Strategic location, industrial competitiveness, talent in human resources and world-class infrastructure are some of the qualities that distinguish the State of Baja California and that have positioned it as one of the most competitive in Mexico.
“Baja California has achieved to be at the top of competitiveness thanks to the design and execution of its wise ‘policy of attraction of strategic investment’ which consists in the targeting of promotional activities in the key sectors of the State, which are, aerospace, automotive, medical devices, electronics and information technologies; in these industries we concentrate all our promotional efforts of attraction of investment and integration of strategic procurement. We pursue the development of the industry in Baja California attracting its suppliers and encouraging the growth of companies already installed towards areas of applied technology, research and development, design, internet of things (IOT) and advanced manufacturing 4.0.,” highlights in an interview Carlo Humberto Bonfante Olache, Secretary of Economic Development of the State of Baja California.
The official emphasizes that the industrial dynamism of Baja California positions it as “the most attractive State to invest, because if we add the fact that it is the State of the country closest to Asia and that belongs to the Pacific Watershed, this makes us even more attractive to manufacture and distribute our products worldwide. The leadership we have maintained has been supported by a successful policy of coordination between the private, educational and governmental sectors, which we call ‘triple helix’, which has worked very well thanks to the determined participation of the members of this strategy of economic development.”
Also, Bonfante Olache states that Baja California has become in more than just a place of accommodation for the industry, nowadays it not only hosts companies, but areas of specialization for its workers, job generators and creators of talent that goes from the automotive sector, medical products, high technology such as aerospace, electronics, information technologies, and food processing.
It must be highlighted that FINSA introduced the first industrial park in 1993, which was dedicated to the automotive industry in Mexico, hand in hand with Volkswagen. “This concept allows suppliers in the automotive industry to operate under the ‘just in time’ and ‘just in sequence’ programs, which result in significant savings in operation time, as well as reduced inventories and packaging costs, to mention some benefits. The concept is replicated later in other locations such as Ramos Arizpe, for General Motors; in Aguascalientes for Nissan, Daimler and Infiniti, and more recently with a second dedicated industrial park in the state of Puebla, for AUDI,” says the president of FINSA.
Baja California has achieved to become the number one State nationwide with more manufacturing companies that operate in the IMMEX Program, an instrument that allows the temporary importation of the necessary goods to be used in an industrial or service process destined to the elaboration, transformation or repair of merchandise of foreign origin temporarily imported for its export or to the provision of export services without covering the payment of the general import tax, the value added tax and, in its case, the countervailing duties.
In fact, the State of Baja California is a pioneer in the establishment of the first maquila industries, now IMMEX, in Mexico.
The head of SEDECO in Baja California mentions that in this State the vast majority of manufacturing companies that operate under the IMMEX program are located within an industrial park thanks to the facilities they offer in terms of infrastructure, availability of basic services such as water and energy, permanent maintenance of facilities and common areas, and security.
He says that in addition to the hundred industrial parks that already exist in Tijuana, Mexicali, Ensenada, Tecate and Rosarito Beaches, undoubtedly the dynamism of the industry will continue to drive the creation of industrial buildings in Baja California. “And this is for two reasons: first, because the companies already established in the entity continue to carry out extensions in their operations and, secondly, because of the arrival of new investments in different sectors, such as aerospace, medical, foods and beverages, manufacturing, electronics, among others. The developers of industrial parks continue building and growing in their offers of industrial buildings in the State and actively participate in the promotion of investment attraction.”
The Secretary of Economic Development of Baja California adds that for the State the border and strategic proximity with the states of California, Arizona and Nevada is fundamental. “It allows us to be practically twinned in terms of the flow of goods and services with the most important States and cities of western North America and linked to its large consumer market, but also to its industrial manufacturing, mainly in the aerospace, automotive, electronic, renewable energies, medical devices, electronics and information technologies, without forgetting recreational tourism and medical tourism turns.”
Xavier Rivas, VP of Grupo PIMSA Mexicali, states that with or without the NAFTA the maquiladora industry will continue to develop. “Let’s remember that the maquila started long before NAFTA; the important challenges are national supply of mexican components, the maquila industry must be integrated; there has been a lot of talk about this, for 40 years there have been government programs and we are still at a level of two percent of national integration.”
Likewise, he emphasizes that it was precisely the intensive labor required by electronics and the aerospace industry that has driven the creation of industrial parks. “It was our turn from the beginning, from the foundation to the implementation of all these programs to bring companies. There are three questions we developed in the experience: why is the company coming? We have to be very careful to notice they are not coming, to escape from labor, ecological, financial or tax problems, we have to be very selective. Where is the company going to establish? In an industrial park, in a residential area or in a suitable area such as an industrial park? And how will the company operate? Will it have enough light for workers, dining room, parking areas, recreation, exercise? That means, we have to ensure the welfare of the worker.”
Antonio J. Bermudez, Mexican politician and businessman, is remembered as the first great promoter of the maquiladoras in Ciudad Juárez, Chihuahua, and as the creator of the first industrial park where they established.
Precisely, a group of entrepreneurs from Mexicali, Baja California, took as reference the business model of industrial buildings of Ciudad Juárez to develop it in this capital.
Mexicali Industrial Park (PIMSA) and Grupo Nelson are pioneers in the development of industrial parks in Mexicali.
