Getting hotter

New Mexico Business Journal, March, 2000 by Debbra O'Hara

Despite some uncertainty over the upcoming Mexico elections, border development is muscular.

There's more going on down here than we can really say grace over." That's the sentiment of Jim Coleman, director of the New Mexico Border Authority, speaking of New Mexico's southern border at Santa Teresa. Since July when the Border Authority moved its office from Las Cruces to Santa Teresa, Coleman has been closer to both the Santa Teresa and Columbus border crossings and the tremendous interest in developing the area. In Las Cruces a few people a day might find their way into his office, he said, but at the Santa Teresa location, "it's like a revolving door, day in and day out."

Mark Lautman, economic commissioner, District 7, and general manager of Santa Teresa Real Estate Development Corporation, agreed that business "just seems to keep building." And will continue to grow, he believes, as several hurdles are overcome.

First, within a few months, connections from the Santa Teresa Border Crossing to I-10 over the Rio Grande, railroad tracks, and major thoroughfare will be complete. Second, the remaining two-lane section of the Pete Domenici Parkway will be expanded to four lanes. Third, Dona Ana County is laying water pipes and preparing to construct a waste water system for Santa Teresa. Now the residential construction phase can begin.

On the other side of the border, Eloi Vallina of Grupo Chihuahua continues to meet with Mexican and U.S. developers and planners, Lautman said. Vallina is laying the groundwork for San Jeronimo, a binational city in conjunction with Santa Teresa. Construction on the city, which should house 7,000 residents and an undetermined number of maquilas, is slated to begin by early summer.

"An unprecedented bilateral cooperation is going on," Lautman said. "Everybody recognizes this is the only chance on the U.S.-Mexico border that we have to do things right, so everyone is being more cooperative."

He is speaking generally, of course, of the multitude of officials and departments involved in such an undertaking. "In Rio Rancho or Grants, in order to get something done, you have to coordinate with the departments in the city, the mayor, county, state senator, and representative. At the border it's exponentially more difficult." Lautman said. "You have the State of Texas, New Mexico, and Chihuahua, their governors and all of their departments, all of the state legislatures, the federal governments of Mexico and the U.S., and 11 departments in the federal government that are working at cross purposes. Commerce wants free flow; Naturalization wants to stop and check everyone. When you add in the extra layer, it is exponentially more difficult and more complicated."

Pending elections in Mexico add to the complication. Although Mexico has established a stable democracy, most of the people involved in getting "mega-projects" off the ground are sitting tight, Lautman said. Those now in control can make promises but may not be able to deliver after the December elections. As soon as the elections are over and everyone settles in, he predicts more activity.

Bill Lew, president of North American Product Sharing, a project management firm for companies wanting to establish operations in Mexico, anticipates the elections will be orderly and the border will continue to flourish. The bigger issue to him is how peso valuations will affect his clients. Traditionally, he said, the peso is devalued during and immediately following Mexican elections. His concern is how to protect his clients from the effects of a revalued peso afterward, but, he said, "I personally think it won't value much more than now."

At least one U.S. company doing business in Mexico seems to think further investment is warranted. Scientific-Atlanta, Inc., a supplier of broadband communications systems and satellite-based video, is expanding its Juarez facility. Just six months after announcing plans to double manufacturing capacity in Juarez to 500,000 Explorer units, the company said it would increase capacity an additional 300,000. In October it also announced plans to add 110,000 square feet to the existing 330,000 at the plant.

The expansion is in response to the demand for digital interactive set-tops being deployed by cable operators into consumer homes and will allow Scientific-Atlanta to improve the manufacturing flow in the Juarez facility with a focus on reducing costs, improving quality, and reducing cycle times, a company spokesperson said.

This type of business is the most beneficial to the border, Lautman believes. When a community is based on an appropriate mix of manufacturers and warehouses, household incomes rise more quickly providing a better tax base and more money for schools and the local community.

"How much better can a forklift driver drive 10 years from now? But a worker in manufacturing has room for advancement," he said. "In El Paso the mix is 80 percent warehousing. We would like to see at least 50-50 in Santa Teresa."