Brownsville (Texas) Economic Journal Fall 2013

EJ

Key industry

Vol. 2, No. 2 / Fall 2013

“I think Brownsville is doing exactly the right thing by investing in infrastructure�

- Dr. J. Bruce Kellison, Associate Director for the Bureau of Business and Research of the University of Texas at Austin

New Greener investments pastures Projects in the works strengthen local automotive industry

Logistics company finds better opportunities in Borderplex

Foreign Direct Investment Latin American companies look to penetrate the American market through Brownsville

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EJ Brownsville

Economic Journal

Cover story:

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Brownsville’s efforts in betting on heavy manufacturing for economic development translate into long term benefits for the entire Borderplex. And in an expert’s opinion, the industry is key for the region’s economic success.

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WHAT’S INSIDE

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Foreign Direct Investment

Latin American companies look to penetrate the American market through Brownsville

New and Improved

FastGIS facilitates Real Estate and data research of Borderplex

Cover Design and Illustration: Jorge I. Montero

High marks

Economic success of Brownsville Borderplex highlighted in recent rankings

New investments Projects in the works strengthen local automotive industry

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VIEWPOINTS

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Guest editorial:

The Mexican Energy Reform: Real benefits, real soon

Local Industry Corner: Brownsville is “All In”

Greener pastures

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Aries Freight Systems finds bigger and better opportunities in Brownsville

PRESIDENT’SCORNER

Nerdwallet.com sheds light on Brownsville’s potential

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Jason Hilts

President & CEO

BEDC.com

n the previous EJ issue, we provided a snapshot of the public-private partnership investment in infrastructure for the region and how we were literally and figuratively pouring the foundation for the region’s future.

Today, we’re starting to get a glimpse of our potential and there to recognize it was Nerdwallet.com, an organization which prides itself on being nerds who create great tools, crunch numbers and give unfiltered and unbiased results.

For most of 2013, the nerd organization has ranked Brownsville in its Top Ten U.S. Cities on the Rise, most recently nabbing a No. 3.

As the economy is trending upward, many are looking for booming cities which, “Brownsville is one of the fastest growing areas in the United States … the Port of Brownsville makes the city a shipping hub, with access to Mexico (and) the University of Texas at Brownsville providing employment opportunities while contributing to the growing community with its green outreach programs,” as stated by Nerdwallet.com.

The organization used a formula analyzing population growth, median income growth and demand at the international airport, all from 2007 to 2013, for its ranking of 233 cities. The airport is part of their equation, gauging how many travelers, especially business travelers, are coming to the city to find industry and business opportunities, according to Nerdwallet.com.

Listed Nos. 1 and 2 were Gainesville, Fla., and Fargo, N.D., respectively. The others in the Top Ten included Bloomington, Ill., Fayetteville, N.C., Alexandria, Va., Shreveport, La., El Paso, Texas, Huntsville, Ala., and Mobile, Ala. We’re encouraged to see how Brownsville is slowly transforming its future by what’s being done today.

As we’ve said in the past, it’s no secret what we’re trying to do – recruit Foreign Direct Investment. Our objective is to position the Borderplex for global competition.

Being one of two Texas cities in the Top Ten is certainly an indicator of what’s in store for Brownsville’s future. EJ

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EDITOR IN CHIEF Gilberto Salinas gsalinas@bedc.com

EDITORIAL CONTENT & DESIGN COORDINATOR Jorge I. Montero jmontero@bedc.com

COPY EDITOR Sylvia Rodriguez srodriguez@bedc.com

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:

PHOTOGRAPHY BEDC Editorial Team

CIRCULATION Sylvia Rodriguez srodriguez@bedc.com

FOLLOW US

ADVERTISING Jorge I. Montero jmontero@bedc.com

CORPORATE CONTACT Lizzy Putegnat ldelagarza@bedc.com

RESEARCH & ECONOMIC INDICATORS Daniela Sosa dsosa@bedc.com

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

copyright laws related to non-profit institutions, such as the BEDC, and for educational purposes.

Fall 2013

Brownsville Economic Journal

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The Mexican Energy Reform: Real benefits, real soon GUEST EDITORIAL

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f we had to describe the last year political and economic scenario in Mexico all of us, national and international spectators, would agree that it has been exciting and not boring at all.

Late last year a major labor reform was enacted and this year we have seen the telecommunications reform a reality, the education reform being implemented and a tax reform that for most of us in the business community is unwelcome since it will cause additional hardship to a substantial number of taxpayers, particularly those on the Mexican side of the border, maquilas and individuals..

But other than some left wing parties and groups who vehemently oppose any modification to the status quo of the current energy legislation, particularly in the oil and gas fields, a majority of the Mexican people are now expectantly waiting for the discussions and final approval of an energy reform that will certainly open up the drilling and exploration markets to private investors.

Although most believe the reform will very likely be approved within the next few weeks and in spite of the fact that no one knows for sure how the final bill would look like, most analysts believe those activities will no longer be reserved in exclusivity to PEMEX. Similar reforms in other countries that had constitutional restrictions to allow private investment in the oil drilling and exploration industries have undeniably demonstrated that there are multiple benefits to be attained with the flow of “new money.�

The Texas-Mexico border communities and particularly the region close to the Gulf of Mexico need to start preparing themselves to take a proactive part in the new developments that will sooner rather than later begin to happen.

Oil exploration and drilling is a very complex industry, particularly when it takes place in deep sea water as the case is with the recent discoveries in the Gulf of

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Ernesto Velarde Danache

President & Founder of Ernesto VelardeDanache, Inc. Mexican & International Lawyers

The Texas-Mexico border communities and particularly the region close to the Gulf of Mexico need to start preparing themselves to take a proactive part in the new developments that will sooner rather than later begin to happen.

Mexico. An army of talented people is required with various levels of education and skills.

An array of products is also required to be supplied for the construction, operation and maintenance of the various facilities that are used for the purpose as well as for the support that this industry must receive

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from third parties.

The local South Texas, Northeastern Mexican communities have in the past been involved in farming, light manufacturing and trade. We now have an opportunity that many worldwide will certainly envy. We will soon be able, if willing, to engage ourselves directly by providing services, people and products to this new industry.

How can we participate? What is required? How do we go about it? These are some of the questions we have been hearing lately. Well, this has to be a joint, community effort.

Local and municipal governments, business development groups, chambers and associations should begin to organize informative seminars by experts on the subject in an effort to educate the local communities into the needs of this industry; schools and universities should start planning the introduction of new careers to cater to the need of professional people that will be required by the investors to come.

What we have seen in the EagleFord/Burgos site is that most of the companies supporting the gas extraction effort do come from distant lands and their suppliers are seldom local. And this is not right.

We have to team up to organize ourselves, identify the needs, educate and prepare ourselves to act and move accordingly.

As is the case with any new venture, going into the unknown may often prevent those that are shy from leaving the comfort zone that is provided by an environment we are very familiar with. Life frequently teaches us that opportunities must immediately be grabbed when they present themselves.

The time will soon come to get moving. Let us be prepared. We cannot afford to lose an opportunity to do something real good for ourselves in the Texas/Mexico gulf region. That would not be right. EJ BEDC.com

New and Improved

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FastGIS facilitates data research of Borderplex BEDC launches new online buildings and sites database

INFORMATIONAL TOOL

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From Staff Reports

he Brownsville Economic Development Council has recently launched its new buildings and sites database using the custom designed FastGIS program built by FastFacility.

FastGIS allows the BEDC to customize data about the Brownsville Borderplex and offers potential clients all the information available about the region at their fingertips.

The new easy to navigate program, available on the BEDC website www.BEDC.com, offers complete GIS functionality. Powered by ArcGIS server, users will receive the most comprehensive possible view and data of the Borderplex region with simple to use GIS tools.

Some of these tools include unlimited data layers, multiple database search, report generation, drawing and measuring, as well as nine basemaps for the users to access all the information necessary for a site selection report.

FastGIS provides the option of adding an unlimited amount of data as layers to the map such as demographics, economic indicators, infrastructure projects, parcels information, public transportation routes, real estate, recreation, schools, zoning, among other information.

The system also allows for the integration of Business Listings, Census Tracts, City Boundaries, Colleges/Universities, County Boundaries, Demographics, and Urban Areas. EJ BEDC.com

Staff Photos

The new easy to navigate program, available on the BEDC website www.BEDC.com, offers complete GIS functionality. Powered by ArcGIS server, users will receive the most comprehensive possible view and data of the Borderplex region with simple to use GIS tools.

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Brownsville Economic Journal

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Brownsville is “All In” LOCALINDUSTRYCORNER

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Lizzy Putegnat

Dir. of Business Retention & Expansion

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dvancing education, creating careers, transforming Brownsville…that’s what “All In” is all about. “All In” is a community-wide movement launched by Partners for Postsecondary Success (PPS), an initiative that is building community partnerships with the goal of doubling the number of young adults with postsecondary credentials that have labor market value and lead to living wage employment by 2025.