Xavier Rivas, VP Grupo PIMSA Mexicali, tells in an interview that the visionary entrepreneurs Ignacio Guajardo Esquer, Mario Hernández Maytorena and Héctor Sada Quiroga (RIP) were the ones who ventured into the development of industrial parks with textile corporations that arrived to the region in search of industrial buildings. “There was a need for industrial warehouses, prospects were arriving and there was no place to installed them, they were looking for buildings from old movie theaters and other places that were not suitable, so they had the vision of creating this industrial park, PIMSA, the first in the northwest of Mexico. In addition, Kenworth Mexicana of Gustavo Vildosola Ahumada had already proven the feasibility of taking Mexicali from an agricultural city to a high-quality industrial city with the truck assembly.”
He says that since its inception PIMSA has sought and achieved an image of seriousness in treatment and in services, coupled with the fact that it has avoided attracting ‘swallow’ companies as it happened in the early days of the maquila industry. “The costs are competitive, especially compared to the US, constructors of industrial buildings and suppliers of first quality have emerged. The corporations installed in PIMSA industrial parks have seniority and expansion in space and technology, among them Rockwell Collins-EEMSA with 53 years; National Oil Varco with 43 years; Chromalloy 40 years; VYAIRE with 35 years; Furukawa with 30 years; Cotto Technologies with 30 years; Pepsico with 35 years, which gives certainty that PIMSA is a serious supplier of industrial warehouses. Today, GKL Aerospace, dedicated to the manufacture of components for aircraft engines, with 60,000 workers worldwide, has a plant here with us and will grow.”
PIMSA currently has eight industrial parks in Mexicali with six million square feet in industrial warehouses. “We also have three land to build ‘Built to suit’ and five land with industrial buildings with 37 companies and a population of workers that fluctuates by demand, between 19,000 and 22,000. We have in stock an industrial warehouse of 140,000, one of 160,000 and one of 100,000 square feet,” comments Rivas.
He adds that the trend of the companies that arrive to Mexicali is income. “Its business dynamics does not want to compromise working capital with real estate, they use the working capital to acquire equipment or manufactures, that´s why they don´t buy, rather they rent. We have rented to Japanese, Korean, German corporations and they understand that concept perfectly well.”
Recently, Grupo Nelson celebrated 50 years of existence in Mexicali. In fact, Grupo Nelson’s founder, Rodolfo Nelson, is locally known as the ‘Father of the Mexican maquila industry’.
Rodolfo Nelson started in 1945 as a merchant importing ‘made in’ overseas products from Japan, Korea and Taiwan, and selling them in Mexico. With the earnings he bought commercial and industrial properties for leasing. In 1965 the concept of ‘maquiladora’ was born, when Mr. Nelson established the first U.S.-owned Maquiladora in the city of Mexicali.
“We have just turned 50 years old as developers of industrial parks. Our first industrial park was El Vigía, created at the beginning of the 70s; back then there was no such thing as an industrial park, but it was just a set of warehouses where you could put people to do manufacturing processes. For many years we worked with a single industrial park, El Vigía, which was one of the first which lasted fifteen years,” comments in an interview Humberto Juárez Nelson, director of Marketing and Business Development of Grupo Nelson.
In Mexicali Grupo Nelson owns three industrial parks: El Vigía, Nelson 1 and El Vigía 2; in the last one there are now only two companies but the land has 26 hectares to build. “We bought a piece of land two years ago in San Luis Potosí and we are about to finish an inventory warehouse. And we are entering to Hermosillo, Sonora, with an industrial warehouse ‘Built to suit’.”
The three industrial parks of Grupo Nelson in Mexicali sum a total of 200,000 square meters and 85 percent of its tenants are foreigners, mostly from the United States, and 15 percent from Mexico. “Most of the Mexican companies established are of logistics. Right now Mexicali is having a lot of logistical movement that we did not see before. In Mexicali there are Koreans, Japanese and Germans. We just established Medline Industries Inc., which gives us a boost because it’s going to start creating the medical cluster in Mexicali.”
Regarding the cost of the square meter of land in the capital of Baja California, he states that it is one of the cheapest in Mexico. “In Mexicali the cost of the square feet of land is between 35 and 36 cents of dollar, while in Tijuana it costs between 45 and 46 cents of dollar.”
He underlines that in the last 10 years Mexicali has taken off with force. “It has always been industrial and agricultural, however, services are growing.”
Xavier Rivas explains that PIMSA attracts investment from companies through the prime location where industrial parks are located in Mexicali. “We offer prime location in front of the international commercial sentry, near urban spots where labor is available.”
Besides, as a founding member of the Mexican Association of Industrial Parks (AMPIP), PIMSA has promoted the institutionality of its activity as an image vehicle.
“All the PIMSA parks are part of the AMPIP and there is ‘Green Industrial Park’ certification. The AMPIP is the most dynamic promoter of the Mexican Republic because it is interested in the arrival of investments in industrial parks and buy or build an industrial warehouse.”
The VP of Grupo PIMSA Mexicali points out that they are selective when choosing their tenants. “The corporations that come must have a financial guarantee in the leases that we sign, what does that mean? They have to be super transparent and, besides, financially solid, the companies we have are first class corporates and they sign guarantees of the contracts, in such a way that if they close, they continue paying rent and they have to comply with the periods, that give us long-term stability. For example, Furukawa just turned 20 years old. We also have an agency of the same industrial park that is monitoring every day the work, energy, fiscal issues, we have meetings every month, etc., we not only rent the industrial warehouse and forget about it, we serve companies as a specialized business organization.”
