,” Jenet said. “A facility like this is going to be extremely attractive to hightech companies — to be able to see that this work is going on down here: Yes, we do have high-tech workers that we are training and, yes, they are working with cutting-edge equipment. And we’re also going to be making scientific discoveries.” The main purpose of STARGATE is to build the local technology base by creating a tech-savvy workforce. UTB’s radio astronomy center works with students from high school through college, Jenet said. STARGATE is a logical extension of the center’s existing programs, he noted, including the Arecibo Remote Command Center, which gives students and faculty in Brownsville access to and control of Puerto Rico’s Arecibo Observatory, the largest single-dish radio telescope in the world. Jenet said UTB’s radio astronomy program is an effective magnet for attracting students into STEM fields — science, technology, engineering and math — and that the skills they learn are highly transferable to other areas of academia and industry. STARGATE would also be run through the radio astronomy center. He praised board members with GBIC and the Brownsville Economic Development Council, which advises GBIC, for “insight and forethought” in their support of funds to help build STARGATE, the first phase of which likely would cost between $4 million and $6 million. “Getting the initial seed money was really great,” Jenet said. “We still have more fundraising that needs to happen. I’m posi-

tive we will be able to pull all this together in the near future.” Gil Salinas, BEDC executive vice president, said STARGATE would be one of just a handful of such facilities in the United States and would enhance his organization’s ability to lure high-tech companies to the Brownsville region. “It’ll just make our place more attractive, and it will strengthen our position,” he said. “It’s perfectly in line with the types of companies we’re trying to recruit. If you start connecting the dots, you can see we’re trying to lay a foundation and develop an aerospace cluster from scratch. Not many have done that. This is a project that would be beneficial to multiple companies in the aerospace industry.” Jenet said that, if built, STARGATE would send a powerful message that things are changing in the Rio Grande Valley. “That’s also one of the strong pluses, is that it’s a high profile thing that sort of redefines what it means to be coming from the Valley,” he said. “I think you can probably tell it’s going to play a key role in effecting a lot of changes here in South Texas.” Jenet described UTB’s efforts to develop STARGATE and the drive to land a SpaceX launch site as “parallel but coordinated.” Final word on STARGATE should come down soon, he added, expressing confidence that it indeed will come to pass. “We’ll definitely know by early next year if this is really going to happen,” Jenet said. “I think it will. I would start betting now.” This article was written by Steve Clark and appeared in the Tuesday, November 27, issue of The Brownsville Herald. BEDC.com

Moving forward

INFRASTRUCTURE

Approval of an additional $140 million for various projects along interstate will improve roadway

TxDOT announces more funding for I-69 route Written by Jorge I. Montero

The Texas Department of Transportation announced the approval of an additional $140 million for various projects along the I-69 route in the state, bringing related funding to date at more than $600 million. The I-69 Texas route is planned to run from the Rio Grande Valley, and Laredo to Texarkana and occupy the footprint of existing highways, including US 59, 77, 84 and 281 and SH 44. In addition to a stretch of US 77 in South Texas designated as I-69 in 2011, about 80 miles of US 59 in the Houston and five miles in the Texarkana area are being reviewed to determine if the sections meet interstate specifications. The stretch of US 77 from Brownsville to Corpus Christi in South Texas is designated as part of the I-69 corridor. In South Texas, $40 million in funding will go toward construction of a relief route in Premont on US 281. On US 77, $60 million is dedicated to the design-build project from Driscoll to Kingsville. In Laredo, $9 million will be used to construct an overpass on Loop 20. Elsewhere in the state, a total of $17 million has been allocated to develop US 59 relief options at Lufkin, Nacogdoches and Corrigan. In the Liberty County area, $6 million was allocated to improve US 59 to a controlled access facility. Another $12 million will fund frontage roads and ramps and the removal of crossovers on US 59 from Loop 463 to US 87 in Victoria. Also, $6 million has been allocated to US 59 projects in Fort Bend and Wharton counties. These improvements were recommended by the citizen planners of the I-69 segment committees. “The citizen planners volunteering on the Segment Committees have been vital to this community-driven planning process. These citizen-driven reports and project priorities give direction to TxDOT on how we should continue moving forward on developing I-69 Texas,” said Texas Transportation Commission Jeff Austin, III. “This report validates the need for I-69 and provides a helpful outline to make it a reality within our near future.” BEDC.com

The I-69 corridor will improve the safety of the communities along the interstate and help alleviate the increased amount of commercial and private vehicular traffic that has risen in those parts of the state due to the growth in population registered during the last decade. Recent statistics reflect that Texas grew by 4.3 million people between 2000 and 2010, an increase of 20.6%. The counties along the I-69 Texas system grew even more, by 23%, and have 8 million residents. Some counties along the I-69 system had population increases over 50% from the 2000 to the 2010 Census. In the last decade, Brownsville’s population has grown by 25.3% and over 175 thousand people call the city home. In that same period of time, the Rio Grande Valley has reached a population of more than a million and a quarter, a 29.2% increment. Ports along the Texas Gulf Coast- such as the Port of Brownsville- and inland ports on the Texas-Mexico border anticipate a dramatic increase of cargo in the coming years. EJ

Photo courtesy of TxDOT

Winter 2012

Brownsville Economic Journal

Regional mobility

INFRASTRUCTURE

The first international rail bridge built by U.S. and Mexico in 100 years is near completion

Courtesy photo

M Green light

Mexico announces West Rail bridge ready for operations Written by Jorge I. Montero

Brownsville Economic Journal Winter 2012

exican President Felipe Calderon visited the Borderplex area in November to receive an update on the construction of the Matamoros Railway Bypass and the West Rail Bridge, where he announced that the new bridge is now ready to begin operations. It is the first international rail bridge built by the US and Mexico in 100 years. “It gives me great pleasure to make this visit and confirm that, finally, this Matamoros-Brownsville International Rail Bridge is completely finished,” Calderon said during a speech he made at the foot of the bridge in Matamoros. “It is a very important accomplishment for our bilateral relations”. The West Rail Bridge, which was constructed to reduce traffic congestion along the rail lines that run through Brownsville and Matamoros, will now generate greater

Mexico’s President Felipe Calderon speaks during his visit to Matamoros in November to oversee the construction of the rail bridge.

competitiveness and economic development in the Borderplex area. “This bridge will boost progress in a powerful way, not only in Matamoros, but in Tamaulipas (state) and Mexico,” Calderon said. “This project benefits train users in Mexico, primarily for cargo, because in those trains we transport the products that we Mexicans export, among others, many products for which we are leaders at the global stage.” Calderon stated that some of the products where Mexico leads in exports worldwide include the manufacturing of smart phones, plasma screens, and automobiles. Much of that merchandise is shipped by train, he said. Through September, commerce between US and Mexico totaled about $369 billion, according to WorldCity, a media company which tracks global trade partners. The Mexican president was accompanied by Dionisio Perez Jacome, Mexican Secretary of CommBEDC.com

Interoceanic Highway

The Federal Highway 40 stretches across seven states in Mexico. Once complete, it will reduce from 20 to 12 the hours it takes to travel the 750 miles from Mazatlan, in the state of Sinaloa, to Matamoros/Brownsville.