PPS was launched with a $100,000 one-year planning grant and a $1.3 million implementation grant from the Bill & Melinda Gates Foundation. Brownsville was one of only three cities in the United States to receive funding from the Gates Foundation. The local community (individuals, businesses, and foundations) also came together and raised $240,000 as matching funds for the implementation plan.

The Partners for Postsecondary Success include: Brownsville Chamber of Commerce, Brownsville Economic Development Council, Brownsville Independent School District, Cardenas Development Company, Community Development Corporation of Brownsville, Project VIDA (Valley Initiative for Development & Advancement), Texas Southmost College, United Brownsville, United Way of Southern Cameron County, University of Texas at Brownsville, Wells Fargo Advisers, and Workforce Solutions Cameron.

Shortly after the partnership was formed, taskforces were created within the partnership as a strategy towards reaching our goal. We were cognizant of the many puzzle pieces in front of us and realized it would be more effective if we had specific groups of people focused and committed to a particular piece of the whole puzzle.

The taskforces that were created to address and resolve specific issues were: 1) Sustainability 2) Data 3) Policy & Practice 4) Community Engagement We’re all about people, quality connections and teamwork. We believe that by working together - educators, employers, local leaders, parents, friends, mentors and believers, we can transform Brownsville by 2025.

Though we still have quite a way to go, PPS has already reached many milestones. Some of the major accomplishments thus far include the following: 1) The Indicator Report on Human Capital and Education was released in March 2013 as a tool to engage the community in the partnership’s work. The indicator report reflects

Brownsville Economic Journal Fall 2013

areas that need improvement and serves as a guide in directing our efforts and measuring the outcomes. 2) The Curriculum Alignment Program, already in its 2nd year, has been key towards helping students transition successfully from secondary to postsecondary education.

BISD teachers, UTB, and TSC faculty have been meeting to identify gaps between secondary and postsecondary curricula, and furthermore developing ways they can bridge those gaps. 3) The Career Planning Tool is a webbased tool created by BISD and UTB counselors and advisors, with the help and input from the BEDC and Workforce Solutions Cameron. This tool offers students and parents information and advice on pathways to postsecondary education and careers. 4) The Student Ambassador Program is about college students helping high school students persevere and succeed. The student ambassadors are from UTB, TSC, and TSTC. The program is now embedded as part of the Career & Technical Education curriculum for seniors at BISD, and this year an estimated 1,200 seniors will benefit from peer-to-peer learning with college students about overcoming challenges and barriers into and through postsecondary education. 5) The Employer Engagement Program has established an internship council that offers training and guidance to employers and students interested in participating in internships.

Some local companies have voiced concerns over the workforce. However, Brownsville is not alone. There is, in essence, a national skills gap crisis - from students, to the unemployed, to current workers. Based on a Deloitte study, 600,000 manufacturing jobs in the US are unfilled due to talent shortage. Businesses cannot find workers with basic math, science, and technical competencies. Now, more than ever, we need to focus on developing our human capital.

Craig Giffi, Deloitte co-author of the report “The Future of Manufacturing; Opportunities to Drive Economic Growth,” said, “Economic growth rests with skilled workforce…In the race to future prosperity, nothing will matter more than talent. The skills gap that exists today will not likely close in the near future…companies and countries that can attract, develop, and retain the highest skilled talent – from scientists, researchers, and engineers to technicians and skilled production workers will come out on top.”

Turn To Page 11 BEDC.com

Foreign Direct Investment Latin American companies eyeing Brownsville as a door to enter the American market

BUSINESS RECRUITMENT

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Staff Photo

Members of the delegation participated in a week long entrepreneur-training session hosted by the BEDC and the University of Texas at Brownsville’s incubator program. The delegation received information from topics such as business law, accounting, immigration, regulations, financing, business planning and marketing.

Latin American delegation visits Brownsville

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fficials with the Brownsville Economic Development Council had their hands full in November as they hosted a 30-member delegation of business representatives from Latin America.

All the visitors were from foreign companies sizing up Brownsville as a place potentially to relocate or expand their operations. Colombians made up the bulk of the delegation, though Mexico and Ecuador were also represented. All members of the delegation paid their own way.

Industries represented included food processing, textile and apparel, electronics and technology, construction and materials, light manufacturers, and medical products, according to Gil Salinas, BEDC vice president.

BEDC.com

Many of the firms were small to midsized businesses that each would create anywhere between 10 and 100 jobs here, he said.

The delegation was officially welcomed by Mayor Tony Martinez before being led on tours of local assets, including a Wednesday trip to the Port of Brownsville. The visitors also met with local companies in business match-making sessions to learn about potential opportunities.

In addition, BEDC and the UTB incubator program put on an entrepreneurtraining session that introduced members of the delegation to numerous facets of doing business in the United States. Topics included business law, accounting, immigration, regulations, financing, business

planning and marketing.

The visit was largely nailed down during BEDC’s mid-September trade mission to South America, when a team of Brownsville officials met with representatives from 400 companies, Salinas said.

The group had organized trade missions to South American countries twice before over the past three years. On the first trip, officials met with merely dozens of companies, as opposed to hundreds.

BEDC’s Latin American business-recruitment strategy earned it a “Cities of the Future” designation from fDI Intelligence, a publication of the London-based Financial Times, for its effort to attract “foreign direct investment.”

Turn To Page 11

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Brownsville Economic Journal

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Greener pastures

The Right Move

Aries Freight Systems finds bigger and better opportunities in Borderplex

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ries Freight Systems came to Brownsville because of opportunity — and to save some money.

The Houston-based logistics, transportation, warehouse and distribution company had an office in Pharr for a couple of years before Emanuel Velasco, district manager, and Regional Account Manager Annalicia “Ani” Velasco came to the conclusion that Brownsville was a better place to be from a logistics and transportation standpoint.

The Brownsville operation caters to the maquila industry in Mata-

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LOGISTICS

moros, Reynosa, Monterrey and elsewhere.

“We were the ones that kind of pushed it,” Emanuel said. “We were paying about $350 per trailer to go from Matamoros to McAllen. Once you add that up, two or three trailers a day, it gets pretty expensive.”

The Velascos, a mother-and-son team, consulted and then brought up the idea with Aries CEO Jeff McIntyre, who liked the idea of a move.

“He said, ‘Hey, if it makes good business sense, why not?’” Emanuel said. “And now we’re here.”

“We decided that business is growing in Brownsville and this is where we need to be,” said Annalicia, who has 25 years in the industry.

Emanuel said being closer to the Port of Brownsville — a top-five exporter/importer of steel and other commodities — strengthens the argument for being in Brownsville. So does the proximity of several international bridges.

The Velascos take delivery of

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products made at maquilas, sort them for distribution then ship them off, usually using a common carrier, to sister plants or customers in the United States or elsewhere around the globe.

That includes local pickup and delivery as well as ocean transport to serve the offshore oil and gas industry, which is seeing increased activity in the Gulf of Mexico.

“We can pick up anywhere in the world and ship to and from anywhere in the world,” Annalicia said.

Most of their business these days is trucking, though in years past air freight played a dominant role.

“Back in the late 80s, early 90s, everything was air freight,” she noted.

That’s because the auto industry largely operated on a “just-in-time” supply strategy. Then 9/11 happened, the auto industry took a hit and production at maquilas slowed down.

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BEDC.com

Brownsville is “All In” Continued from Page 8

As a member of the PPS Leadership team and co-chair of the Employer Engagement Committee, I exhort employers to become involved, offer internships, and be part of the solution. Employers often ask me, “What will the company get out of it?” That’s a fair and valid question. My response to them is, “Your company makes many capital investments…this is just another kind of capital investment.

You are investing in your future workforce. Your ROI will be an experi-

enced, skilled, and knowledgeable employee that will add value to your company.”

For many years, most of the partners were on different boats, paddling in various directions, trying to reach similar goals…now we are all inside one boat, paddling in sync, and all going the same direction to reach our destination. We invite you to jump on our boat and join the movement. We invite you to be “All In.” EJ

Greener pastures Continued from Page 10

Things eventually recovered, but automakers switched gears and began building warehouses along the border, signaling a shift away from reliance on air freight.

“At that point they started setting up distribution points and they started stocking material — for example, Ford, GM and Chrysler,” Emanuel said.

“Instead of buying one pallet of raw material, they would buy a truckload, which fits about 25 pallets, and they would store it in a warehouse here on the border.”

Among the maquilas Aries serves are suppliers to the likes of BMW, Ford, Freightliner, GM, Mercedes, et cetera. The firm is certified by Customs Trade and Partnership Against Terrorism, meaning trucks are sealed at departure points to allow for streamlined inspections and thus faster border crossings.

“If you’re CTPAT certified you’re going to breeze through the border crossing,” Emanuel said. “If you’re not, you’re going to go through a series of inspections, X-ray, whatever it is that they have to do.”

“Our business is ‘every minute counts,’” Annalicia said.