For Xavier Rivas it is key to provide the same urban standard of the countries from which the companies that invest in Mexicali are originally from. “Our industrial parks have green areas, space between housing and park, urban infrastructure that amazes foreigners when they come because they see that it is the same as in the United States but at a lower cost.”
On the other hand, Humberto Juárez Nelson says that in Grupo Nelson they build industrial warehouses based on the necessities of the clients. “It is an advantage for the client because many think that having a specific industrial warehouse to meet their needs, will cost more expensive that´s not true, the only difference there is, are the terms of contract that we require to cover the cost. Within the three largest groups that are here in Mexicali, we are experts in delivering ‘Built to suit’ industrial warehouses because we have our own construction company.”
He declares that the advantage of being in an industrial park is the security. “You feel in a community, the sources of work are going to get there. For someone who is just arriving in Mexico it´ll be its first foray to establish and start a business in the country, so the most viable for them is an industrial park, somehow they will feel more secure, they will see around them other of our clients, who have been established for many years. We can deliver the industrial warehouse ready for them to come to work.”
In Mexico there is a deficit of engineers and specialists in the development of telecommunications networks, according to the National Chamber of the Electronics, Telecommunications and Information Technologies (CANIETI). Even, in his study entitled ‘The current state of engineering training. Criteria for excellence and competitiveness’, María Ruth Vargas Leyva, PhD in Education of the Technological Institute of Tijuana, underlines that “at a global level, the emerging of the new economic order, has a fundamental impact on the training of engineers, turned into a central axis in the search for competitiveness within the framework of a global economy, training that is related to the functions deriving from the continuous technological change and new forms of production.”
In fact, training 4.0 professionals or 4.0 engineers is the new challenge for universities, says in an interview Jorge Sosa, dean of CETYS University’s College of Engineering Mexicali Campus, a private institution born in 1961 in Baja California under a group of visionary entrepreneurs, committed with education. “That is the challenge because the engineer must not only know the tools and technologies that every engineer should know, but now he has to know that the technology he learned three or four years ago is now something else. It is not about learning technology but learning how to use new technologies, that is a different challenge, in terms of training. We as teachers also have to enter into this dynamics, we also have to incorporate technology into the classroom. So, if students are using mobile devices for personal things, we should first incorporate the use of mobile devices for class issues.”
And due to all companies demand different profiles of engineers with a view towards the future, as an initiative of the Advisory Board of the College of Engineering, the Center for Technical and Higher Education (CETYS University) published a study on which are the most sought after engineering professionals in the region. “For example, if you do not know a second language you are at a disadvantage, that is, knowing English is a minimum, knowing a second language is very important and knowing a third one is even better. Also the issue of being able to work with multidisciplinary and virtual teams, especially since the current engineer not only works with his Mexicali group, but also with people in different parts of the world.”
It is worth mentioning that all engineering students of CETYS University graduate with English language proficiency and perform high level professional practices in transnationals. “We provide them with English language training from the first semester and from the fifth semester they take classes in English; there are teachers, as is my case, who gives all the classes in technical English, which they are learning in an academic scenery. We also promote international exchange programs, double degrees, we have agreements with embassies, opportunities for students to have that contact. Also, all students must perform a minimum of 400 hours of professional practice, it is a great opportunity they have in Baja California because mechanical engineering students who are in the specialty of aerospace are doing their practices in Honeywell, in Gulfstream Aerospace or at UTC Aerospace Systems, they are doing high level engineering work and this is the price that has an international and global dynamic,” declares professor Jorge Sosa.
In order to keep updated in education matters, CETYS University’s College of Engineering operates with a Consultative Council formed by industry representatives, academics from the region and the country. “Basically what that Council does is sit down twice a year, they are totally alien to CETYS University, the objective is to show them the plans of the College of Engineering so that they give us feedback and know what are the trends that are happening in their companies because we want to incorporate them and react attractively. This Council was formed in 2016, it is operating and several interesting things have already come out,” states Jorge Sosa.
Besides, jointly with companies, government and society, and through its Centers of Excellence, CETYS University constantly works under a model of ‘quadruple helix’ that allows the collaboration with various actors for the offer of professional internships, continuous education and consulting, as well as for the development of tailor-made academic programs, research and projects, which allows better opportunities for its students and greater development in the region.
“We have links with several companies in the region such as Skyworks Solutions, which develops integrated circuits for communication devices in fact, they made a donation for the Internet of Things Lab of the Innovation and Design Center (CEID). Part of the preparation is not to raise the students traditional problems, but the problems of the future and opportunities in which they can use technology to solve them,” says Sosa.
In 2006, when Honeywell announced that it would establish in Mexicali, it immediately requested the support of the academic sector. “This was done in order to design the graduation profiles, first you started with a master’s degree in which you graduate in two years, so that we can reconvert engineers from other careers, mechanics, industrialists and other subjects, to make them specialists in aeronautical issues; then a working group was formed with the academics of CETYS University, with expert representatives of Honeywell and Gulfstream that also has a presence here in Mexicali, Rockwell Collins and another pair of companies. And if I’m not mistaken, I have the idea that it was the first graduate program in aeronautics that was formally opened at the national level,” relates in an interview engineer José Luis Arroyo, Corporate Relations director at CETYS University Mexicali Campus.