UNITED STATES

TEXAS

TORREON DURANGO MAZATLAN

BROWNSVILLE MONTERREY SALTILLO

MATAMOROS

MEXICO

Courtesy photo

Calderon inaugurated the Matamoros-Monterrey Bypass, or Libramiento Matamoros-Monterrey, a highway loop that connects the Matamoros-Reynosa Highway with the Monterrey-Reynosa Highway in Reynosa.

unications and Transportation, Tamaulipas state Governor Egidio Torre Cantu, Matamoros Mayor Victor Alfonso Sanchez Garza, as well as other state and federal officials. Perez Jacome mentioned that the Railway Bypass consists of a main road of 6.4 miles (10.3 km), and buildings that will house terminals and connections to the Monterrey-Matamoros rail line. The project also includes the construction of a rail yard with 12.6 miles of rails (20.3 km) a capacity to store 608 freight cars “The infrastructure of communications and transportation repreBEDC.com

sents a strong push towards social wellbeing and for economic growth. The foods, products and the raw materials necessary for their fabrication reach our homes through the different modes of transportation,” Perez Jacome said. “Here, in the border with the US, it is important to have efficient means to transport people and goods. Matamoros is the big door for land commerce with our neighbors,” he added. In total, the bypass and rail bridge will cost Mexico a little over $73 million (955 million pesos). The bypass project is 65% com-

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Mexican highway to connect the Borderplex with the Pacific Coast Written by Jorge I. Montero

As part of his trip to Matamoros, Mexican President Felipe Calderon inaugurated the MatamorosMonterrey Bypass, or Libramiento Matamoros-Monterrey, a highway loop that connects the Matamoros-Reynosa Highway with the Monterrey-Reynosa Highway in Reynosa. The Matamoros-Monterrey Bypass construction, which consisted of widening a stretch of 5.3 miles (8.6 km) of the existing highway from 4 to 8 lanes, is part of a much more ambitious endeavor the Mexican Department of Communications and Transportation is undertaking: the construction of the Mazatlan-Durango highway, which is expected to be finished during the first part of 2013. The Mazatlan-Durango road is the final piece of the Mexican Federal Highway 40, the East to West corridor that connects Mexico’s West Coast and the Pacific Ocean to the Gulf of Mexico and the Brownsville-Matamoros BorderPlex. The road, also known as the “Interoceanic Highway”, stretches across seven states in Mexico. Once complete, it will reduce from 20 to 12 hours the time to travel the 750 miles from Mazatlan, in the state of Sinaloa, to Matamoros. “The road that we are opening, the MazatlanMatamoros (highway), is going to transform the northern part of the country,” said Dionisio Perez Jacome, Secretary of Communications and Transportation, during his visit to Matamoros. Mexican authorities said the Matamoros-Monterrey Bypass is part of the main axis of the MazatlanMatamoros highway. The region will benefit primarily from better mobility, and will save manufacturers time and costs of operation by speeding up the shipment of goods. It will also position the Borderplex area as an ideal location for produce distribution, among other goods, from Mexico into the United States. Sinaloa is a top Mexican producer of large volumes of food year round exporting grains, vegetables, and fruits. According to Sinaloa’s Department of Economic Development, the state produces 30% of the total food production in Mexico alone. EJ Winter 2012

Brownsville Economic Journal

Port of Brownsville could turn to P3s to upgrade facilities

Calderon oversees West rail bridge project Continued from Page 17

The Port of Brownsville in Texas is looking to upgrade its port facilities and it may look for private partners to help accomplish that goal. “There are less federal dollars out there,” said Eduardo Campirano, port director and CEO. “We have to look at the private sector.”

A key initiative at the port is the deepening and widening of the Brownsville Ship Channel. A feasibility study for this initiative is now underway. “The preliminary estimate for the widening and deepening of the channel is between USD200m and USD250m,” Campirano said. “The US Army Corps of Engineers has not released the estimated costs. Once we get those, we will determine the plan of finance. We anticipate funding sources to include federal, local and private sector sources.” Possibilities include having companies that would benefit from deepening and widening the channel help finance the project. Another scenario lets port tenants, if they make an upgrade at their facilities, “own the revenue stream” that it generates, Campirano said.

Costs & Benefits

While many ports are deepening their channels and improving facilities to make room for the megaships that will transverse the Panama Canal, the Port of Brownsville will not likely get visits from those vessels. However, the widening of the Panama Canal will increase shipping activity on the Gulf Coast, Campirano said. The Port of Brownsville, located at the southern end of the Gulf Intracoastal Waterway on the US-Mexico border, handles a wide variety of bulk and liquid commodities. It is a leading importer and exporter of steel, due to its proximity to steel mills in northern Mexico.

Uptick in Business

This article was written by Eugene Gilligan and appeared in the August edition of InfraAmericas Magazine. Brownsville Economic Journal Winter 2012

Courtesy photo

President Felipe Calderon rode a train during his visit to Matamoros to oversee a pair of projects that, when finished, will improve the infrastructure of the Borderplex region.

plete, while the rail bridge is finished and ready to begin operations. The bypass project is projected to be finished during the first quarter of 2013. The new rail bridge will reduce transportation times and operation costs and companies will be able to move their merchandise in less time and more efficiently from Mexico to the US and vice versa. The train velocity will increment from 12 to 37 mph (20 to 60 kilometers/hour) and the hours of operation will be extended. The rail bridge consists of an elevated structure of almost 3,000 feet (900 meters long), of which almost 600 are on the Mexican side. It will benefit the cargo that is transported by train, and used for the export of products. Cantu mentioned that Tamaulipas is the Mexican border state nearest to the center of the country, which favors for commercial exchange between both countries. The State of Tamaulipas has 17 international bridges, three of those are located in the Brownsville-Mata-

moros Borderplex. The rail bridge, will become the fourth international port of entry for commercial goods in the area. “Tamaulipas is the link between two great nations. We are the entity with the best communication with the US,” Cantu said. “The Matamoros-Brownsville International Rail Bridge is the first one constructed in more than 100 years. It is the key to international intermodal transportation between Mexico and the United States, and it is a product of both (federal) governments, Tamaulipas and Texas, and Matamoros and Brownsville.” Nelson Balido, president of the Border Trade Alliance, a nonprofit group of economists and private sector interests that represent more than 4.2 million members, told the Texas Tribune that rail traffic hauls about 6% of the goods that cross the United States’ southern border under NAFTA. The Mexican government predicts that in the next five years, it will increase to 35 percent, Balido told the media outlet. EJ BEDC.com

Foreign investment

ECONOMIC ALLIANCE

Regional economic alliance to travel to China on a trade mission to promote South Texas

TS-IA looks to bring foreign investment Written by Jorge I. Montero

Members of the Texas South-International Alliance met in San Antonio to sign a Memorandum of Understanding (MOU) to recruit foreign investment and increase exports from the region, according to a press release from the city of San Antonio. Representatives of the cities of Brownsville, Corpus Christi, Edinburg, San Antonio, and San Marcos joined economic development leaders in signing the MOU during a ceremony held in November at the International Center, 203 South St. Mary’s Street, in San Antonio. “Together we can leverage the region’s assets to increase foreign investments and exports to make the South Texas economy even stronger,” said San Antonio Councilwoman Elisa Chan, one of the founders of the alliance. “This strategy will complement each of our traditional economic development efforts by increasing market share.” A delegation of TS-IA members will begin their work with a trade mission to China in early 2013. The group will visit the area near the city of Shanghai. “By promoting the key assets of the entire region, each city will brand South Texas as a strategic place for foreign investors seeking to build factories or invest in target industries of energy, bioscience and healthcare, logistics, advanced manufacturing and tourism,” said Brownsville Mayor Tony Martinez, who attended the event with Gilberto Salinas, Executive Vice President for the Brownsville Economic Development Council, and other leaders from the community. BEDC.com

San Antonio Express News

City Council member Elisa Chan speaks for representatives of the Texas South- International Alliance during a signing of a memorandum to recruit foreign investment on November 14, 2012. TEXAS

SAN MARCOS

SAN ANTONIO

LAREDO MEXICO

CORPUS TS-IA REGION CHRISTI

EDINBURG

BROWNSVILLE

South Texas offers an abundance of opportunities to potential foreign investors because goods can easily be shipped by land, air or water. Across the region, trade thrives via five sea ports on the Gulf of Mexico, 14 land bridges, an efficient Interstate freeway system that will soon become part of the I-69 corridor, seven airports, and a future trans-border railroad. According to the release, the region is

Strategic location

considered a key gateway to the Western Hemisphere, North American free trade, and the booming Texas economy. It is ranked among the Top 50 regions for Global Trade, and ranks among the Top 10 U.S. Customs Districts for its trade with Latin America. The 28-county South Texas region has a population of over 4.4 million people, while another 3 million live across the border in Mexico, according to the release. In the decade between 2000 and 2010, South Texas counties grew by more than 24%, outpacing the growth rate of the state of Texas and far exceeding the U.S. growth rate of 9.7% in the same period, the release indicates. TS-IA will focus on attracting foreign investment, increasing exports of goods and professional services, and strengthening civil society through exchanges in tourism and culture, the release states. It has received support from U.S. Assistant Secretary of Commerce for Market Access & Compliance Michael C. Camuñez. EJ

Winter 2012

Brownsville Economic Journal

Cover story PANAMA

COLOMBIA

ECUADOR

SOU AME

PERU

Written by Jorge I. Montero Design and illustration: Jorge I. Montero

CHILE

Ranked by Forbes as one of the Best Places to do Business, Brownsville offers many benefits to South American industries like its geographical location, logistics and a deeply rooted and influential Latin American culture.