Aries is also certified by the TransBEDC.com

portation Security Administration since it uses commercial airlines. TSA certification guarantees same-day service, she said.

Aries Freight Brownsville, 4536 E. Ruben Torres Blvd., became operational last January. The Velascos plan an official grand opening Oct. 16 now that the dust has settled from the move and offices have been built.

Aries, founded 30 years ago, also has operations in Dallas, El Paso, Laredo and Miami, and is planning a Chicago operation, Annalicia said.

As for the future of the industry, the Velascos foresee a resurgence in air freight, partly due to rising diesel prices. Maquilas are thriving, meanwhile, though not at pre-recession levels, Emanuel said.

“I think it’s plateaued for now,” he said. “You don’t see families with three and four cars anymore. But in the next let’s just say five to 10 years, I think things will start ramping up again the way they used to be, to where we’re using more airplanes and quicker service and things like that.”

This article was written

by Steve Clark and appeared in the Thursday, October 10, 2013 issue of The Brownsville Herald

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Latin American delegation Continued from Page 9

When attempting to recruit investment, foreign and domestic alike, emails and social media “will only take you so far,” Salinas said.

“You still need to do the face-to-face,” he said. “At the end of the day, if somebody’s going to invest in your community they want to know who you are and what the product is like. We think we have a great product; we have a great story to tell.”

Actually traveling to target countries is the most aggressive form of investment recruitment, but also the most difficult, Salinas said.

It involves doing research to identify which companies to focus on, knocking on doors and convincing those businesses to send someone to Brownsville to check out things.

The delegation wouldn’t have come to Brownsville if the firms represented weren’t already keenly eyeing Brownsville, Salinas said. If recruiting is a 10-step process that starts with a cold call, actually visiting the potential site is probably the eighth step in the process, he said.

“In economic development and site selection, whenever a company or investor visits your community they’re already in the latter part of the actual selection process,” Salinas said. “It means there’s a definite seriousness to the project you are working with.”

Usually, when Latin American companies think of doing business in the United States they think of Miami, he said. BEDC has attempted to show these businesses that “there’s more to the U.S. than Florida.”

Another point they’re careful to make is that Brownsville is part of Texas, which has the second largest economy in the United States and a Hispanic population bigger than Florida, making it the logical choice for a Latin American company to break into the U.S. market, Salinas said.

“Once you hit the rest of the market in the U.S. it will be that much easier,” he said. “You want to be in Texas to try to take on the bull that we know as the U.S. market.”

This article was written by Steve Clark and appeared in the Friday, November 14, 2013 issue of The Brownsville Herald Fall 2013 Brownsville Economic Journal

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University Merger

New regional university will increase number of physicians and create opportunities for biomedical research

MEDICAL INDUSTRY

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UT Medical school would improve industry T

he influx of students to a new regional medical school is expected to boost what is now a low doctor-to-patient ratio in the Rio Grande Valley and help physicians improve medical services to residents.

The Valley medical school will also create new research opportunities locally, said Dr. Leonel Vela, regional dean at the Regional Academic Health Center in Harlingen.

Medical students will be able to participate in research projects that could provide insight into the Valley’s particular needs. And patients from the Valley will also be able to be part of clinical trials here, Vela said.

The Valley, along with the entire state of Texas, has long dealt with an inadequate number of doctors as the population has grown, experts say.

According to the most recent estimates compiled by the Texas Medical Association, in 2011 Texas ranked 44th in the nation with a ratio of 245 physicians for every 100,000 residents.

Efforts have been made to attract more physicians to the state, and the new medical school in the Valley is expected to help efforts here to match the pace of population growth.

The Texas Medical Association website states that Texas licensed 3,630 new doctors in 2012, the highest number of any year on record. That was a stark contrast to the 2,088 doctors licensed in 2001.

Experts said this increase was largely

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attributable to 2003 tort reform legislation, with a constitutional amendment that limited hospital liability for non-economic malpractice damages.

“Up until that passing, there were people leaving in the middle of their practice,” Dr. Stephen Brotherton, president of the Texas Medical Association, said. “That’s been solved. So that made a big difference and it made a huge difference in (the Rio Grande Valley).”

However, experts said the reform raised the issue of training and keeping new physicians locally.

“We have been educating doctors for other states for a while, and it’s actually a mistake we have made in the past,” Brotherton said. “We have not enough residency spots for all of our medical school graduates and it forces them to go elsewhere, and unfortunately a lot of them stay there and don’t come back.”

In June, Gov. Rick Perry signed a bill into law merging the University of Texas at Brownsville and the University of Texas-Pan American and creating a new regional medical school, with half the students going to the RAHC in Harlingen.

The decision to create the medical school is expected to address the need to

3,630

number of new doctors that Texas licensed in 2012, according to the Texas Medical Association

increase the number of physicians here and retain them.

“We start with a notion that South Texas has been very much short of physicians for a long time,” said Dr. Kenneth Shine, executive vice chancellor for health affairs for the University of Texas System.

“So, the University of Texas has long had a desire to provide opportunities for students in South Texas and to educate them in South Texas so that they may be educated in staying there,” Shine said.

BEDC.com

25.6% 2.3%

1.5%

The Education & Health Services sector leads all industries in employment in the Borderplex, showing a 74% growth since 2000.

2.8%

Employment by sector

MEDICAL INDUSTRY 23.8%

4.1% 4.1%

Education & Health Services

18.9% 7.1%

9.7%

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Total Government

Trade, Transportation & Utilities

Leisure & Hospitality

Professional/Business Services Manufacturing

Financial Activities Other Services

Mining, Logging & Construction

Information

Source: Texas Workforce Commission

The expected influx of medical students, and the consequent recruitment of more physicians who are expected to remain in the region, bring another level of medical service to the region: local residents will be able to participate in medical trials conducted here, providing insight into particular medical needs in the Valley.

Residencies and workforce impact

“The single most important impact is to help with the workforce needs of the community,” Shine said. “One of the reasons the hospitals are very interested in supporting residency positions is because BEDC.com

they want a supply of physicians going forward.”

At the Regional Academic Health Center in Harlingen, more than a thousand students since 2002 have taken advantage of an internal medicine residency program at Valley Baptist Medical Center, as well as the family practice residency program at McAllen Medical Center.

However, with the development of the new medical school, the UT Health Science Center at San Antonio has worked with area hospitals and clinics to add residency positions to the existing and future programs.

“Several years ago we became interested in expanding the opportunities, and the first thing we had to do was substantially increase the number of residency positions,” Shine said.

In 2013, there were 1,761 residency programs in Texas, according to TMA officials. They said 1,682 of those were filled this year.

Texas would need to add an additional 400 residency positions to ensure a recommended 1.1 to 1 ratio of residency positions to medical students in the state, according to a 2011 TMA report.

Looking at the local region, Shine said, “We began to work with the hospitals in the region, and we now have commitments for an additional 115 residency positions.

So over the next couple of years we will have a total of about 148 residency positions.”

The new residencies are likely to be in adult psychiatry, adolescent and child psychiatry, internal medicine, obstetrics and gynecology, family medicine and surgery.

“For us here, it is very important to develop these residencies. These students will now have a place to conduct their post-graduate studies, and a higher probability that they will stay here and set up a practice,” Vela, regional dean at the RAHC, said.

The new medical school also provides an opportunity to recruit new faculty, and officials say it will help bring additional and previously unavailable services to the region.

This article was written by Jesse Mendoza and appeared in the Sunday, August 18, 2013 issue of the Valley Morning Star Fall 2013

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Talk of the town

High Marks

Economic success of Brownsville Borderplex highlighted in recent rankings

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From Staff Reports

rownsville has recently been recognized by different renowned publications as one of the best places to do both, international and domestic business. These accolades have given the Borderplex the distinction of being one of the cities of the future, a top city for global trade, a city on the rise, a place for future job growth, and the top trade zone for foreign exports. EJ

#3 CITY ON THE RISE

Brownsville ranked number 3 on nerdwallet.com’s “Top 10 Cities on the Rise.”

The site considered Brownsville as one of the fastest-growing areas in the U.S., with 1.3 percent growth in employment and 17.8 percent growth in median income. Another factor for the ranking was the boost in passenger traffic at the Brownsville South Padre Island International Airport, which saw a corresponding 0.2 percent growth.

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ACCOLADES

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#1 FOREIGN EXPORTS

The Port of Brownsville was first among the nation’s top 25 foreign trade zones for exports to foreign countries in fiscal year 2012, according to the Foreign-Trade Zones Board’s 74th annual report to Congress.

Brownsville’s FTZ exported more than $3 billion worth of commodities in 2012 — primarily offshore oil rigs built by Keppel AmFELS, petroleum products, steel and other metals. In terms of total exports and imports ($3.8 billion), the port was ranked 11th in the nation.