He mentions that CETYS University has collaborated with the industry for more than 35 years. “We have found that most of the companies locally are growing, they are making important investments. Skyworks is present in approximately eight or nine of every ten mobile devices in the entire American continent, cell phones, fitbit, etc. They are producing eleven million daily components they are sending around the world from Mexicali, and they are growing, they are building a building.”
He also highlights that the CETYS University system prepares students to compete in the international labor market. “We are projecting students to be aware that when they work they will not compete for a job against the graduates of the State University, they are competing for positions with graduates from India, Germany, England, United States, Brazil, not for a specific place but also because the investment decisions of the corporations go hand in hand. The competition for that position starts from the moment the corporation decides where they are going to install their operation, so we need them to have a global vision.”
In January of this year CETYS University Mexicali Campus inaugurated the building that houses the CEID, recognized as a seedbed of Industry 4.0. In an interview, the engineer Juan Manuel Terrazas, coordinator of the CEID, declared that it was essential to have this type of infrastructure in Baja California. “The CEID is essential in this region because it is necessary to create an innovation ecosystem where the main clusters, which are the aerospace, automotive, electronic, medical and information technologies have a meeting point where they can raise project initiatives and improvements, where the professors and students who will also promote innovation with good ideas, who are entrepreneurs, that wants to research, patent, to make a company. So how do you give support to all those actors? It is the Center that allows it, that has spaces that foster creativity and innovation, allows applied research on aspects of vocation of the State of Baja California.”
The architectural design of the CEID is inspired by the industrial building models of the universities of Arizona, in the United States, and Warwick in England. “Precisely we want the companies to see CEID as an extension of their production floor. If, for example, they detect the need for an improvement of a process, it is very complicated to stop the machinery to make experiments, since it implies costs, loss of productivity and production, so we propose that a pilot or simulation plant to be transferred to the production floor of the CEID, so that the designs or process improvements can be made with the help of the company’s engineers, academics and students; once the process is approved or the solution is transferred to the production floor of the company, which is done in the shortest time possible and with the least amount of setbacks,” explains Terrazas.
The laboratory of Applied Research, Integration and Testing, which is the core of the CEID, can be converted into 10 manufacturing cells, where each can represent a production line, a pilot plant or a process. Additive manufacturing and design, sustainability and renewable energies, robotics and automation, production systems; advanced computing, internet of things, radiofrequency, and animation and visual effects are the themes of the seven additional CEID laboratories.
“I hope that in a very short time we are filling this productive floor of machines and projects that will be paying off in patents and publications. We have very diverse topics, from process improvement and automation to technology for the medical sector. We are in phase one, but in time this will be growing to more concrete and tangible things,” concludes the coordinator of the CEID.
In north of Mexico, on the border with the United States, four of the five aerospace clusters in the country are located (Baja California, Chihuahua, Nuevo León and Sonora). The development of the electric-electronic and automotive industries has been given, as well as the mixture of both, which has generated the basis for the growth of an increasingly sophisticated aerospace industry.
For Tomás Sibaja, president of Aerospace Cluster of Baja California, “the convenience of the risk measured when operating in the border region with California generates an element of confidence to the foreign investor, who obtains quick answers to any problem, since they can be attended in less than 24 hours. There is a service and business sector with many years of experience in installation, operation and industrial logistics to support the companies that have established their operations here.”
He highlights that in the case of Baja California, the necessity to form an aerospace cluster was born as an initiative of a group of companies with interest, problems and common expectations in a region that offers opportunities and challenges. “The sustained growth of the vast majority of companies in the aerospace sector has allowed them to know and share topics of specialization and valuable information that would otherwise be fragmented. Likewise, the association itself has generated a front that allows the representativeness and the definition of a strategic 25-year plan.”
Among the competitive advantages offered by the aerospace ecosystem of Baja California, Sibaja states both the logistic cost and human capital. “The logistic cost is very attractive for the expeditious movement of goods and products to destination markets. Besides, the staff that works in this region brings world class expertise, precisely through the industrial export dynamics of more than five decades. We have a bicultural youth with an international vision that generates groups of engineers and technicians with proven professionalization in the workplace. There is also a pro-business environment supported by the triple helix where government and educational institutions generate information and valuable guidelines in favor of better business practices.”
He reports expertise areas of the corporations that integrate the Aerospace Cluster in Baja California, mainly come from the United States, France, United Kingdom, China and Germany, are the parts and components of the airframe, landing gear, parts and components of turbine, avionics, aircraft interiors, cables and mechanical harnesses, hydraulic and electric, as well as design and technological development activities.
The president of Aerospace Cluster of Baja California qualifies his perspectives regarding the future of the State’s aerospace sector as positive. “In fact, the vast majority of companies are expanding their operations and hiring more staff, precisely because of the trust that their corporations have placed in them to attend projects of greater value and complexity. We also have the Bilateral Aviation Safety Agreement and the Wassenaar Agreement that allow us to give certainty to foreign investments endorsed by the governments of the undersigned countries.”
For Armando Cortés, Executive Director of Sector B by the Sectoral Development Unit of ProMéxico, Baja California is an emblematic case in the aerospace industry. “The issue of states located on the border is that they are closer to industrial conglomerates in the United States. That’s why Baja California is the State that generates more jobs in the Mexican aerospace industry, around 20,000.”
About 75 percent of the aerospace industry in Mexico is linked to manufacturing, and the remaining percentage is divided into maintenance and repair themes; engineering, development and issues of related organizations.