ARG

UTH ERICA

GENTINA

Opportunity

Economic

Borderplex targets emerging industries in Latin America

he economies in Latin America have been enjoying success in the last couple of years and will continue to do so in 2013 as they climb the ranks in the global economy, and Brownsville is looking to bring those emerging industries to the Borderplex region. Despite global economic uncertainties, regional economies in Latin America will grow by an estimated 3.8 percent, compared to 3.1 percent projected for 2012, said Alicia Bárcena, executive secretary of the United Nations’ Economic Commission for Latin America and the Caribbean, during the release of the Preliminary Overview of the Economies of Latin America and the Caribbean 2012. According to ECLAC's Preliminary Overview, countries such as Colombia, Panama, Peru, Chile, Ecuador, and Argentina are projected to see continued growth in 2013, although not as high as the expected percentage for 2012. Out of this group, Argentina will be the only economy that will see an actual increment from this year (2.2 percent) compared to 2013 projections (3.9 percent). Panama will remain the region's fastest growing economy for the third year in a row, with an estimated 10.5 percent for 2012 and a projected 7.5 percent for 2013. In 2011, Panama reported an

economic growth of 10.6 percent. Colombia’s economic growth for 2012 is projected to be 4.5 percent and it is expected to remain unchanged for 2013. Peru’s growth will also remain virtually unchanged for the second year in a row, having reported a 6.2 percent increment for 2012 and an expected 6.0 percent for 2013. For next year, Chile and Ecuador will report gains of 4.8 and 3.5 percent, respectively, but will be less than their gains in 2012 (5.5 percent for Chile and 4.8 for Ecuador). That recent economic success has been observed by Brownsville officials as a prime opportunity for the Borderplex to establish relations with leading industries from these countries. Recently, a delegation comprised of Brownsville’s Mayor Tony Martinez, representatives from the Brownsville Economic Development Council, the Port of Brownsville, and other officials visited Colombia in September seeking economic opportunities for the city. During the trip, Martinez said that there is a great potential for commercial exchange between Brownsville and South American cities. Ranked by Forbes as one of the Best Places to do Business, Brownsville offers many benefits to South American industries like its geographical location, logistics and a deeply rooted Latin American culture that can be an added plus to businesses that seek to invest in the region.

Cover story

CHILE

POPULATION: 17.1 million CAPITAL: Santiago

hile is considered the best emerging economy in Latin America and it is one of the most recognized worldwide. The country ranks number 17th among the 20 best economies to do business in, according to Forbes. The World Economic Forum puts Chile in 33th place in the Global Competitiveness Index for 2012-2013. It is also the best ranked Latin American country from this list. The Office of the United States Trade Representative reports that Chile is currently the United States 29th largest goods trading partner with $25.1

MAIN CITIES: Santiago, Valparaiso, Concepcion, Antofagasta, Talcahuano, Talca, Temuco

TRADE FACTS

Chile is currently the U.S. 29th largest goods trading partner with $25.1 billion in total (two ways) goods trade during 2011. EXPORTS: The top export categories to Chile in 2011: mineral fuel (oil) ($5.0 billion); machinery ($3.0 billion); vehicles ($1.6 billion); electrical machinery ($1.1 billion); and special other (low

billion in total (two ways) goods trade during 2011. Goods exports totaled $16.0 billion; Goods imports totaled $9.1 billion. The U.S. goods trade surplus with Chile was $6.9 billion in 2011. The United States is

value shipments) ($610 million).

IMPORTS: The five largest import categories to U.S. in 2011: copper ($3.3 billion); edible fruit and nuts (grapes, blueberries) ($1.5 billion); fish and seafood (salmon fillets) ($866 million); wood ($573 million); and precious stones (gold and silver) ($464 million).

Chile’s third most important commercial partner and is number one in Foreign Direct Investment in the South American country, representing 24.6 percent of Chile’s FDI. The main sectors for U.S. investment are in the

GDP GROWTH*: 5.5% (2012 estimate) 4.8% (2013 projections) *Source: ECLAC

mining industry (27 percent), commerce (16.1%) and gas, water and electricity (13.8%). In 2011, U.S. capital investments in Chile’s service industry amounted to $1.5 billion. According to Forbes, “Chile has a market oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Exports account for more than one-third of GDP, with commodities making up some three-quarters of total exports. Copper alone provides one-third of government revenue.”

ECUADOR

cuador moved up 16 places in the WEF Global Competitiveness Index and at number 86 is one of the top 100 countries best suited for business development and economic growth. The Department of Commerce of Ecuador states that the economic growth is due to a better access to technology, improvements in innovation, infrastructure, macroeconomic stability and the prospect of investments in the mining sector. The government

POPULATION: 14.2 million CAPITAL: Quito

TRADE FACTS

Ecuador is currently the U.S. 40th largest goods trading partner with $15.7 billion in total (two way) goods trade during 2011. EXPORTS: The top export categories to Ecuador in 2011 were: mineral fuel (oil) ($2.3 billion); machinery ($1.1 billion); electrical machinery ($427 million); and plastic ($290 million); and ve-

agency adds that the industrialized exports grew by 72 percent between 2006 and 2011. Some of the main exports include: vegetable oils and extracts, fish

MAIN CITIES: Quito, Guayaquil, Cuenca

hicles (256 million).

IMPORTS: The five largest import categories to U.S. in 2011 were: mineral fuel (crude) ($7.5 billion); fish and seafood (shrimp and prawns) ($673 million); edible fruit and nuts (bananas, plantains) ($511 million); cocoa ($247 million); and live trees and plants (cut flowersroses) ($149 million).

flour, textiles, leather, plastics, rubber, paper and cardboard. According to Forbes, Ecuador is substantially dependent on its petroleum resources, which

GDP GROWTH*: 4.8% (2012 estimate) 3.5% (2013 projections) *Source:â&#x20AC;&#x2C6;ECLAC

have accounted for more than half of the country's export earnings and approximately two-fifths of public sector revenues in recent years. Ecuador, who is known worldwide for its flower industry, appears in 122th place in Forbes Best Countries for Business List for 2012. Texas is one of Ecuadorâ&#x20AC;&#x2122;s biggest trade partners in the U.S., reporting $2.57 billion in imports and exports combined between the two entities in 2009.

Cover story

ARGENTINA

rgentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. The country is the second biggest in land size in Latin America and eight in the world. Argentina’s levels of agricultural productivity are among the best in the world. According to the country’s Department of Commerce and Finance, Argentina boasts ample mining and forestry resources and rich fish and

POPULATION: 41.2 million CAPITAL: Buenos Aires

TRADE FACTS

Argentina is currently the U.S. 43rd largest goods trading partner with $14.4 billion in total (two ways) goods trade during 2011. EXPORTS: The top export categories in 2011 to Argentina were: machinery ($2.1 billion); mineral fuel (oil) ($1.8 billion); electrical machinery ($1.0 billion); or-

seafood deposits. Argentina’s primary sectors are agriculture, cattle, hunting, forestry, fishing and mining which represent 14% of the country’s economy. The Department of

MAIN CITIES: Buenos Aires, Cordoba, Rosario, Mendoza, La Plata, San Miguel de Tucuman

ganic chemicals ($932 million); and plastic ($590 million). IMPORTS: The five largest import categories in 2010 to U.S. were: mineral fuel and oil ($1.2 billion); aluminum ($297 million); beverages (wine) ($277 million); iron/steel products ($221 million); and preserved food ($160 million).