BEDC.com

#21 CITY FOR GLOBAL TRADE

Global Trade Magazine reports Brownsville registered $6.0 billion in exports for 2011, a 2.1 billion increase from 2010 (52.3 percent increase). These statistics helped the Borderplex rank number 21 on the list of Top 25 Cities for Global Trade. The magazine reported Brownsville-Matamoros is a U.S.-Mexico region with strong economic ties.

Mexico ($3.8 billion) and Canada ($333 million) accounted for 68.6 percent of 2012 exports. Top U.S.to-Mexico sectors were petroleum ($920 million), soy beans ($333 million) and TV components ($288 million).

#8

CITY OF THE FUTURE

#10 FUTURE JOB GROWTH

Forbes placed Brownsville at number 10 on the list of Best Cities for Future Job Growth. The highly respected economic news source projected the Brownsville MSA to have the fastest job growth through 2015 in the U.S. as well as in the state. It also forecasted an annual job growth of 3.1 % for the region.

Brownsville was ranked among “Cities of the Future” for 2013-14 by fDi Intelligence. The Borderplex made the list for its “foreign direct investment” strategy, which fDi ranked eighth among the best for small cities in North America. For the FDI strategy rankings — a new category this year — the magazine’s research team collected submissions from 127 cities containing details of each city’s approach to generating FDI. The “small city” category lists cities with populations between 100,000 and 350,000.

Brownsville’s population is around 200,000.

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BROWNSVILLE INVESTING IN INFRASTRUCTURE An increase in electrical capacity, improvements in water and waste water infrastructure, and the construction of shovel ready industrial parks help accommodate large scale heavy manufacturing plants such as a steel mill or rolling steel plant.

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“I think Brownsville is doing exactly the right thing by investing in infrastructure”

- Dr. J. Bruce Kellison, Associate Director for the Bureau of Business and Research of the University of Texas at Austin

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COVER STORY

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Since its establishment at the Port of Brownsville in 1990, Keppel AmFELS, a wholly owned US subsidiary of Keppel Offshore & Marine Ltd (Keppel O&M), has built up its facilities and equipment to become the most well equipped offshore shipyard in the Gulf of Mexico. Keppel AmFELS has built four jackup rigs for Perforadora Central since 2002, the most recent being the Papaloapan in early 2013 (pictured).

A long term benefit Heavy manufacturing Expert: Industry is key in Brownsville’s economic success

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Written by Jorge I. Montero

xperts agree that heavy manufacturing is an important component of a community’s

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economic success. The benefits it brings to a region include long term capital investments, as well as employment opportunities with greater salaries and a highly skilled workforce.

In fact, according to Dr. J. Bruce Kellison, Associate Director for the Bureau of Business and Research of the University of Texas at Austin, economic development experts and economists favor this industry over others.

“The reason why states like to attract manufacturing to its region is because the

supply chain it generates is so thick,” Kellison said in a phone interview. “We like to talk about thick supply chains that have a lot of economic impact and economic turnover, a lot of reverberation in the local economy. There is nothing better than heavy manufacturing.”

But, in these challenging times, the manufacturing industry has been shrinking at a steady pace, Kellison noted, and something needs to be done to help revert that trend.

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COVER STORY “Manufacturing in general is shrinking, manufacturing employment is shrinking steadily.

Anything that we can do to reverse that and grow heavy manufacturing is a good thing,” he said.

So far in the last quarter of 2013, the manufacturing activity in Texas has been showing a positive outlook.

The state’s factory activity picked up in October, according to business executives responding to the Texas Manufacturing Outlook Survey published by the Federal Reserve Bank of Dallas. The production index, a key measure of state manufacturing conditions, rose from 11.5 to 13.3, suggesting output increased at a slightly faster pace than in September.

Doing the right thing

The Imagine Brownsville Comprehensive Plan, a guideline designed to address the future growth of the city in key sectors, identifies heavy manufacturing as a high value cluster that offers the potential for the greatest impact on the economy of Brownsville.

The economic plan also states that the heavy manufacturing cluster is one of the most promising economic development catalysts in the region. It has the potential for increasing the level of integration dramatically through targeted recruitment of key firms and integration of existing firms.

With that in mind, Brownsville has been working on a series of infrastructure projects that have put the region in the driver’s seat to attract big corporations to the Borderplex

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Areas of opportunities

The potential markets that the Borderplex is looking into as part of the region’s heavy manufacturing cluster includes:

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Key player in the manufacturing industry of the Borderplex

n Manufacturing of steel compo-

nents for renewable energy equipment (e.g., wind turbines, wind turbine structures and heavy equipment, solar energy structures) n Manufacturing of steel components for energy exploration and extraction (e.g., off shore oil platforms and associated heavy equipment) n Manufacturing of steel components for heavy construction equipment (e.g., industrial, mining, agriculture, and oil exploration) and in turn convert this metropolitan region of 1.2 million into the manufacturing center of South Texas.

Those projects, that have been completed, are under construction or in planning phase, are in the areas of real estate (industrial parks and industrial corridor), transportation (newly designated interstate and overweight corridor), energy (800 MW power plant), water management, and human capital.

“I think Brownsville is doing exactly the right thing by investing in infrastructure,” Kellison said.

“I can’t think of a better place to do it given the proximity with Mexico. The area serves as a transit point for shipping and reshipping across the border,” he added, meaning that the Borderplex’s prime location is excellent for the development of a heavy manufacturing cluster.

Brownsville Economic Journal Fall 2013

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eppel AmFELS is a Singapore-based company that serves one of the most robust oil and gas markets in the world.

The company has about 20 yards around the world and looking towards more expansion in Latin America and Mexico.

It was established in Brownsville in 1990 and has built a solid track record in the construction, refurbishment, conversion, life extension, and repair of mobile drilling rigs and platforms. AmFELS has helped place Brownsville on the global map for world class offshore solutions.

Keppel AmFELS has about 2,700 direct employees, but about 3,000 workers on their yard right now. They have an engineering office in both Brownsville (71 engineers) and Matamoros (30 engineers).

Most recently, the company landed another offshore rig job: a $240 million contract with Central Panuco S.A. De C.V., a subsidiary of Mexico’s Perforadora Central, to build a B Class “jackup” rig. Delivery is scheduled for the fourth quarter of 2015 for operation offshore of Mexico.

The new rig will be able to operate in water depths of up to 400 feet and drill to depths of 30,000 feet.

Keppel AmFELS has built four jackup rigs for Perforadora Central since 2002.

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COVER STORY A long term benefit

Kellison also noted that heavy manufacturing has the upper hand on other industries because of the type of beneficial return it brings to the economy of a region or community.

For example, the retail industry produces more of a “short term” capital investment and generates fewer jobs with a lesser pay, whereas heavy industry is generally a long term investment that brings more jobs with a higher salary.

“The jobs are more permanent and higher paying (in heavy manufacturing) than in the retail industry,” he said. “It all comes down to that. They (communities) are better served in the long run.”

And the commitment a company in retail makes to a community is more unstable, since it is easier for them to close the business and leave than for a steel plant to do the same, he added. The steel plant has a greater commitment to a community since it is harder, and costlier, for them to set up shop and then retract and leave town.

When asked about what a community needs to help the heavy industry thrive in the region, Kellison responded that the key is integrating the local workforce development boards as well as the local education institutions in providing the sufficient human capital and try to keep a flexible workforce ready to go to employ people.

“If making long term investments it’s important to BEDC.com

keep the good communication lines open between the employers and employee base,” he said. “What makes Texas so attractive to manufacturers is the healthy supply of local labor.”

“Make sure you’re training people for the right jobs and the skill sets are being updated and upgraded as you go,” he recommended. “Workforce development has got to be nimble and flexible when attracting new industries or expanding old ones.”

Brownsville’s bet

Kellison noted that Brownsville’s success in the development of a healthy and prosperous heavy manufacturing cluster can lie in two industries, steel and oil, the latter deriving from the projected rise in oil exploration in the Gulf of Mexico and Mexico’s new energy reform that could allow for private foreign investment.

Recent reports from City Research mentioned that Mexico might have 29 billion barrels of oil and gas reserves in the Gulf of Mexico that could be recoverable with foreign capital and expertise. Mexico could also have an additional 13 billion barrels of recoverable oil shale reserves. And experts forecast that the country could increase its production by as much as 25 percent by 2024.

Those close to Mexico and the Gulf, like Texas, and more so the Brownsville Borderplex, would be the most likely beneficiaries of a new Mexican oil boom, Kellison said.

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Key player in the manufacturing industry of the Borderplex

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All Star Metals was awarded a contract by the U.S. Navy to dismantle a decommissioned aircraft carrier, formerly known as the USS Forrestal (pictured above). ll Star Metals LLC has been operating as a licensed ship recycling and enviromental remediation contractor since 2003. Over the years, the company has grown from its small shipyard to a full blown ship recycling and metal processing center, and today ranks as one of the largest ship recycling facilities in the United States.

The company began with only 9 employees. In 2013, they have 250 people employed.