“The development of the aerospace industry is very focused in the subject of manufacturing and supply of highly specialized components. The large buyers worldwide, such as Boeing or Airbus, as well as the largest number of tier 1 suppliers with operations in Mexico and the corresponding chain are concentrated in manufacturing activities of the process such as aerostructures, landing gear, engines and turbines,” explains Armando Cortés.
The official informs that the growth of the aerospace industry in Mexico can be visualized through exports, which in 2017 generated 7,600 million dollars. “To give us an idea, from 2009 to 2017 the sector has presented an annual sustained growth close to 15 percent, this means that it is an industry that grows in double digits, which is important if we compare it, for example, with the six percent average growth of exports of manufactured goods in the last 10 years. Everything that is done in Mexico is exported because the aircraft manufacturers such as Boeing or Airbus are located outside the country.”
The Executive Director of Sector B by the Sectoral Development Unit of ProMéxico remarks that the forecast for the Mexican aerospace industry is to continue growing in double digits in the coming years. “Why can we predict that this trend will continue? For example, according to forecasts by Airbus itself, currently there is a fleet of 20,000 aircraft in the world and it is estimated that by 2035 it will reach 40,000 units. That is, in 15 years we have to double the fleet worldwide, which means a great opportunity for countries like Mexico, which can increasingly increase the production of aerospace components and have that demand satisfied. So our forecast is that this double digit will continue to be maintained in light of the demand, the increase and the specialization our country has achieved in this industry.”
Cortés points out that in addition to advanced manufacturing, the Mexican aerospace industry also has specialized human capital. “In Mexico, around 130,000 students are graduating each year in the areas of engineering and manufacturing, which makes human talent available very convenient for the development of the aerospace industry. They are human resources that are at the level of the best in the world and that foreign investment has seen that it is a niche of opportunity.”
He adds that the Honeywell Mexicali Research and Technology Center is a representative example of how Mexican engineers are becoming more and more valued in the international aerospace industry. “I think that is our perspective, to see how we specialize as a country and that in Baja California continue on a scenario where they focus on activities with higher added value, with more specialized engineers and that are at a competitive level, equal or superior to others.”
He reveals that ProMéxico currently has a registry of 330 large, medium and small companies linked to the Mexican aerospace sector. “And this also involves some support entities, which means, in this accounting we also consider all the companies that in some way have links with the sector. In 2006 they were only 109 companies registered, twelve years later we are reaching 330, which means that the number of aerospace companies in Mexico has tripled and tells us about the exponential growth the country has had in this area.”
Queretanos say that their city has grown dramatically in recent years, and no wonder. In fact, Querétaro was previously thought of as a colonial region that invited visitors to visit its Historical Center, its temples, squares, parks, museums and shops, however, it has become a business city, more cosmopolita.
Mauricio Sánchez, director of Tourism of the municipality of Querétaro, speaks in an interview about the transformation of the city. “It has evolved a lot. Querétaro, since colonial times is a very important place for the large number of people who passed through the city. It has a privileged location, only two hours away from Mexico City, which has allowed it to receive many people who come to the north, to the south and to the east of the Mexican territory. And that is precisely why Querétaro has developed a very important internal economic level and that has encourage that in recent years has the presence of diverse foreign communities.”
A proof that shows the growth of the city and its position worldwide is the report ‘American Cities of the Future, 2017/18’ of the division of fDi Intelligence of Financial Times that analyzes the performance of 421 different locations of the American continent and which recognized the city of Querétaro in several areas: second place as the ‘Best Latin city of all’ and as the second city with the greatest ‘Friendliness to do business’; in addition, it obtained the fourth place as ‘Best Big City of America’ and in ‘Economic Potential of Large Cities’.
Due to the economic boom of the city more and more foreigners visit and settle in it. “We have just celebrated the first ‘Festival of Foreign Meals’ in the city, in April, in which 71 communities from different parts of the world participated. Many people who have settled in Querétaro and who have made their lives here have come mainly for business reasons, due to the Bajío’s bonanza. There is a very important German community and a community of retirees from the United States coming from San Miguel de Allende, and recently we had the arrival of the Korean and Japanese community. In addition, it has many residents who arrived here as consequence of the 1985 earthquake in Mexico City,” comments Sánchez.
It should be noted that the significant economic development of this city has allowed it to become a focus of foreign direct investment from Canada, France, Germany, the United States, Japan, among other countries.
Walking through the neighborhoods and multicolored streets of the city of Santiago de Querétaro is not an easy task. Its squares, architecture, shops, galleries, workshops, handicrafts and gastronomy make the journey slow and stimulating to the senses.
Today it is common for the local and foreign population living in the city not only to meet in the schools of their children, but also in places with tradition such as the vintage restaurant ‘La Mariposa’ (1940) or the old textile factory Hercules, which was one of the main industrial complexes in the area but which today has become a living garden where you can enjoy fresh craft beer, freshly baked pizza and German sausages cooked by chef Cristian Taboada, as well as notes of flavor from the signature cuisine of the restaurant Planta Alta, owned by chefs Emiliano Ayala and Nadia Pérez Lazcano, where the main ingredients come from organic ranches in San Miguel de Allende, Guanajuato, and from national producers.