Commerce reports that between 2003 and 2011 these sectors grew at a median annual rate of 2.3%. The South American country is also rich in mineral resources. The

GDP GROWTH*: 2.2% (2012 estimate) 3.9% (2013 projection) *Source: ECLAC

majority of the mineral deposits for lead, zinc, tin, silver, potassium, copper and gold are located along the Los Andes mountain range. The country is the top producer in the world of unfermented grape juice, lemon juice and leather and the third biggest producer in soy and sunflower oils. The World Economic Forum placed Argentina at number 94 in the Global Competitiveness Index for 2012-2013, while Forbes listed the country the 113th best country for business of 2012.

PERU

he United States is Peru’s top commercial partner. According to the Department of Commerce and Finance, in 2010 16 % ($5.77 billion) of Peruvian exports went to the U.S. market. The U.S.-Peru Trade Promotion Agreement entered into force on February of 2009 and gave the opportunity for greater trade and investment between the two economies. Eighty percent of

POPULATION: 28.9 million CAPITAL: Lima

TRADE FACTS

Peru is currently the U.S. 42nd largest goods trading partner with $14.9 billion in total (two way) goods trade during 2011.

EXPORTS: The top export categories to Peru in 2011 were: machinery ($2.0 billion); mineral fuel (oil) ($1.6 billion); electrical machinery ($739 million); plastic ($556 million); and vehicles

U.S. exports of consumer and industrial products to Peru became duty-free immediately after the passage of the agreement, with remaining

MAIN CITIES: Lima, Arequipa, Trujillo, Chiclayo, Cuzco

($430 million).

IMPORTS: The five largest import categories to U.S. in 2011 were: mineral fuel (oil) ($1.6 billion); precious stones (gold and silver) ($1.0 billion); knit apparel ($681 million); copper ($512 million); and spices, coffee, and tea (mostly coffee) ($433 million).

tariffs phased out over 10 years. According to Forbes, Peru’s economy has been growing by an average of 6.4% per year since

GDP GROWTH*: 6.2% (2012 estimate) 6.0% (2013 projection) *Source: ECLAC

2002. Growth in 2010 was close to 9% and in 2011 almost 7%, due in part to an increment in private investment, especially in the extractive sector, which accounts for more than 60% of Peru's total exports. The World Economic Forum puts Peru in 61th place in the Global Competitiveness Index for 2012-2013, while the country appears in the 44th spot of Forbes’ list of Best Countries for Business of 2012.

Cover story

PANAMA

anama is one of the fastest growing economies in Latin America, expanding 6.2 percent in 2010, with similar annual growth forecast through 2015, according to Forbes. The U.S.-Panama trade agreement, which entered into force in October of 2012, will support American jobs, expand markets, and enhance U.S. competitiveness by eliminating tariffs and other barriers to U.S. exports and expanding trade between our two countries. With the passage of the trade agreement, more than half of current U.S. farm exports to Panama became duty free immediately and

POPULATION: 3.5 million CAPITAL: Panama City

GDP GROWTH*: 10.5% (2012 estimate) 7.5% (2013 projection) *Source:â&#x20AC;&#x2C6;ECLAC

TRADE FACTS

Panama is currently the U.S. 52nd largest goods trading partner with $8.6 billion in total (two way) goods trade during 2011.

EXPORTS: The top export categories in 2011 to Panama were: mineral fuel (oil) ($4.0 billion); machinery ($624 million); aircraft ($517 million); electrical machinery ($478 million); and

most of the remaining tariffs will be eliminated within 15 years. According to the U.S. Department of Agriculture, Panama is already an important market for Americaâ&#x20AC;&#x2122;s farmers and ranchers.

special other (low value shipments) ($340 million).

IMPORTS: The five largest import categories in 2011 to U.S. were: special other (returns) ($127 million); fish and seafood ($80 million); precious stones (gold) ($64 million); sugars (cane) ($38 million); and edible fruits and Nuts (bananas, pineapples) ($20 million).

In 2011, the United States exported more than $505 million of agricultural products to Panama. Top U.S. exports were corn, wheat, soybean meal, dairy products, poultry, and rice.

With the Panama agreement in place, agricultural trade between the United States and Panama will change from a oneway street to a two-way street. The Panama trade agreement eliminates tariffs and other barriers on most agricultural products, increasing export opportunities for a range of Texas products, including beef, poultry, and dairy. The World Economic Forum placed Panama 40th in the Global Competitiveness Index for 2012-2013, while Forbes listed the country at number 57 in the Best Countries for Business List of 2012.

COLOMBIA

olombia is considered one of the six “key ‘next tier’ economies” in the world with “relatively stable, fast-growing markets, offering significant commercial opportunities” and anticipating “high Gross Domestic Product” growth rate in the next few years. According to Forbes, Colombia's consistently sound economic policies and aggressive promotion of free trade agreements in recent years have bolstered its ability to face external shocks. The US–Colombia Trade Promotion Agreement (TPA) passed by Congress on October 12, 2011, and implemented this summer, will eliminate tariffs and other barriers to trade in

POPULATION: 45.5 million CAPITAL: Bogota

TRADE FACTS

Colombia is currently the U.S. 25th largest goods trading partner with $37.4 billion in total (two way) goods trade during 2011. EXPORTS: The top export categories to Colombia in 2011 were: machinery ($2.9 billion); mineral fuel (oil) ($2.7 billion); electrical machinery ($1.2 billion); organic chemicals ($969 million); and plastic ($692 million).

goods and services between the United States and Colombia. Over 80 % of U.S. consumer and industrial export products to Colombia became duty free immediately, with remaining tariffs phased out in 5 to 10 years. This is great news because

MAIN CITIES: Bogota, Medellin, Cali, Barranquilla, Cartagena

IMPORTS: The five largest import categories to U.S. in 2011 were: mineral fuel and oil (crude) ($16.8 billion); precious stones (gold) ($2.2 billion); spices, coffee, and tea (mostly coffee) ($1.3 billion); live trees and plants (cut flowers) ($578 million); and edible fruit and nuts (bananas) ($211 million).

over 90 % of Colombian products entered the U.S. market duty-free in 2011, while U.S. merchandise entering Colombia faced tariffs averaging 9 %. The agreement will support more American jobs, increase U.S. exports, and enhance U.S. competitiveness.

GDP GROWTH*: 4.5% (2012 estimate) 4.5% (2013 projection) *Source: ECLAC

The country’s GDP grew 5.7 percent in 2011 and inflation ended 2011 at 3.7%, continuing almost a decade of strong economic performance. All three major rating agencies have upgraded Colombia's investment grade, Forbes reported. The third largest Latin American exporter of oil to the U.S., Colombia is also one of the topworld producers and exporters of flowers, coffee and semiprecious stones. The World Economic Forum put Colombia in 69th place in the Global Competitiveness Index for 20122013, while the country appears in the 55th spot of Forbes list of Best Countries for Business of 2012. EJ

Cover story

Delegation promotes Brownsville in Colombia Written by Jorge I. Montero

The recent passage of the U.S.-Colombia Trade Agreement has made Brownsville leaders aware of the importance of creating relations with the South American country in hopes of bringing its business to the Borderplex region. Taking advantage of the agreement that will eliminate tariffs to trade in goods and services between the United States and Colombia, a Brownsville delegation comprised of city Mayor Tony Martinez, representatives of the Brownsville Economic Development Council and the Port of Brownsville, along experts in immigration, customs and logistics visited Colombia in September seeking economic opportunities for the city. Martinez told The Brownsville Herald that the intention for the trip was to imprint Texas, specifically Brownsville, on the minds of Colombia’s entrepreneurs. The delegation hosted forums in the cities of Bogotá, Barranquilla, Cali and Cartagena where they met with more than 150 companies interested in doing business in the United States, BEDC Vice President Gilberto Salinas told The Herald. “We not only showed what Brownsville had to offer but how you break into the U.S. market,” he informed the Herald. During the trip, Martinez told Colombian business newspaper La Republica that there is great potential for commercial exchange of exotic fruits like Quito orange, passion fruit, soursop, dragonfruit and bananas. “There are great opportunities (to make business) with Colombia because of the complementarity of both markets. Colombia grows fruits that are not grown in the United States and are popular among the 25 million Texans in the state. Also the automotive and textile industries have potential,” Martinez told La Republica.