“Brownsville has a lot of the dynamics that other ports don’t have. We have a deep water port. The weather is great year-round, coupled with a full-on labor force that has the ability to meet our requirements in the recycling space,” Nick Shah, the company’s president, said.

Most recently, All Star Metals was awarded a contract by the U.S. Navy to dismantle a decommissioned aircraft carrier, formerly known as the USS Forrestal.

“The journey and dream is achieved, the hard work begins now – we look forward to working with the United States Navy to safely and successfully recycle the aircraft carrier, ex-Forrestal. Our team has worked tirelessly to get ready for a job of this magnitude and we are ready to see this come to fruition,” Shah said.

All Star is expected to begin towing the vessel from its current berth, the Navy’s inactive ship facility in Philadelphia, before the end of the year after the Navy approves a final towing plan, according to the announcement.

The aircraft carrier was decommissioned in 1993 after more than 38 years of service and saw action during the Vietnam War. The vessel was launched in 1954 from Newport News Shipbuilding and Drydock Co. in Virginia as the first of the so-called “super carriers.” It was commissioned in 1955.

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COVER STORY

“An investment like this in Brownsville could be really exciting 5 to 20 years out from now… We are watching that closely for its impact on Texas.

Investments made now are going to be perfectly positioned by the time Pemex finally opens up,” the economist said.

In fact, such investment already exists in the Borderplex in the name of Keppel AmFELS, and the potential to build from this company’s success in the region is enormous.

Since its establishment at the Port of Brownsville in 1990, Keppel AmFELS, a wholly owned US subsidiary of Keppel Offshore & Marine Ltd (Keppel O&M), has built up its facilities and equipment to become the most well equipped offshore shipyard in the Gulf of Mexico.

The yard engages in the construction, refurbishment, conversion, life extension and repair of a complete range of mobile drilling rigs and platforms. Spread over 165 acres, its comprehensive facilities are world class and include a drydock capable of docking the largest semisubmersible drilling units, and a modern steel processing plant.

G.S. Tan, President and CEO of Keppel AmFELS, said in early March that PEMEX's demand for jack up rigs is expected to remain strong and

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Keppel’s near market, near customer strategy has put his company in a good position to benefit from it.

“Keppel has developed a strong partnership with Mexican companies,” he said.

Keppel AmFELS’ close connection to PEMEX includes having built two 220 men accommodation modules for the national oil company in 2006 as well as repairing and servicing a total of 16 rigs that have been chartered by PEMEX from other companies over the years.

The firm recently landed a $240 million contract with Central Panuco S.A. De C.V., a subsidiary of Mexico’s Perforadora Central, to build a B Class “jackup” rig. Keppel AmFELS has built four jackup rigs for Perforadora Central since 2002, the most recent being the Papaloapan in early 2013.

“It makes a lot of sense in investing in port infrastructure but also specifically making Brownsville more attractive to companies that are building or servicing oil platforms, and helping exploration companies get out into the ocean,” Kellison said. “There’s already plenty of oil and gas exploration in the Gulf, and there is going to be more south of us if Pemex opens up to outside investment.” EJ

Brownsville Economic Journal Fall 2013

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Key player in the manufacturing industry of the Borderplex

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rico Products Corporation is a global OEM (original equipment manufacturer) and aftermarket supplier of windshield wiper systems, assemblies, and components for the auto industry. Trico windshield wiper products protect more drivers on the road in North America than any other wiper manufacturer. From conception to production and delivery, Trico provides superior visibility solution – from full wiper systems to wiper blades, arms, motors, and linkages.

Trico has 8 facilities throughout North America, South America, Europe, Asia, and Australia with about 1.5 million square feet of manufacturing space and around 2,500 employees worldwide.

They supply 50+ countries in those 5 continents. Included in their 8 facilities is a plant in Brownsville and a plant in Matamoros.

Their Brownsville facility is their North American manufacturing headquarters that serves both the OE and aftermarket sectors.

Their Brownsville facility is also their warehouse and distribution center for American, Canadian, and Mexican OE customers.

Trico’s Matamoros facility is the largest windshield wiper systems and wiper blade manufacturing facility in North America. At their Matamoros plant, they assemble, package, and paint for North American OE and aftermarket customers.

At both plants, their certifications include Ford Q1, VDA 6.1, TS 16949, ISO 14001, and ISO 9001.

At their Brownsville facility, which opened in 1986, they do plastic injection molding, metal stamping, rubber extrusion, tool and die, maintenance and repair, coating/painting line, and just recently in 2012 they began doing rubber injection molding.

As of July of 2013 they have a total of 391 employees at their Brownsville facility which operates 24 hours a day, 7 days a week.

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Expansion mode Lab on Wheels

TELECOMMUNICATIONS

GC Telecom expands its operations with mobile service truck

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C Telecom, a cellphone repair company that launched operations in Brownsville three years ago, is taking its show on the road.

The company got its start at the ITEC Center business incubator, relocated to 625 N. Expressway a year ago, and now has invested in a mobile repair lab for the purpose of bringing its services to the customer.

Besides cellphone repair, GC also works on laptops, PlayStations, XBox, and is a Bose-certified repair center as well.

The company has a statewide contract with Sam’s Club to fix Bose SoundDock digital music systems, said Benjamin Luna, the company’s head of sales and business development.

“But our main bread and butter is cellphone repair,” he said.

The mobile rig, a former pipefitting truck from California, has been tested at one location so far: Sunrise Mall, where GC also has a kiosk. Luna also hopes to take the mobile lab to the Rio Grande Valley outlet mall in Mercedes.

“The biggest thing is to set it up where people can see it,” he said.

The lab doubles as a billboard on wheels. If the concept is successful in the Valley, GC plans to put trucks in major metro areas like Austin, Dallas, Houston and San Antonio, Luna said.

To date, the company has depended on drop-off customers at its Sunrise Mall kiosk and at the company’s North Expressway headquarters.

“It’s been working great,” Luna said.

“Business is good. We’re happy where we BEDC.com

stand. Of course, there’s more to do.”

GC’s target clientele is largely comprised of cellphone customers who can’t afford or don’t want the insurance sold by phone manufacturers. It’s a quickly growing segment of the wireless-subscriber community, Luna said.

“This market is booming up in Austin, San Antonio, Houston,” he said. “A lot of people are now starting to do third-party repair instead of going through insurance.”

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As long as GC has the part on hand — cracked screens are a common issue — turnaround time is only an hour, he said.

Research is another aspect of GC’s operation, necessary for repairing the newest products on the market, such as fifth-generation iPhones and iPods.

GC started in Monterrey, Mexico, in the mid-1990s and today has a large Latin American footprint, with hundreds of technicians at repair centers scattered around Mexico, Central and South America.

Luna said GC in the Valley has a close relationship with its Monterrey-based sister company, and that his technicians go to that city for training.

GC contracts with major wireless providers such as Telcel and Movistar south of the border, and Luna hopes to do the same thing here with Sprint, Verizon or another top U.S. provider.

GC’s southern contracts didn’t happen overnight, of course, but took time to cultivate.

“It’s going to be maybe about the same thing here,” Luna said. “It’s going to take a little bit more time.”

He’s thinking one, maybe two years.

“There’s a lot of red tape we have to go through, and of course we want to do it correctly as well,” Luna said.

“We’re going in the right direction.”

This article was written by Steve Clark and appeared in the Thursday, August 29, 2013 issue of The Brownsville Herald Fall 2013 Brownsville Economic Journal

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PORT OF BROWNSVILLE

Leader in exports to foreign countries T

From Staff Reports

he Port of Brownsville ranked number 1 on the list of Top 25 Foreign Trade Zones for exports to foreign countries, according to the 2012 74th Foreign Trade Zone (FTZ) Annual Report to the U.S. Congress.

The Port exported commodities valued over 3 billion dollars.

The top commodities moved were offshore exploration and production plat-

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forms, petroleum products, metals, and steel.

“The Port of Brownsville continues to grow as an international leader in world trade. Our ranking as the number one FTZ and Port in the nation is very important to our role as the most significant logistics center in the region,” Port Director and CEO Eduardo A. Campirano said.

Campirano recently stated that it’s gratifying to see Texas as the number one state in Foreign Trade Zone activity and that the Port of Brownsville is leading

Texas ports in FTZ export activity.

“FTZ designation is just another tool we can utilize to attract more industry and manufacturing to our area,” he said.

The Port of Brownsville is the Grantee for Foreign Trade Zone No. 62 and offers sites at the Port of Brownsville, Brownsville-South Padre Island International Airport, Harlingen Industrial Park and Airpark, NAFTA Industrial Park and FINSA Industrial Park at Los Indios. Zone status is available to any of the Port’s properties.

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FOREIGN EXPORTS

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The Port of Brownsville ranked number 1 on the list of Top 25 Foreign Trade Zones for exports to foreign countries, according to the 2012 74th Foreign Trade Zone (FTZ) Annual Report to the U.S. Congress.