And after visiting the Historical Center of Santiago de Querétaro (Theater of the Republic, House of the Corregidora, Plaza de Armas, among other historical sites) or visiting a temple (Old Convent of Santa Rosa de Viterbo or the Temple of the Cross), museums (Museum of the City, Art Museum, among others) or workshops as the Guadalupe Vallejo, which preserves loom weaving tradition, locals and tourists choose to taste some dishes and desserts prepared at the time offered in restaurants like Dongu (word meaning ‘old house’ in Otomí language), or chatting while having a glass of wine on the terraces of restaurants like Hank’s Querétaro (New Orleans cuisine), although there are those who opt for the small food places located in the downtown streets, where you can enjoy a morning or evening with freshly baked bread and a cup of coffee from the region.
And you can not say goodbye to the city of Querétaro without taking a souvenir from the Querétaro Ciudad Store, a design and decoration space inaugurated in March of this year, in which entrepreneurs and industrial designers like Rafael Rodríguez, from the firm Paswato, offer visitors creations with style.
At the end of 2017, the exports of the agro-industrial projects of the ProMéxico Querétaro office represented a total amount of 30.66 million dollars, in its majority fresh or chilled vegetables and processed products (dehydrated fruits, corn chips, animal feed, among others), reports in an interview Laura Maritza Greetel Chablé García, ProMéxico´s Representative in Querétaro.
Among the factors that have activated the dynamism of exports in the agroindustrial sector in Querétaro, ProMéxico´s official says at first for years exporting agroindustrial companies of Querétaro had been admonished to place their products in several international markets, in addition that they have been given training in foreign trade and improvement of production processes with the purpose of expanding their participation in this sector. “On the other hand, it seems to me that the infrastructure conditions facilitated by parks with an agroindustrial vocation have favored the arrival of direct foreign investment to the State and an increase in export sales.”
Chablé García declares that in order to increase their export percentages, agro-industrial companies have accessed new markets and better financing schemes that allow them to innovate and improve their production processes through the incorporation of high technology. “In the same way, they have been working on the image of their products and implemented international certifications demanded by their buyers with the requirements requested by the importing country and, finally, they have been participating in international fairs to promote their exports, likewise in the case of processed foods, promotional schemes have been incorporated through electronic commerce”.
Also notes that Querétaro municipalities that stand out in the agroindustrial sector are Colón, San Juan del Río, El Marqués, Querétaro, Huimilpan, Ezequiel Montes and Corregidora.
It is worth mentioning that in Querétaro, currently there is only one agropark, inaugurated in 2009. However, the ProMéxico’s Representative in Querétaro believes that more agroparks may emerge in the state. “The very dynamics of growth of the industry in this sector has led to the development of infrastructure conditions that agro-industrial companies may require so I think that in the coming years we will definitely see a development of more agro-industrial parks in the State.”
In September 2017 Agropark started the development of its second stage. The 805 hectares of the original project were divided into two phases: the first, of 300 hectares, focused solely and exclusively on the development of high-tech greenhouses, while the rest, more than 500 hectares, will house 200 hectares of greenhouse, 40 hectares for small industry and service warehouses, as well as, between 8,000 and 10,000 homes on a land where it is pretended to create Agropark City.
“The second stage still has a much more ambitious plan. We will have housing for workers of the zone, not just Agropark. We are planning a place where the needs and housing deficit that exists today in the entire municipality and in the industrial corridor where we are located are met. A completely sustainable project is being done, where we will have rainwater collection, recirculation and water purification, and alternative energies,” declares in an interview Alberto Amkie, director of Agropark.
Additionally he states that in this stage they will sell lots with a minimum of 11 hectares in which they can roof 10 hectares and dispose one hectare for services. However, customers can purchase up to 40 hectares as if it were a single lot, without having to make any division.
He mentions that in this second stage, 2,500 jobs will be generated, which will be added to give a total of 5,000 to 6,000 jobs in the agropark. “Plus all the jobs in the industrial corridor area of the Intercontinental Airport of Querétaro towards the municipality of Colón, for that we will build good quality housing for workers, we will have industry, that is, processors, warehouses and everything is required for the zone, such as green areas, even a very interesting waterbody. This is what will be coming in the next 500 hectares. It is a project that we are starting, although we already have all the planning and the support of the authorities, what we are expecting is to finish the first procedures related to licenses and permits to start building.”
He adds that in the first phase there are still under construction last stages of some greenhouses and a joint project is being planned with the producers of the area to create compost. “All the organic material is being seized to generate first an orderly decomposition and then produce natural fertilizers for use in the harvest. Work continues with a very important system to harness water, in which water is recycled and besides discharges without chemicals or pesticides are being made. All this first part is certified to be able to export to the United States and Canada.”
Total investment for the first stage required almost 170 million dollars, including what companies invested and the amount injected by Agropak for the development of infrastructure. The second stage will require an investment of approximately 500 million dollars, although the amount it is likely to increase, depending on the kind of housing that will be built. It should be noted that Agropark greenhouses, focused on the production of tomato and red pepper with export quality, are distinguished by their certifications and the safety of their production processes. “When the distributors come to Agropark and see that there are 13 companies that are producing, they become very interested in consuming because the product with a uniform output is of first class, which is not easy to find, especially in just one place, for them it is ‘milled gold’.”
Amkie underlines that customers are mainly looking for vegetables, since it is what the US market demands.
He concludes that the Mexican countryside changed from being a traditional agriculture to an agriculture with more technology and possibilities. “It has already been shown that we can. We have at least five years producing, exporting and growing, and making the Agropark brand is recognized. So now what we have to do is open up to attract greater investment, of people that knows about the field, and push this project to be unique in the world.”