Brownsville Economic Journal Winter 2012

Staff Photo

Brownsville Mayor Tony Martinez chats with Elsa Noguera De la Espriella, the Mayor of Barranquilla, Colombia, during a recent trip to that country to promote business opportunities in Brownsville. From left, Noguera, Michelle Lopez, Director of Public Affairs and International Development for the Brownsville EDC; Jason Hilts, Brownsville EDC’s president and CEO; Martinez and Claudia DaCunha, director of special projects for Barranquilla. The photo was taken on a balcony outside Noguera's office in the city, which is Colombia’s fourth largest.

U.S.-Colombia Trade Promotion Agreement

The US–Colombia Trade Promotion Agreement (TPA) will eliminate tariffs and other barriers to trade in goods and services between the United States and Colombia. The United States Congress passed this agreement on October 12, 2011, and was implemented in the summer of 2012. Over 80 % of U.S. consumer and industrial export products to Colombia became duty free immediately, with remaining tariffs phased out in 5 to 10 years. This is great news because over 90 % of Colombian products entered the U.S. market duty-free in 2011, while U.S. merchandise entering Colombia faced tariffs averaging 9 %. The agreement will support more American jobs, increase U.S. exports, and enhance U.S. competitiveness. “As of now, Colombian exporters can send their goods to the main distribution destinations located in California, Texas, Florida, New York, Georgia and Illinois, which offer opportunities for a complete

business package, that is, from raw materials and consumable goods to finished products,” said Sergio Díaz-Granados, Colombia’s Minister of Commerce, Industry and Tourism, in a press release. Diaz-Granados added that the sectors that will benefit the most from this agreement are: textile-clothing; design and fashion; automotive parts and vehicles; cosmetics; metalworking and iron and steel; health tourism and ecotourism; software and TI; fruit and vegetable growing; biofuel; bovine meat; chocolate making, pastry and its raw materials; dairy and shrimp industries, among others. Overall, the International Trade Commission (ITC) has estimated that the tariff reductions in the Agreement will expand exports of US goods alone by more than $1.1 billion, supporting thousands of additional American jobs. The ITC also projected that the Agreement will increase US GDP by $2.5 billion. Colombia will become the 5th largest open market for U.S. exports in the world after Canada, Mexico, Singapore and Australia. EJ

BEDC.com

UNITED STATES

TEXAS

MEXICO

Gross Domestic Product Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.7 percent in the third quarter of 2012 (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.

Employment Growth Texas gained 22,900 jobs in October after adding 23,600 jobs in September. Current Texas employment stands at 10.95 million. The Texas unemployment rate edged down to 6.6 percent in October from 6.8 percent in September. The Texas rate remains lower than the U.S. rate, which was 7.9 percent in October.

Gross Domestic Product The pace of economic growth moderated in the third quarter as gross domestic product only grew 1.8 percent quarter over quarter (annualized rate), down from 3.3 percent in the second quarter and 5.4 percent in the first quarter. In the third quarter, goods-producing industries, including manufacturing, construction, utilities and mining, expanded at a 2.9 percent rate. Service-related activities (including trade, transportation, services and government) grew 3 percent from the previous quarter. Agricultural output fell –2.2 percent.

Annual Industry Accounts Retail trade and durable goods manufacturing were the leading contributors to the deceleration in U.S. economic growth in 2011, according to revised statistics on the breakout of real gross domestic product (GDP) by industry from the Bureau of Economic Analysis. Real GDP growth slowed in 2011, increasing 1.8 percent after increasing 2.4 percent in 2010. The revised statistics do not change the general picture of the economy: 12 of 22 industry groups contributed to the slowdown in real GDP. International Transactions The U.S. current-account deficit—the combined balances on trade in goods and services, income, and net unilateral current transfers—decreased to $117.4 billion (preliminary) in the second quarter from $133.6 billion (revised) in the first quarter. The decrease in the current-account deficit was accounted for by a decrease in the deficit on goods and an increase in the surplus on income. SOURCE: U.S. Department of Commerce Bureau of Economic Analysis BEDC.com

Exports Quarterly Texas exports edged up 0.1 percent in the third quarter of 2012. The third-quarter level of exports was 5 percent higher than a year earlier. Exports to Mexico, Texas’ largest trading partner, rebounded 3.2 percent, while exports to Asia rose 1.6 percent. Exports to Canada, China and the European Union fell 2.8 percent, 2.8 percent and 5.4 percent, respectively. Manufacturing Texas factory activity changed little in November, according to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 1.7, suggesting output barely increased from October.

Exports Exports fell again in October, down 0.2 percent after falling 1 percent in September. Exports have been trending down steadily this year, suppressed by falling oil exports. Oil exports are down 5 percent in the first 10 months of the year over the same period in 2011, while manufacturing exports have grown 5.6 percent. Total exports increased by just 4.1 percent during the January–October period, a substantially slower pace than the 15.3 percent growth seen a year ago. Industrial Production Industrial Production (IP) bounced back in September, increasing 0.8 percent month over month after falling 0.7 percent in August. Weaker growth in Mexico IP follows on the heels of sharply lower U.S. IP since July. Mexico’s IP typically tracks U.S. IP, due in part to the U.S. automotive industry’s large presence in Mexico. However, since the end of the recession, Mexican IP has grown much faster than U.S. IP, which has yet to reach its pre-recession peak.

Leading Index The Texas Leading Index, which uses key economic indicators to forecast future economic activity, rose 1.2 percent from August to October. SOURCE: Federal Reserve

SOURCE: Federal Reserve Bank of Dallas

Bank of Dallas

Winter 2012

Brownsville Economic Journal

Wind farm

Company receives DOE grant to conduct environmental feasibility assessments

ALTERNATIVE ENERGY

Baryonyx chosen for federal funding Baryonyx Corp., the Austin-based firm that has been pursuing development of wind farms offshore of the Rio Grande Valley, is one of seven projects selected for funding through the U.S. Department of Energy’s Wind and Water Power Program. Once the final contract details are worked out, Baryonyx will receive an initial DOE grant of $4 million to conduct environmental and feasibility assessments and pay for front-end engineering costs on a three-turbine offshore demonstration project capable of producing 18 megawatts, or 18 million watts. Baryonyx has dubbed the project “Gulf Offshore Wind” or “GO Wind.” Although seven projects were chosen for the initial grants, no more than three will receive additional DOE funding — up to $47 million each — for siting, construction and installation. The goal is for these projects to be in commercial operation by 2017. The DOE effort to advance innovative offshore wind technologies is part of the Obama administration’s comprehensive National Offshore Wind Strategy to develop a sustainable offshore wind industry in the United States. Ian Hatton, CEO of Baryonyx, said in a phone interview he feels confident his company will gain final approval toward actual construction. That’s because he and other Baryonyx executives were part of Eclipse Energy, a British company that conceived and developed the groundbreaking “Ormonde” wind farm project operating in the Irish Sea. “We’re the only team in the whole application process who’s actually built one of these things before,” Hatton said. Baryonyx leads the consortium that submitted the GO Wind application to DOE. The other members are Keppel Am-