Top foreign-status products by value (in Texas) Oil/Petroleum (80%)

Consumer Electronics (11%) Petrochemicals (2%)

Consumer Products (1%)

Vehicles (1%)

Other (5%)

Source: 2012 74th Foreign Trade Zone (FTZ) Annual Report

The Port is a leading in-transit port and major importer of steel in the United States.

In an interview with The Brownsville Herald, Campirano said that the steel comes from China, Europe, Italy, Japan, Russia, among other places, and it is mostly shipped to mills in and around Monterrey, Mexico and as far south as San Luis Potosi.

The steel goes into multiple applications, including vehicle production, “white appliances” and construction materials, he said.

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Campirano told The Herald that he predicts a continued rise in steel and petroleum volume, with major new oil discoveries in the western Gulf of Mexico likely to increase rig production.

“It just kind of points to really the capabilities of the port,” he said. “We are a major logistical center. Obviously we have a global reach. The port is critical to the trade we do between the United States and Mexico. It’s all great for the region, whether it’s northern Mexico or South Texas.” EJ

Top 25 Foreign Trade Zones

1. Brownsville, Texas (Zone 62) 2. Broward County, Florida (25) 3. El Paso, Texas (68) 4. Knoxville, Tennessee (148) 5. Spartanburg County, S. Carolina (38) 6. Atlanta, Georgia (26) 7. Peoria, Illinois (114) 8. Honolulu, Hawaii (9) 9. Laredo, Texas (94) 10. Homestead, Florida (166) 11. Detroit, Michigan (70) 12. Harris County, Texas (84) 13. Boston, Massachusetts (27) 14. Miami, Florida (32) 15. Philadelphia, Pennsylvania (35) 16. Orlando, Florida (42) 17. Los Angeles, California (202) 18. Kern County, California (276) 19. Corpus Christi, Texas (122) 20. Newark/Elizabeth, New Jersey (49) 21. Anchorage, Alaska (160) 22. Jacksonville, Florida (64) 23. West Sacramento, California (143) 24. Denver, Colorado (123) 25. San Diego, California (153)

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New Investments

MAQUILADORA NEWS

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Toyoda Gosei sets up plant in Matamoros Projects in the works strengthen local automotive industry

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From Staff Reports

apanese supplier Toyoda Gosei has set up a new company in Matamoros to strengthen its automotive rubber hose production in the U.S. The new company, Toyoda Gosei Rubber Mexico, S.A. de C.V. (TGRMX), will start production of fuel hoses and radiator hoses in February 2015 in Matamoros, and will employ 140 workers. The factory is expected to span about 129,000 square feet.

This will be Toyoda Gosei’s third manufacturing base in Mexico and it will cater to Toyota in the U.S., Canada and Mexico, with expected sales of $3.2 million for fiscal 2015.

Capital investment in the project was put at about $1.5 million by the company.

An additional investment was estimated at $7 million.

Established in 1949 and headquartered in Kiyosu, Aichi prefecture, Japan, Toyoda Gosei has grown as a manufacturer in the area of polymers (such as rubber and plastics) and optical semiconductors. Today, the company internationally provides a variety of automotive components and LEDs with its network of 60 group companies in 17 countries and regions worldwide.

Autoliv invests in expansion

Autoliv, the world’s largest automotive safety supplier with sales to all the leading car manufacturers in the world, recently

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Artist rendering of the new Toyoda Gosei plant in Matamoros that is set to begin operations in February 2015. This will be the company’s third manufacturing base

The investments Toyoda Gosei: n $8.5 million Autoliv: n $6 million Johnson Controls: n $15 million expanded its Matamoros factory and added 500 workers for the production of steering wheels. The total investments made were in the ballpark of $6 million.

The company develops, manufactures and markets airbags, seatbelts, steering wheels, passive safety electronics and active safety systems such as radar, night vision and camera vision systems. It also produces anti-whiplash systems, pedestrian protection systems and integrated child seats.

In 2012, Autoliv registered a total of $8,267 million in global sales and had 51,000 employees for its global operations, located in 29 countries.

Johnson Controls receives quality honor from Ford

Johnson Controls, a global leader in automotive seating and seating components, recently was awarded Ford Motor Company’s “Q1” quality award for its plant in Matamoros.

The facility, which opened in 2006, supplies metal front-row seat adjusters for a variety of Ford vehicles.

“We are honored to receive this quality recognition from our customer,” said Daniel de la Lama, Matamoros plant manager for Johnson Controls Automotive Seating. “The award reinforces our continuing focus on quality and commitment to excellence.”

This is the first time the Matamoros plant has received Ford’s quality award.

Johnson Controls also announced the investment of about $15 million in the contruction of a new building at its Matamoros site. The investment will be done in 2013. EJ BEDC.com

Mexican Supervia

TRANSPORTATION

Recently inaugurated interoceanic highway will connect the Pacific Coast with the Gulf of Mexico

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Open for business Courtesy Photos

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From Staff Reports

exican federal authorities recently inaugurated the Mazatlan-Durango Highway, the final missing piece of a much ambitious road infrastructure project known as the “Supervia”, the interoceanic highway that spans through six northern states and connects the Pacific Ocean with the Gulf of Mexico.

The 230-kilometer-long (140-mile) highway will link the Brownsville-Matamoros region on the Gulf of Mexico with other port cities on the Pacific by a mere 12-hour drive. It will stretch along the cities of Mazatlan, in the state of Sinaloa; Torreon and Saltillo, in the state of Coahuila; Gomez Palacio and Durango, in the state of Durango; and Monterrey, in Nuevo Leon.

During the inauguration ceremony held in early October, Jorge Herrera Caldera, Governor of the Mexican state of Durango, said that the important economic BEDC.com

corridor will become a true engine for capital investment, growth and job generation.

The Supervia will connect Mexico’s commercial and industrial region in the north with Sinaloa, dubbed the “breadbasket of Mexico.” The state is the country’s leader in food production.

Meanwhile, Gerardo Ruiz Esparza, Mexico’s Secretary of Communications and Transportation, revealed that the massive project that began in 2001 called for an investment of more than $1.2 billion.

The corridor features more than 60 tunnels and 115 bridges.

The superhighway includes one of the most incredible engineering marvels, the Baluarte Bicentenario bridge, in the mountains of western Mexico. With 1,321 feet high above the ravine called the “Devil’s backbone”, it is the highest cable-stayed bridge in the world.

Opportunity for the Borderplex

In August, Brownsville and Mazatlan officials got together to form a sister-city

agreement between both municipalities, further strengthening its commercial ties.

Brownsville Mayor Tony Martinez and Mazatlan City Commissioners Eric Reynoso and Sergio Romero signed a pact to form a new partnership in commerce to bring economic prosperity to their respective regions.

According to The Associated Press, the highway will eventually move 5 million vehicles a year, more than four times the number on the old road.

The access to the Supervia in Texas will be through the Veterans International Bridge in Brownsville. The bridge offers a quick and direct connection to the U.S. Interstate 69 corridor, which stretches through eight states in the U.S. before reaching the Canadian border in Port Huron, Michigan.

Through Brownsville, Sinaloa now has a quicker, less expensive route to export its products to the central and eastern U.S. markets, and Brownsville now has easy access to the Pacific and Asian markets. EJ Fall 2013

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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 2.8 percent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the “advance” estimate released by the Bureau of Economic Analysis.

2.8%

Trade in Goods and Services

Total September exports of $188.9 billion and imports of $230.7 billion resulted in a goods and services deficit of $41.8 billion, up from $38.7 billion in August, revised.

September exports were $0.4 billion less than August exports of $189.3 billion. September imports were $2.7 billion more than August imports of $228.0 billion.

-$41.8 billion

U.S. 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 $98.9 billion (preliminary) in the second quarter from $104.9 billion (revised) in the first quarter.

The decrease in the currentaccount deficit was accounted for by a decrease in the deficit on goods, an increase in the surplus on income, and an increase in the surplus on services. These changes were partly offset by an increase in net outflows of unilateral current transfers, such as government grants, government pensions and other transfers, and private remittances.

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$98.9 billion

Brownsville Economic Journal Fall 2013

UNITED STATES

Inaugural SelectUSA Summit focuses on increasing FDI

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he inaugural SelectUSA 2013 Investment Summit, which took place at the end of October, included two high-impact days of meetings and discussions among senior government officials, major business executives, global economic experts and U.S. economic development officials about strategies to increase foreign direct investment (FDI) in the United States.

Throughout the day, speakers from businesses, professional services firms, academia, and trade associations helped to demystify aspects of the U.S. economic and regulatory system. The discussions covered the implications of U.S. leadership in the energy sector, advice on effective global talent development, understanding U.S. investment export controls and foreign investment security reviews, and accessing U.S.-based sources of investment and working capital.

U.S. Secretary of Commerce Penny Pritzker, who hosted and presided over the first-ever federal government event focused on inbound U.S. investment, declared the Summit a success.