Mexico already has seven SEZs in the south-southeast in the States of Chiapas, Veracruz, Michoacán, Guerrero, Yucatán, Oaxaca, Campeche and Tabasco, which have been qualified as exceptional spaces for productive investment, with a modern and global perspective.
“What we did was generate exceptional conditions where investment did not flow. We have a Single Window, a cluster of services, an incentive package and three government orders that bet on infrastructure projects that allow us to be more competitive logistically. Then it was a comprehensive vision of these conditions that did not exist before and that the country had not given them, especially in the incentive part, so we decided that they are special. They are destined for the main markets, both national and international, that is why we opted for them to be in ports and in geographic areas within the States, which had logistic potential and access to markets,” expresses in an interview Gerardo Gutiérrez Candiani, head of the Federal Authority for the Development of Special Economic Zones (SEZs).
Regarding the potential of the new SEZs in Dos Bocas, Tabasco, and Seybaplaya, Campeche declares that they will take advantage of the opportunities offered by the Energy Reform. “You have in front the Gulf of Mexico. The largest investments in both shallow and deep water occur in Campeche, Tabasco and Tamaulipas, then there you will have a very large opportunity area of investment, supply, maintenance, development, in many sectors that have to do with the energy part. We have almost 200,000 million dollars committed to hydrocarbons, gas and electricity in that area, so I think the opportunity that is going to open in both Tabasco and Campeche is immense.”
He says that the goal is to move new investments to the south-southeast of Mexico, because it is in that region where there are lags that are not detected with such depth in the center and in the north of the country. “That is why we also generate such special conditions, because when we make the analysis of where the companies are going to be established, we promote that they consider the south-southeast as a very attractive option. The south-southeast is our great reserve of both human and natural capital and, in the end, Mexico with all its free trade agreements, with the opening it has had, with access to the main markets, it is a country that continues growing and that the internal market is increasingly strengthened, since it is extremely attractive for any country, because of these conditions that very few countries actually have. Of course, we have to continue investing in productive infrastructure, but it exists. We have human capital, so we are a country of young people, it is a country that will contribute a lot, not only to the regional economy of NAFTA, but globally.”
Once the stage of the institutional scaffolding that will allow the permanence of the SEZs beyond the end of the present administration is completed, there is an investment foresight of 42,000 million dollars for the next 20 years, which will allow creating about 367,000 formal jobs.
“I think it is a number that depends on how the country goes, of how our international agreements like NAFTA, will accelerate the investment process with the new government, etc., but it is a foresight, even conservative,” emphasizes Gerardo Gutiérrez Candiani.
He declares that Puerto Chiapas, Chiapas; Lázaro Cárdenas-La Unión, which shares Michoacán and Guerrero; Coatzacoalcos, Veracruz; Salina Cruz, Oaxaca, and Progreso, Yucatán, already register investments. Likewise, he foresees that by the end of 2018 all the SEZs will have anchor investments.
It should be noted that in May of this year the head of the Federal Authority for the Development of SEZs announced that the fundamental criteria for the ‘Anchor Companies’ that wish to establish in these polygons is ready, among them we can emphasize an investment of 90 million dollars in five years and the creation of 800 jobs, as well as the occupation of an area of at least 20 hectares. “These are the main criteria that anchor companies have to meet in private land in order to be able to give them the corresponding permits.That is the premise.”
And in a short-term estimate, Gutiérrez Candini points out that SEZs will attract investments of more than 7,000 million dollars and generate around 24,000 jobs.
He also adds that Asia is very interested in investing in SEZs. “For obvious reasons, because of the geopolitical theme. The United States is our natural market, the Special Economic Zones are a great option for them.”
The Special Economic Zones (SEZs) located in the south-southeast of Mexico offer industrial park developers the opportunity to boost the sector, attract foreign direct investment, strengthen infrastructure, contribute to the economic dynamism of the states and generate greater number of jobs.
Proof of that is Parque Alis, whose investors have bet on the potential of the Coatzacoalcos SEZ. “We believe that the potential is huge, we are betting that economic development will be based a lot on issues of energy reform, in fact, it is a process that will generate growth throughout this region. The southeast of the country is historically a producer of raw materials, especially agricultural, so the potential is there. The purpose is to create value in economic activities of the agricultural sector, petrochemical industry and generate poles of development through this for the generation of jobs and investment,” declares in an interview Víctor M. Velázquez Cortés, general director of Parque Alis.
He comments that what caught the attention of investors is that in the south-southeast of the country there is no development of industrial parks. “We observe the economic dynamics that exist in the center-north of the country, referring to the Bajío, Querétaro, Aguascalientes, it is very different from what happens in the south-southeast. And one of the main axes of development of these States has been the development of the automotive sector, aeronautics and manufacturing, and everything has been done in industrial parks. The first fact is that there are no industrial parks similar to those that exist in the center-north of the country. The investors had this land and decided to build an industrial park.”
The director mentions that after making the evaluations to invest and develop this industrial park, they focused on the analysis of multimodal logistics. “The area has a port that makes very feasible the issue of foreign trade, it is a direct connectivity with the East of the United States and with Europe. The other element is that there are railroads and roads, the most strategic point to connect the center and north of the country with the southeast is Coatzacoalcos. If you want to go to the center of the Republic, even to Central America, you have to go through Coatzacoalcos.”