Brownsville Economic Journal Winter 2012

FELS, the Brownsville-based offshore oil rig fabricator; Siemens AG, the German manufacturer of the massive 6MW turbines GO Wind plans to use; Offshore Design Engineering Ltd., Eclipse’s partner on the Ormonde project; and Texas A&M University, the lead partner of the project’s academic group, which also includes Texas Tech and the University of Texas (Austin and Brownsville). Hatton said the key objective of GO Wind is to show how to drive down the unit cost of offshore power through the “excellent wind resource” the Gulf of Mexico provides, highly efficient turbines from Siemens, and the fabrication expertise of Keppel AmFELS. He believes significant cost reductions should be achievable through the ability of Keppel AmFELS to mass produce the substructures to support wind farm towers and turbines. Siemens turbine technology has evolved rapidly, meanwhile, leading to a larger, lighter machine with very little internal friction and thus much more efficiency in recovering energy from the wind, Hatton said. There’s a reason the focus is on lowering cost: The wind industry is facing new competition from cheaper natural gas thanks to several recent discoveries of gas reserves in the United States and worldwide. This has driven down the cost of producing electricity from gas-fired power plants. The challenge is to prove that electricity produced by offshore wind can compete price-wise with electricity generated by natural gas. Onshore wind has proven itself to be competitive with gas-fired generation, Hatton said. Offshore wind energy costs more to produce, but it delivers a better yield-to-cost ratio, he said. Also, low electricity prices are discouraging construction of the new gas-fired plants necessary to

satisfy growing electricity demand, Hatton said. If everything goes as planned, the environmental study and other aspects of phase one for GO Wind will begin in February and take two years to complete. Assuming the project moves to the next phase it will be generating electricity by the third quarter of 2017, Hatton said. If the demo succeeds, the next step will be a larger, commercial-scale project. Baryonyx’s ultimate goal is to erect hundreds of turbines on more than 41,000 acres offshore of Cameron County, on two leases it has secured from the Texas General Land Office and dubbed “Rio Grande North” and “Rio Grande South.” GO Wind, which would be built within the Rio Grande South lease, will cost about $120 million to develop and require matching contributions from the various consortium members in addition to DOE support. Hatton said that having GO Wind selected for funding by the DOE is a big deal, though not as big as what will happen if Baryonyx is able to carry out its larger vision. For instance, the economic impact of Keppel AmFELS fabricating hundreds of giant substructures would be immense, he said. “It’s going to be a pretty big thing for South Texas in terms of an economic shot in the arm if it all pans out,” Hatton said. “That’s one of the interesting things about renewable energy projects. They quite often benefit communities which historically haven’t often benefited from oil and gas or other forms of mineral extraction.”

This article was written by Steve Clark and appeared in the Friday, December 14, issue of The Brownsville Herald. BEDC.com

BUSINESS&ECONOMICBRIEFS

Brownsville gets AA- score

Brownsville’s proximity to Mexico and an expanding transportation grid are among the factors contributing to the city’s continued robust bond rating, according to a recent spate of reports from Fitch Ratings, Moody’s and Standard & Poor’s. The big news according to city finance director Pete Gonzalez is that S&P bumped Brownsville’s rating up to AA-, bringing it in line with the other two agencies. He noted that S&P’s upgrade will save the city $55,000 in bond insurance — a one-time savings but a savings nonetheless. Fitch, in its Nov. 30 report, affirmed its AA- of city securities in the form of $13.5 million in combination tax and revenue certificates of obligation. Among the projects to be paid for by the proceeds of those bonds are an aircraft hangar at Brownsville South Padre Island International Airport that will be leased to the private sector, street construction projects and the city’s share of two FEMA emergency domes. One of the FEMA domes will be built at the main library on Central Boulevard and the other most likely at the Brownsville Sports Park, Gonzalez said. FEMA is paying the lion’s share of the cost for both of the domes, which are designed to be used for gymnasiums, community centers or other facilities when not needed for emergency shelters. Fitch also affirmed the AA- rating for the city’s $149.8 million in outstanding debt, as well as $16.6 million in sales tax bond debt the Brownsville Community Improvement Corporation incurred to build the Sports Park. The GIBC bonds are backed by a .25 percent city sales tax and a cash reserve fund. Of the $149.8 million in outstanding debt, $141.9 million is being paid from property taxes and the remainder from various other sources of income. The $13.5 million in new bonds is secured by an annual property tax levy of $2.50 per $100 of taxable assessed valuation, surplus revenue from Brownsville’s municipal landfill and surplus airport revenues. AA- minus, or Aa3 according to BEDC.com

Moody’s ratings system, is considered a “high grade” credit risk. In addition, the city’s credit outlook is “stable,” according to the rating agencies, whose purpose is to gauge the credit health of businesses and municipalities. Among the “key rating drivers” Fitch identifies are a tax base and economic growth that have remained steady throughout the recession, in large part due to investment from Mexico. That investment has been spurred not just by the city’s nearness to Mexico but also by “an extensive and expanding transportation network” that encourages international trade and tourism, according to Fitch. The report notes that Brownsville is the only port of entry from Mexico with all four shipping modes: highway, air, rail and water. More than 5.5 millions tons of cargo move through the Port of Brownsville each year, much of it to service the maquiladora industry. The city’s economic growth is bolstered by a low cost of living, even if income and wealth levels lag behind state and national averages. According to Fitch, Brownsville also benefits from a veteran financial management team, conservative budgeting and maintenance of adequate general fund reserves. “We need to have reserves for any emergency that comes about,” Gonzalez said. “Our reserve policy is to have at least 15 percent of total expenditures in reserve, and we’re meeting that percentage. They look at that.” Rating agencies also take a close look at the local economy — namely sales taxes and property values, both of which have been growing, he said. But debt is the key factor. In Brownsville’s case, most of the principal debt is paid off within a decade, something rating agencies like to see. In the view of all three agencies, the city’s debt is manageable, which helps lead to a strong bond rating. Gonzalez noted that the city’s credit rating has been rising steadily since the late 1980s, when it was just “medium grade.” “There are three more grades above AA-,” he said. “We’ve been climbing and it’s going to be very difficult to climb any more, especially right now with the econ-

omy the way it is. We see cities being downgraded. We don’t see too many cities being upgraded. We’re very proud that we have a good bond rating.” This article was written by Steve Clark and appeared in the Tuesday, December 11, issue of The Brownsville Herald

BPUB to control natural gas system

A city-owned gas utility system will be established in Brownsville, and it will be managed by the Brownsville Public Utilities Board. The Brownsville City Commission earlier this week approved an ordinance to create such a utility system and gave authorization for BPUB to manage and control it. The first step BPUB must take is to get the necessary permits from the Texas Railroad Commission for the construction of a pipeline that will transport natural gas as fuel for a proposed generation facility, officials said. The pipeline would also transport natural gas to the existing BPUB generation facilities and other locations. Brownsville PUB officials said the utility company has no other plans for the gas utility system other than using it as a natural gas pipeline. This article appeared in the Friday, December 14, issue of The Brownsville Herald

Fed to spend $45B to sustain bond purchases

The Federal Reserve will spend $45 billion a month to sustain an aggressive drive to keep long-term interest rates low, The Associated Press reported. The Fed also set a goal of keeping a key short-term rate near zero until unemployment drops below 6.5 percent. The policies are intended to help an economy that the Fed says is growing only modestly with 7.7 percent unemployment in November.

Winter 2012

Brownsville Economic Journal

MARKETINGCORNER

Economic Journal The Show BUILD A BETTER BLOCK

Michelle Lopez

Courtesy photos

Dir. of Public Affairs & International Development

Six months ago, The Brownsville Economic Development Council embarked on a journey to bring the Rio Grande Valley residents a monthly television program where they can grasp on the many things Brownsville, as a whole, is doing, whether it’s on the job front like a large business opening up, an existing business’s success or non-profit events, like the Build a Better Block, Market Days, CycloBia, etc. These are the type of stories we have aired since May and will continue to do the very same this upcoming 2013. We’ll feature more success stories, more companies setting up shop in our city, more events to bring unison to our city and much more. Economic Journal, the show, airs monthly on KVEO. EJ

Brownsville Economic Journal Winter 2012

BROWNSV

ILLE EARLY

R LIFE

HOOKED FO

COLLEGE HIG

H SCHOOL

Top: A man works on a painting recently during the Build a Better Block event held in Historic Downtown Brownsville. Left: Dozens of people attended the event, which included different activities such as, arts and crafts making, painting, and playing chess.

