Fireworks over Mexicali!

A reader sent in a query to me. He wanted to open a small factory for his sewing business and asked if Mexicali was safe.

The answer is a resounding YES. In Phoenix, he is paying $10 an hour for his employees – in Mexicali, it would be only $2 an hour.

Companies are now realizing that Mexico is a much better investment than Asia. Rising Chinese costs and higher shipping prices are part of the reason. Then there is China’s rampant piracy, risk of losing intellectual property, quality failures, and communication problems.

Also, China is just too far away.

Mexico is located on the U.S. border; goods can reach U.S. retailers and manufacturers in only two days rather than in five weeks from China.

In addition, in Mexico, business operations and practices are handled much like in the U.S.

Where is Mexicali?

Beijing’s Lenovo left China to open a plant in Mexico to make up to 5 million ThinkPad notebook PCs a year. Yes, manufacturing is even moving from China to Mexico!

Despite all of the drug war news happening in Tijuana, and Juarez, the Mexican maquiladoras-factories making goods for export-are not fleeing. Each day, 9,000 managers cross the Rio Grande safely from El Paso Texas, to the Juárez plants of Johnson Controls, Cummins, Emerson Electric, Delphi Automotive, and others.

MOVING TO MEXICALI

Mexicali, a city of close to 1 million, and the the capital of the Mexican state of Baja California, has been spared the violence of nearby Tijuana.

Baja California, and Mexicali are in Mexico’s Free Zone and are not considered parts of Mexico for customs purposes. In the Free Zone businesses may import goods duty free, except from other parts of Mexico.

Mexicali and Monterey are the two safest places for manufacturing in Mexico. Mexicali, however, holds a big advantage, because it is right smack on the border, close to both San Diego and Phoenix.

U.S. Interstate 8 is just seven miles from Mexicali, and U.S. Interstate 10 is only a few miles further north.

Rail service from Mexico crosses the Mexicali border into California and extends to San Diego and Los Angeles, with connections to all U.S. rail routes.

Air transport is also available from Mexicali’s International Airport, and from the Imperial Valley Airport 15 miles north across the border from Mexicali.

Things are so good in Mexicali, that David J. Hill, formerly with National Semiconductor, is leading the development of a 10,000-acre high-tech park called Silicon Border in Mexicali.

Factory jobs are moving from the U.S. to Mexico.

Kellogg’s new $100 million plant in Mexicali has 247,500 square feet – it is their 4th factory in Mexico. Kraft buys its taco shells from a factory in Mexicali owned by a subsidiary of PepsiCo.

Skyworks Employees in Mexicali

In Mexicali, Skyworks, a maker of semiconductors for mobile phones and PDAs, is adding 100 jobs to produce items they formerly made in Maryland. Skyworks originally considered relocating to China, but decided Mexico is actually cheaper because its skilled workforce is more efficient.

Yes, Mexicali is more efficient than China!

Mexicali is also attracting such high-tech industries as microelectronics, aerospace, and medical devices. Gulfstream has expanded its Mexicali facility to produce sections of executive jets. Honeywell, which has large manufacturing operations in Mexicali, has opened a $40 million center staffed with 300 of its engineers.

Honeywell in Mexicali

To further improve its manufacturing prowess, Mexico is studying successful business models in Asia, the U.S., and Europe. Mexico is also collaborating with universities and private industry to upgrade workforces, infrastructure, research and development programs.

In the past five years the Mexicali campus of Universidad Autónoma de Baja California (UABC) has doubled its engineering enrollment to 4,000.

UABC and CETYS Universidad, Mexicali’s top private university, recently added bachelor’s and graduate programs in aerospace engineering, microelectronics, bioengineering, radio frequency design, and renewable and clean energies.

Mexicali, itself, is a model of clean energy usage. It does not depend on fossil fuels to generate electricity, but has a huge 750 MW geothermal power plant site just 20 miles to the south of the city. Baja California even exports electrical energy to the U.S!

Fluency in English is a requirement. In fact, many residents of Mexicali are English speakers. Most of the movies in Mexicali are in English along with the TV.

Mexicali from California

Not only that, in Mexicali, you can drive a car with U.S. plates, and pay in dollars or pesos wherever you want – even at Mexicali’s Super Wal-Mart!

This is all due to Mexicali being in Mexico’s Free Zone.

With Calexico right across the border, most Americans would feel very much at home in Mexicali.

The drug cartels? Mexicali is extremely peaceful, with no apparent activity from any of the reputed drug cartels.

Mexicali "Shelter Plan" Site

For those who want to start small, and gain an easy manufacturing foothold in Mexico, space, and employees are ready and waiting in industrial parks, including Mexicali.

“Shelter plans” provide U.S. companies with ready-made manufacturing facilities complete with employees.

The Shelter Plan

The shelter plan provides foreign manufacturers with a fast start in manufacturing operations in Mexico without having to go through the process of setting up their own facility.

With the shelter plan, the risks of labor liability, ownership of facilities and legal presence in Mexico are avoided. Immediate start-up is possible with minimal costs, and there is flexibility to grow or shrink as needed. There is no long-term commitment, and no legal presence in Mexico is required for this.

It’s time for manufacturers targeting the U.S. market to take a hard look at Mexico – and especially at Mexicali.