SOURCE: U.S. Department of Commerce

Import and Export Price Indexes

Employment

Total nonfarm payroll employment rose by 204,000 in October, and the unemployment rate was little changed at 7.3 percent.

Employment increased in leisure and hospitality, retail trade, professional and technical services, manufacturing, and health care.

“We predicted that there was a hunger for something like this,” she told Summit attendees. “But we were overwhelmed with the positive response from global business leaders and economic development organizations.”

The Summit is a key component of SelectUSA’s mission to promote FDI and to help achieve the Obama administration’s goals of creating jobs, spurring economic growth and promoting American business competitiveness. Approximately 1,200 business and government leaders from nearly 60 countries and economic development organizations from 47 states, the District of Columbia and three territories met at the SelectUSA Investment Summit to learn about the advantages of doing business in the U.S. and to explore investment opportunities.

President Obama launched SelectUSA in 2011, creating the first federal program to promote and facilitate U.S. investment in partnership with the nation’s states. EJ

7.3%

U.S. import prices declined 0.7 percent in October, led by lower fuel prices. The October decrease in overall import prices followed comparatively modest advances in each of the previous 3 months. Prices for U.S. exports fell 0.5 percent in October, after a 0.4 percent increase the previous month.

0.7%

SOURCES: U.S. Census Bureau; U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics BEDC.com

MEXICO

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Mexico’s economy picks up the pace

he monthly proxy for gross domestic product (GDP) increased in July, suggesting Mexico economic growth ticked up after three months of either stagnant or declining activity. In the most recent data, exports, industrial production and employment also grew. However, retail sales were subdued. The rate of inflation has continued to fall, and the peso depreciated against the dollar in September.

Output grows

Mexico’s global economic activity index (IGAE), a monthly proxy for the nation’s GDP, grew 0.5 percent in July after stagnating in June. In July, service-related activities (including trade, transportation and government) expanded 0.6 percent.

However, goods-producing industries (including manufacturing, construction, utilities and mining) fell 0.1 percent. Agricultural output grew 0.1 percent. Despite the recent pickup in economic activity, the 2013 GDP growth forecast has been revised down to 1.4 percent from 1.8 percent in August. In the first half, GDP contracted 1.4 percent at an annual

rate from its fourth-quarter level.

Exports improve

Exports grew 2.2 percent in August and are up 0.2 percent in the first eight months of 2013 compared with the same period last year.

Three-month moving averages show improvement in oil exports, while manufacturing shipments show some decline. Exports are posting their second consecutive year of little to no growth, having risen a meager 3.8 percent in 2012. Exports grew at double-digit rates in 2010 and 2011 and played a major role in Mexico’s recovery from the 2009 recession.

Industrial Production Recovering

Industrial production (IP) rose 0.5 percent month over month in August after growing 0.2 percent in July. Three-month moving averages show considerable improvement, particularly in manufacturing production. Across the border, U.S. IP increased 0.4 percent in August after posting a flat reading in July. Mexico’s industrial production typically tracks U.S. IP, due in part to the U.S. automotive industry’s large presence in Mexico. EJ SOURCE: Federal Reserve Bank of Dallas

Employment

SOURCE: Federal Reserve Bank of Dallas BEDC.com

Formal-sector employment—jobs with government benefits and pensions—expanded at an annualized rate of 2.2 percent in August, better than July’s growth of 1.9 percent but still below the average monthly rate of 2.6 percent for the year. Formal-sector employment grew at a 4.6 percent pace in 2012.

Global Economic Activity

Consumer Price Index

2.2%

Inflation fell to 3.4 percent year over year in September, down from 3.5 percent in August (Chart 7). Prices excluding food and energy rose only 2.5 percent, below the central bank’s long-term inflation target of 3 percent. The central bank lowered its policy rate to 3.75 percent in September over concerns that the economy was slowing.

3.4%

Mexico’s global economic activity index (IGAE), a monthly proxy for the nation’s GDP, grew 0.5 percent in July after stagnating in June (Chart 1). In July, service related activities (including trade, transportation and government) expanded 0.6 percent.

0.5%

Exports

Exports grew 2.2 percent in August and are up 0.2 percent in the first eight months of 2013 compared with the same period last year. Three-month moving averages show improvement in oil exports, while manufacturing shipments show some decline.

2.2%

Industrial Production Industrial production (IP) rose 0.5 percent month over month in August after growing 0.2 percent in July. Three -month moving averages show considerable improvement, particularly in manufacturing production. Across the border, U.S. IP increased 0.4 percent in August after posting a flat reading in July.

0.5%

Peso/Dollar Exchange Rate

The peso depreciated 1.2 percent in September, when the exchange rate averaged 13.1 pesos per dollar, up from 12.9 in August.

Relatively higher U.S. interest rates and concerns about the slowing of the Mexican economy may be pushing up the dollar relative to the peso.

13.1

pesos per dollar

Fall 2013 Brownsville Economic Journal

27

TEXAS

Employment

The seasonally adjusted unemployment rate in Texas fell to 6.2 percent in October, down from 6.3 percent in September. The state’s unemployment rate remained well below the national October unemployment rate of 7.3 percent.

6.2%

Monthly Exports Monthly Texas exports fell 2.8 percent from July to August after increasing 4.1 percent from June to July. August exports were 5.3 percent higher than at the same time last year.

2.8%

Production IndexTexas Manufacturing Texas factory activity picked up further in October, according to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 11.5 to 13.3, suggesting output increased at a slightly faster pace than in September.

13.3

Crude Oil Prices The West Texas Intermediate crude oil price fell 5.4 percent to $100.56 per barrel in October and was up 12.3 percent year over year.

28

5.4%

Brownsville Economic Journal Fall 2013

Unemployment rate down as more than 43,000 jobs are added statewide

T

he seasonally adjusted unemployment rate in Texas fell to 6.2 percent in October, down from 6.3 percent in September. The state’s unemployment rate remained well below the national October unemployment rate of 7.3 percent.

In October, Texas had an estimated total nonfarm employment of 11,232,700 jobs, an increase of 267,400 jobs over the year.

Total nonfarm employment in Texas rose by an estimated 7,400 positions in October following an increase of 36,400 jobs in September, a total of 43,800 jobs added over the last two months.

“The private sector in Texas recorded a strong annual growth rate of 2.9 percent in October, adding nearly 265,000 jobs over the year,” said Texas Workforce Commission (TWC) Chairman Andres Alcantar.

“We encourage job seekers, in particular our returning veterans, to visit their local Workforce Solutions office for assistance in finding work.”

Seven out of 11 industries that added jobs in October included Leisure and Hospitality, which expanded by 7,600 positions; Professional and Business Services, which

added 5,000 jobs; and Trade, Transportation and Utilities, which grew by 3,700 positions.

“It’s good to see our unemployment rate declining for three consecutive months, from 6.5 percent in July to 6.2 percent in October,” said TWC Commissioner Representing Labor Ronny Congleton. “Positive economic growth means continued employment opportunities for the job seekers and workers of Texas.”

Industries such as Mining and Logging, and Professional and Business Services, continued to show annual growth in Texas.

Mining and Logging added 15,000 jobs over the year, while Professional and Business Services added 73,200. Both of these industries have grown by more than 5.0 percent over the year.

“The Texas economy continues to move forward, with every major industry in the state showing positive growth over the last year,” said TWC Commissioner Representing Employers Hope Andrade. EJ SOURCE: Office of the Governor Rick Perry

Natural Gas Prices

Texas Rig Count

Natural gas prices rose to $3.66 per million Btu in October, a 1.1 percent increase from the September level.

The price was 10.6 percent

The Texas rig count decreased to 820 in October and was down 5.4 percent year over year.

1.1%

820

SOURCE: Federal Reserve Bank of Dallas BEDC.com

Developer breaks ground on apartment complex BROWNSVILLE BORDERPLEX

D

espite a big demand for new apartment space in Brownsville, precious little of it has been built in recent

years.

So says Ryan Harden, a Dallas-based developer and partner with JJR Group LTD, which broke ground on the new Bella Vista complex on Aug. 15.

The multimillion-dollar development, to be located on 28 acres on Ruben Torres Boulevard between Central Avenue and Robindale Road, is being built in response to that demand, he said.

“There hasn’t been any market-rate, Class A, luxury multi-family brought to market in Brownsville since I think early 2000, with the development of a project called La Mansion there on (Ruben Torres) kind of close to Paredes Line Road,” Harden said.

“The only other Class A, market-rate, multifamily complex in Brownsville is one called Las Palmas. It was built I think in the late ‘90s. So there’s pent-up demand for market rate, Class A apartments in Brownsville.”

Harden was the developer behind Villages at Paso Real apartments in San Benito, and also has a complex under construction in Edinburg. His partners in Brownsville-based JJR Group are John Cowen and John Cowen Jr. The contractor is Peterson Construction of McAllen and Frisco.

Phase one of Bella Vista will include a clubhouse and 128 units and will be complete in 12

months. Phase two will add another 150 to 170 units.