Top: Students listen during class at Brownsville Early College High School. The school helps students to graduate in four years with a high school diploma and an associate’s degree from college. Left: Thousands of children took part in the third annual Hooked For Life fishing tournament held at the Brownsville Events Center.

BEDC.com

“ ”

Employment generator

Tru-Tone will benefit the Borderplex area by offering dozens of manufacturing jobs and help reduce the unemployment rate in the region

MANUFACTURING

Industrial coater expands into Brownsville Written by Jorge I. Montero

“We’re very excited about the project... We’ve been working on it for a couple of years now and we finally got everything in place.”

work, quality product, superb customer service and a family environment.” According to its website, through the years Tru-Tone has expanded its capabiliTru-Tone Finishing Inc., an industrial ties to meet the ever changing needs and coating company based out of Chicago, demands of their customer base. Through will be expanding its operations to the the use of new technologies, Tru-Tone has Brownsville Borderplex area. grown from a small liquid coating comThe company from Addison, Illinois, pany into a multi-functional full service will move into a 50,000-plus square-foot finishing corporation. facility at the Brownsville Industrial Air Tru-Tone Finishing is a full-service Park, on Billy Mitchell Boulevard, which ISO 9001:2000 certified e-coat and powis home to companies such as Trico Techder coating company that has provided sunologies, Starkey, UPS, Portage Plastics, perior quality and service to the Little Farms Frozen Foods, Fisher DyMidwestern United States and now looks namics and Saint Gobain Abrasives. to expand its reach to Texas and Mexico. Tru-Tone will benefit the Borderplex The Brownsville EDC has been workarea by offering dozens of manufacturing ing with the company since 2010, helping Greg Klemenswicz, jobs and help reduce the unemployment owner of Tru-Tone facilitate their entrance into the local marrate in the region. ketplace. “We’re very excited about the project,” Klemenswicz family and since has “Tru-Tone will provide a valuable said Greg Klemenswicz, the owner of the adapted to the ever changing demands and service to the local metal working industry company, to The Brownsville Herald. needs of its industrial clients, in particular and in the process, will generate traffic “We’ve been working on it for a couple of the automotive industry. and opportunity for the local workforce,” years now and we finally got everything in “The Klemenswicz family has much in Hilts said. place. We’re going to be making the move common with Brownsville – they value “We, as an industrial and business there pretty quickly.” hard community, will make sure to embrace the Klemenswicz told The Herald that the company,” Hilts said. Brownsville site will operate one shift of Tru-Tone’s Chicago plant provides 35 to 50 employees, mostly assembly both e-coating and powder coating, line workers and a handful of manwhich is typically more expensive agers. He also said that the plant and tends to be used in decorative should be operational by Decemapplications. The company Custom packing Custom masking ber and at full production capaccounts John Deere and Caterpility by the first of the year. lar among its powder coating TRU-TONE With its arrival to customers, Klemenswicz said Brownsville, Tru-Tone looks to CAPABILITIES to The Herald. serve clients and suppliers in Northern Mexico as well as Light assembly E-Coating Process Custom masking South Texas. According to its website, “We are pleased to welcome Tru-Tone Finishing has multiple Tru-Tone not only as a member of cathodic black epoxy e-coat lines our manufacturing and supplier which provide a “Class A” finish on base, but as a partner in our business Computer controlled In-house lab a broad range of metal parts. The cruprocesssing community,” said Jason Hilts, president cial component in any finishing opera& CEO of the Brownsville EDC. Office racking and inspection Tru-Tone was founded in 1974 by the Turn To Page 37 BEDC.com

Winter 2012

Brownsville Economic Journal

Renovate or Die

Get your motor

AUTOMOTIVE INDUSTRY

Dealerships revamp showrooms and extend their stock of vehicles to better serve the Borderplex area

running

“

Car dealerships expand to attract manufacturers

Written by Jorge I. Montero

fter a tumultuous beginning of the decade, the automotive industry has been trying to get back up to its feet after suffering a tremendous blow four years ago when the world was hit by a global recession, forcing some auto manufacturers and dealerships to the brink of bankruptcy and others to cease existence. Since then, manufacturers and dealerships have been trying to find ways to bring back customers, whose consumer confidence dropped to the floor due to unemployment, a decline in home values, personal bankruptcies and rising oil prices that came along with the financial crisis of 2008. Across the country, car dealers are remodeling and updating their showrooms at the request of manufacturers, who want all dealerships to have a more modern look with hopes that sleek-looking showrooms will lead to more sales. And Brownsville is no exception.

Brownsville Economic Journal Winter 2012

”

“Our dealership is due for a makeover in order to attract manufacturers to acquire new vehicles. This is a national trend, dealerships nationwide are renovating.”

Dealerships like Don Johnson Motors and Tipton Motors Inc. have recently remodeled or are in the process of upgrading their showrooms in order to attract customers to their businesses and recoup from several years of low sales. And Charlie Clark Nissan has been added to the mix in Brownsville after it recently opened a new car dealership in hopes to expand its business.

- Jim Tipton President of Tipton Motors Inc.

Competition has become fierce, and renovation is the key, according to Jim Tipton, president of Tipton Motors Inc., located on 3840 N. Expressway 77/83. After the 2008 global crisis, carmakers have since cut back on production and now are manufacturing a less percentage of vehicles, forcing the dealerships to find ways to beat out the competition for acquiring new models.

For Tipton, it’s renovate or die

BEDC.com

AUTOMOTIVE INDUSTRY

Staff Photo

Don Johnson, owner and operator of Don Johnson Motors, shows an artistic rendering of his new showroom. In August Johnson broke ground on the 11,000 square foot expansion of his dealership.

With some manufacturers willing to dish out money for renovation projects, and with financial institutions offering low interest rates for financing the construction, Tipton decided to update his facility. “Our dealership is due for a makeover in order to attract manufacturers to acquire new vehicles. This is a national trend, dealerships nationwide are renovating due to incentives from dealers to modernize BEDC.com

the stores,” Tipton said. The dealership, which has been at its current location of Expressway 77/83 and Morrison Road for the past 26 years, recently acquired the Hyundai line from Don Johnson, so making space for their new addition of vehicles made sense. The new Hyundai showroom, which will be located on Morrison Road across from Target, will be ready by the begin-

ning of 2013. Tipton said he received financing from Hyundai to help build the showroom. He expects to have a soft opening for the new showroom in January, followed by a grand opening in February. Though he declined to specify on the amount spent in the project, he estimated that the investment surpassed one million dollars. Besides a brand new showroom full with all the bells and whistles, the dealership has other tricks up its sleeve to help seal a deal and sell a car or truck. One is the new EcoBoost engine that Ford designed to give the driver “more kick with less gas.” EcoBoost is a series of turbocharged engines produced by the Ford Motor Company and used in some of their newer models, like the F150, one of the best-selling vehicles in the US for over 30 years, Tipton said. According to Ford, EcoBoost technology improves fuel economy and at the same time greater power. The other is the Hyundai line of vehicles, which are rated top of the line in quality, and offer the consumer the look and styling of an expensive car at a more affordable price, Tipton said. His dealership, which has been a family owned business since 1923, has exceeded its goals in 2012 with their newly acquired Hyundai line. And Ford sales “are right on top of the projected numbers,” he said. For 2013, Tipton expects a good year also. They project to sell between 600-700 units of Hyundai and Ford each – between 1,200 to 1,400 units in total. That is an optimistic outlook, but nobody has a crystal ball, Tipton said, stating that the numbers are his projections, barring any setback from the economy or other obstacles such as gas prices or financing. Currently, the dealership employs 115 people. At the moment, Tipton said they do not project on hiring more employees.

From cars to trucks, Don Johnson has you covered

In August Don Johnson, owner and operator of Don Johnson Motors on Central Boulevard, broke ground on the 11,000square foot expansion of his dealership, which will feature a new, much larger showroom and parts department. During the summer he added Dodge Winter 2012

Turn To Page 37

Brownsville Economic Journal

Link to the mainland

INFRASTRUCTURE

Cameron County Regional Mobility Authority chooses proposed route for new Island bridge

Second SPI causeway closer to reality

Brownsville Economic Journal Winter 2012

BUENA VISTA

LEGEND

Proposed route City or town

Laguna Atascosa National Wildlife Refuge

tend to Holly Beach on the mainland. It would connect to FM 510 and also to Highway 77. The bridge would extend 7.9 miles across the Laguna Madre to north of the city of South Padre Island. Officials say there are about 1,000 acres of developable land in that area. Authorities believe the second causeway is a sure thing, though a few hurdles still lie ahead. CCRMA is now waiting for clearance of the remaining environmental obstacles, which are expected to take a year to be approved. In the release, Allex said that one of the biggest reasons for the proposed second access point is to facilitate evacuation for the Island. “As we remember, in 2001, the Island was isolated after the barges crashed into the Queen Isabella Memorial Causeway’s support columns and totally disabled the

Laguna Heights

QUEEN ISABELLA CAUSEWAY

STATE HWY 100

South Padre Island

Laguna Vista

510

ST AT E

FM 510

PADRE BLVD

R FO TE Y OU EWA R ED US OS CA OP ND PR ECO S

OCEAN BLVD

In July, Cameron County officials with cooperation from the Texas Department of Transportation and the Federal Highway Administration, hosted a public hearing meeting in South Padre Island, where they announced the preferred route chosen for the new bridge. Officials opted to go with Option Number 6 from a total of 11 alternatives that had been drawn for the second connection to the Island. From the Island, Option 6 would start between Beach Accesses 5 and 6, and ex-

Selecting the route

Laguna Atascosa National Wildlife Refuge

GENERAL BRANT ROAD

STATE PARK RD 100

A critically needed second access route connecting South Padre Island to the mainland of Texas is one step closer to reality, and developers are preparing themselves for an expected economic boom on the north side of the Island and the Laguna Madre Area, where the proposed bridge would be built. The Cameron County Regional Mobility Authority (CCRMA) and the Texas Department of Transportation (TxDOT) have cleared a number of environmental hurdles and chosen the route for the proposed South Padre Island 2nd Access Project for further processing. “This is great news for South Padre Island, Port Isabel, Laguna Vista, and the Rio Grande Valley,” said David Allex, Chairman of the CCRMA Board of Directors, in a press release. CCRMA announced in June that the Federal Highway Administration (FHWA) had approved the Draft Environmental Impact Statement (DEIS) for the proposed second causeway. A month later, they presented the proposed route for the bridge during a public hearing held in South Padre Island.

SOUTH PADRE ISLAND SECOND ACCESS PROJECT

Written by Jorge I. Montero and Tony Vindell

Port Isabel

bridge, closing it for two months. As long as we only have one way on and off the Island, our residents’ and guests’ safety is an on-going concern, especially during hurricane season,” Allex said. Allex said it's a bit too early to talk about cost or when construction would start as they have not even gotten close to the bidding process, but he estimated the cost of the project at $400 million. “Of course,” Allex said, “that could change one or two years from now.” He said financing the bridge will be over a 50-year term and will pay itself by a toll system. The construction of a second causeway would not only give its residents and visitors a second alternative to get on and off the Island, but also will help generate economic development on the Island and in the region, local officials said.

Economic boom

Turn To Page 37 BEDC.com

Car dealerships revamp showrooms Continued from Page 35

Ram to his Chrysler Jeep franchise, and after obtaining the deal, he needed more space to accommodate his new inventory of trucks, he told The Brownsville Herald. With the new acquisition of Dodge Ram, he has the car and truck market covered, he said. “We can now participate in every market, from compact cars to heavy duty trucks and everything in between,” Johnson told The Herald. With his new inventory, Johnson, who has operated the dealership since 1974, said that he expects to have a good 2013. “In Texas trucks are king,” he told The Herald. “I think that Texas sells 47 percent of all the trucks in the U.S. That’s quite a bit. That’s why we wanted the Ram. We wanted trucks and of course a complete line of cars.” Johnson’s dealership already employs 56 people and will probably add five or 10 more employees once the expansion is complete.

Charlie Clark, the new guy in town

Charlie Clark finally got what he wished for: a new car dealership in Brownsville. The automotive entrepreneur said he always saw the economic potential this city has and he is confident that he is going to do well here with his new Nissan dealership, which opened its doors in August. “This is a dream come true for me,” he said. “I have been asking for a full service dealership in Brownsville since 2000 and finally got it.” The used car lot he ran for a number of years in Brownsville where 10 company employees sold vehicles from a trailer house has now been replaced by a 28,000-square feet facility built at a price tag of about $8 million. “I paid the debt on the propBEDC.com

erty with the used cars lot,” he said. “I bought the six-acre property betting it was going to be a wonderful location.” He credits the success of his business to his administrative staff and to his fine team of workers. “We wouldn't be here if it weren't because of our team," he said. "It's really amazing how we got the project off the ground.” A little more than 10 years of being in business, Clark earned the distinction of running the number 2 Nissan dealership in the nation and hopes that his new venture will move them a little closer to the top spot. “We are Number 2 in the nation, beating places like Dallas, Miami and Los Angeles,” he said. “And with this new dealership we believe we are going to double our sales.” Christopher C. Cobb, area general manager for the central region with Nissan North America Inc. in Irving, said the Clark dealership is number two out of 1,100 the company has nationwide. “It's great to sell a lot of cars, but when you treat your customers and your employees right this is what you get,” he mentioned. Clark said he will employ from 80 to 130 people to work at the new dealership. “Even though the gamble is having the two stores so close together, we do have a formula for success,” he said. “Our Brownsville customers will be shopping here instead of going to Harlingen and we also have Matamoros and beyond. “We are going to increase our market share,” he said, before concluding with a resonant, “Oraleee.” EJ Tony Vindell contributed to this article

Tru-Tone

Continued from Page 33

tion is the proper pretreatment and cleaning of the parts which are to be coated. Tru-Tone's e-coat systems are specialized which allow for different levels and degrees of pretreatment depending on the metal substrate being coated. Aluminum, galvaneal, pregalvanized, zinc castings, cold rolled steel, etc. all require different levels of cleaning, conditioning, or zinc phosphating for a proper finish. Your typical monorail or auto-indexing ecoat system cannot clean and pretreat every load of parts differently. Only Tru-Tone Finishing has the capability of providing such customized pretreatment. The result of this

specialized all reverse osmosis 11-stage pretreatment systems is a properly cleaned, conditioned, and zinc phosphated part regardless of substrate which provides our customers with the "Class A" finish that they demand.

Powder coating

Tru-Tone Finishing main plant of 80,000 sq ft offers unique power coating processes. All of its equipment and processes are EPA approved and ISO-9001: 2000 certified. The company has 4 in-line spray booths which can accomodate conveyorized mass production or individual parts of any color, chemistry, or textured finish. EJ

SPI second causeway Continued from Page 36

“The proposed project is critical on a day-to-day basis, giving the Island’s residents and visitors a second option to get on and off the Island. Besides transportation reasons for this proposed project, we also need the infrastructure in order to support economic development on the Island and in the region,” said Pete Sepulveda, Jr., CCRMA Executive Director. Richard Franke Jr., an entrepreneur/developer with Franke Inc.Realtors, has been involved along with his brother Dennis in a multi-million-dollar upscale project on the north side of the Island called The Shores. Winter 2012

The development, located just south of the proposed site of the second causeway, is in a prime spot for residential and commercial development that would have a tremendous beneficial impact with the construction of the new bridge. Franke said one of their newest projects that is close to completion is Los Corales, an 84-unit condominium complex that is about 30 percent sold. Besides Los Corales, The Shores has many single family three-story houses priced at $700,000 and up. Franke said they have a new tract of land just north of the existing development that is ready to go. EJ

Brownsville Economic Journal

North Brownsvil

This property has the coveted

‘Shovel Ready’ seal by an

le Industrialâ&#x20AC;&#x2C6;Park

i n t e r n a t i o n a l s i t e s e l e c t i o n f i r m , T h e A u s t i n C o m p a n y.

“Texas is a state where a dream can be put to work.” - Texas Governor Rick Perry

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