“We’ll have a lease-up period that will overlap with construction,” Harden said. “Once we’ve hit a certain percent occupied in the first phase, then we plan to initiate the second phase.”

The clubhouse will feature amenities such as a media center, business center, fitness center, resort-style swimming pool and poolside cabana and barbecue area. Rents will range from $660 to $1,040, and the first units will be available for occupancy in April 2014.

Harden described the location as prime, with a high traffic count, a Wal-Mart and associated retail development 1.5 miles to the east, and another Wal-Mart planned less than two miles to the west.

“The retailers there and the housing has not kept up with the growth on the commercial side, which is unusual, because usually it’s the other way around,” he said.

The site is also close to Sunrise Mall, Brownsville South Padre Island International Airport, the Port of Brownsville and South Padre Island.

This article was written

by Steve Clark and appeared in the Friday, September 5, 2013 issue of The Brownsville Herald. For the complete article, visit www.brownsvilleherald.com

Employment

Construction

Employed: 146,142

Commercial Building Permits: $37,948,051

Civilian Labor Force: 162,700

Unemployed: 16,262

Job growth rate: -1.05

Brownsville South Padre Island International Airport Landings & Takeoffs Enplaned Passengers: 8,607* Deplaned Passengers: 10,698* Total Passengers: 19,305*

Revenue Landed Weights American Airlines: 3,948,000* United Airlines: 5,113,989* Other: 1,093,776* Total: 10,155,765*

Cargo Weights (lbs) Cargo Enplaned: 86,533* Cargo Deplaned: 80,652* Total: 167,185*

*Data for July 2013

Year-to-Date (Jan-Jul 2013) Landings & Takeoffs: 22,500 Passengers: 120,638 Revenue Landed (lbs): 75,424,872 Cargo (lbs): 929,580

Source: Brownsville South Padre Island International Airport

Border Crossings

Rail Northbound: 25,641 Southbound: 25,864

Truck Northbound: 119,902 Southbound: 130,057

Residential Building Permits: $34,219,628

Vehicle Northbound: 2,583,187 Southbound: 1,704,750

Total Permits: $72,167,679

Pedestrian Northbound: 1,410,378 Southbound: 1,185,487

Unemployment rate: 10% Brownsville-Harlingen MSA data for August 2013 Source: Texas Workforce Commision

BEDC.com

Data from Jan-Aug 2013 Source: Texas Center for Border Economic and Enterprise Development

Data from Jan-Jul 2013 Source: Rio Grande Valley Partnership

Fall 2013

Brownsville Economic Journal

29

BUSINESS&ECONOMICBRIEFS

Construction of Cargo Dock 16 underway

The Port of Brownsville Board of Commissioners approved the Award of Contract for the construction of Cargo Dock 16 to Shoreline Foundation, Inc. of Pembroke, Fl. Construction began in September, 2013 with estimated completion in March, 2015.

“We have eagerly awaited the commencement of this important project at the Port of Brownsville,” Port Director and CEO Eduardo A. Campirano stated.

Cargo Dock 16 will enhance the Port’s expansion efforts in the container business while allowing it the versatility to keep up with increased demand for handling bulk commodities. It will serve as our second heavy-load capacity dock and increase efficiencies by eliminating or minimizing potential vessel delays.

“The construction of Cargo Dock 16 will allow us to increase our cargo handling capabilities and allow us to accomplish our goal of continued growth as an international port and create jobs for our region.”

The project is being funded in part by a U.S. Department of Transportation TIGER Grant in the amount of $12,000,000. The Port will contribute the remainder of the funds for a total estimated cost of $26,207,427.

The Port’s funds will be utilized to construct the general cargo dock, road improvements and lighting.

Shoreline was the responsible bidder submitting the lowest and best bid for $20,924,230 for the construction of the dock.

“First and foremost, I would like to thank the Port of Brownsville Board of Commissioners and staff for putting their trust and confidence in us,” stated Tony Royo, President, Shoreline Foundation. “I am sure that they will be very pleased with the quality and outcome of our work. We look forward to a successful project that the Port of Brownsville can be proud of for years to come.” EJ

30

Brownsville Economic Journal Fall 2013

UT System, Valley celebrate funds for regional university

A symbolic check for $196 million was presented in a ceremony Wednesday, November 20, to Project South Texas, the initiative to create a new Rio Grande Valley university and medical school.

University of Texas System Board of Regents Vice Chairman Gene Powell and Regent Ernest Aliseda met with local leaders at the Regional Academic Health Center for the check event.

The money comes from the Permanent University Fund, which is funded by state oil and gas revenues. The University of Texas at Brownsville and the University of Texas-Pan American were not eligible for PUF money until legislative approval this year to begin the process of consolidating the campuses.

UT System Chancellor Francisco Cigarroa attended the ceremony, as did state Sen. Eddie Lucio Jr., D-Brownsville, state Sen. Juan “Chuy” Hinojosa, D-McAllen, and students from the two universities.

Powell said the creation of the new university is the result of efforts by many individuals over many years.

“All of these years have come together,” he said. “In October 2012, Chancellor Cigarroa called me one night at 11:45 and we talked for two hours. The idea came up with how to get the state to allow us to get PUF funds.”

A plan emerged and the process began to merge UTB and UTPA into one university and allow the state to provide PUF revenue for the Valley.

“This has been going on for years and years and years, but one great idea got it done,” Powell said. “Thirteen months later, in November 2013, we’re meeting to bring the first PUF money ever in 130 years.”

The PUF money will be used to build facilities for the new university at UTPA and UTB. Classes at the new university are expected to begin in 2015, with the first medical school classes opening in 2016.

UTB President Juliet V. Garcia called the event “a momentous moment.”

“We have been laboring with the un-

fulfilled dreams of our parents,” she said.

“This is the beginning of a new day, a great day for the Valley. Our dreams can be fulfilled.”

UTPA President Robert Nelsen said it was an important day for the future of the Valley.

“The future of the Valley is going to be very different because of today,” Nelsen said. “Our students will have the facilities they need and will gain the education they deserve.”

This article was written

by Travis Whitehead and appeared in the Thursday, November 21, 2013 issue of The Valley Morning Star

Maintenance dredging enhances Brownsville Ship Channel

Goodloe Marine Inc. recently took on the task to do maintenance work on the Brownsville Ship Channel at the Port of Brownsville.

The contractor was required to dredge the channel and remove approximately 333,200 cubic yards of shoal material using a pipeline dredge, with material being placed in an upland confined placement area.

“The Brownsville Ship Channel, which services the Port of Brownsville, is currently under a draft restriction,” said USACE Galveston District Chief of Navigation Christopher Frabotta. “Maintenance dredging will increase channel availability, a critical component in providing unrestricted navigation to the Port of Brownsville.”

According to Frabotta, the Port of Brownsville is the 67th ranked port in the nation with respect to import and domestic tonnages, moving approximately 5.9 million tons of cargo in 2011.

Principle commodities include petroleum products, ores and minerals, steel and other metals, vegetable oils and grains.

Work began in August 2013 was finished in November 2013. EJ BEDC.com

North Brownsville Industrial Park

A DEVELOPMENT OF THE GREATER BROWNSVILLE INCENTIVES CORPORATION

73-ACRE MASTER PLAN INDUSTRIAL PARK

SITE DESCRIPTION:

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Inaugurated in June 2011 73-Acre Master Plan Industrial Park 9 lots remaining Minutes from Port of Brownsville, Brownsville International Airport I-69 Highway, and Mexico n Acess to rail n Minutes from Maquiladora Industry in Matamoros, Mexico n Concrete roads, boulevards, and turnarounds

n

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SHOVEL READY CERTIFIED SITE

1/4 mile from SH 550, future extension of I-69 All utilities in place: electric, water, wastewater, natural gas Gas supplied by Texas Gas Service 4-inch gas line size with 125 lbs of pressure Water, wastewater, electricity supplied by Brownsville Public Utilities Board w 16” water line runs along Paredes Line Road

8” looped water line around the CK Technologies LLC building (adjacent to park) w An existing lift station and an 8” sanitary sewer gravity line at CK Technologies building (adjacent to park) w Capacity at 10 MGD w

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Flat topography

Site is development ready Shovel ready certified site

Home of CK Technologies LLC

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AVAILABLE Lot 6 (10.0 acres)

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SOLD 6.2 acres

Park entrance

AVAILABLE Lot 3 (5.6 acres)

AVAILABLE Lot 4 (5.7 acres) AVAILABLE Lot 5 (6.6 acres)

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1/4 mile to SH550 (I69 Spur) To Port of Brownsville, Brownsville South Padre Island International Airport

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CONTACT:

srodriguez@bedc.com

Brownsville Economic Development Council 301 Mexico Blvd. Suite F-1 Brownsville, Texas 78520 p.956.541.1183 / 800.552.5352 f.956.546.3938 www.BEDC.com

“Texas is a state where a dream can be put to work.”

- Texas Governor Rick Perry

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