Likewise, he highlights that to the attractiveness of multimodal logistics of the region, the metal-mechanical industry as a strategic sector could be add. “World class companies have approached us for the production of screens and other types of manufactures, including some suppliers of the automotive sector. Today we have prospects. We have a very important breakthrough because we did not start at the time that the SEZ came out, we had the fortune to develop the vision of a project and then the SEZs come. What is going to change with the SEZs? Our market association, that is, to fill our park with industry, we are thinking that it could take place in a period of 10 to 11 years. We believe that with the SEZ this market absorption is going to be important but also the basics, the industrial park is a real estate business that offers companies all the conditions to do their activities a turnkey so that they can work.”
It should be noted that all corporations that have a permit or authorization within the authorized park of ALIS Park could enjoy of the benefits such as the 100 percent exemption from Income Tax during the first 10 years of operation and 50 percent during the following five years, as well as a special customs regime with reductions in fees, exemption from taxes on foreign trade and goods not subject to non-tariff regulations and NOMs, to name a few.
“We want to have the status of a camera that gives us a more direct contact with the authorities and gives us the opportunity to participate with greater legitimacy in a series of productive processes with which the government benefits and at the same time gives us access to receive some kind of technological and economic support, mainly through the Secretariat of Economy. Then, one of the projects that I want to promote and consolidate in these two years of presidency is the launching of the Mexican Chamber of Private Industrial Parks,” declares in an interview Héctor Ibarzabal.
Regarding the overview of the sector with which he receives the presidency of AMPIP, Ibarzabal states that the industrial real estate market is at a historic peak. “We had not had as much activity, as many business opportunities, as many occupations as we have now. We had never had increases in the rent levels and in the values of buildings as there are currently; there was never so much money focused on the sector from the business and operational viewpoint. The industrial real estate sector is in a spectacular situation, I would say that the favorable trend began in 2010 but since 2015 there have been very good levels of investment and operation, the generalized occupation that is registered is in the order of 95 percent, it’s a luxury occupation.”
He highlights, that AMPIP associates are focused on manufacturing activity and logistics. “We give quality to multinational companies that look Mexico as a place where the operation to export is efficient. Despite the negotiation of NAFTA, we have not observed a single client who says ‘I’m leaving because who knows what’s going to happen with NAFTA’. Many of the companies that are operating already have 50 percent of their activities outside the NAFTA protocol and many already have a contingency Plan B that is naturally migrating from NAFTA to the World Trade Organization, at an additional cost implication between three and five percent, depending on the product they handle, but with exchange rate fluctuation. The companies that are operating are doing very well and they are expanding.”
To the companies that are already penetrating in Mexico or wish to do it, the president of the AMPIP invites them to approach to this association. “We can be a conduit to provide alternatives in the investments that they want to make. They will be amazed with the sophistication, professionalism and topicality that the development of industrial warehouses has in Mexico, we are not lagging behind, at all, to what is happening in all parts of the world; the quality of construction, the specifications, the designs of the buildings are in accordance with international standards, and they will meet at the end of the day with a work force that will surprise them. The Mexican has lots of energy, lots of commitment and lots of dedication.”
The ‘20 -30 ‘project of AMPIP seeks the use of information technologies and the digitalization of industrial parks that allow them to enter Industry 4.0. “The 20-30 project aims to anticipate the new needs that customers may have so that they do not lose continuity or efficiency. What is becoming more famous is the 4.0 manufacturing, it is perfectly identified, there are many changes happening at the same time, so it is intended to identify all innovations. I believe that for 40 or 50 years there hasn´t been a situation like this, before there was an assembly activity and now it is an activity that can be very technological and focused on the research and development of new things. And logistics can also be identified as Logistics 4.0 in which we have to address automation, new energies, autonomous vehicles, 3D printers, virtual reality, there is a list of approximately 15 things that we know today and there must be other 80 that the researchers are preparing.”
He adds that the AMPIP will continue working on the certification of associated industrial parks. “We need a seal of guarantee from the AMPIP, since this certification indicates that you are a sustainable park that meets the requirements that we have established from a viewpoint of better operations and safety. We try to share what we use to call best practices, which is to modernize the buildings, which are called real estate but are much more alive than they seem, we must be continuously providing maintenance, security, a permanent service to customers and adapt them to the new requirements.”
For Jorge Ávalos, CEO of Fibra Mty, one of the purposes of the FIBRAS is to democratize the investment in commercial real estate. “You give access to the public in general, to public investors, to invest without having to buy a complete building. You can buy a piece through certificates, so to speak, and that allows the real estate development industry to capitalize and acquire resources to continue growing the real estate market. We like FIBRA, tomorrow we can buy a building from a developer and that developer with those resources builds another building, stabilizes it, sells it to us and so on. So the main idea is to democratize investment in real estate, encourage and capitalize the real estate market in our country.”
In fact, the Mexican Stock Exchange (BMV) underlines that the FIBRAS have demonstrated in international markets the capacity to consistently obtain attractive returns and be a valuable addition to the diversification of portfolios, besides of granting the investor liquidity and access to best properties managed in a professional manner. With this, investors, individuals, can access real estate investments that they could not otherwise reach.
It is worth mentioning that that Fibra Mty’s portfolio consists of 43 properties, of which 25 are industrial warehouses, 12 office buildings and six commercial buildings. In November of last year Fibra Mty was recognized by the National Association of Real Estate Investment Trusts (NAREIT) thanks it has been a pioneer in adopting a corporate governance model of internal administration, which allowed it to reduce its administrative costs of 1.7 percent of assets at the time of going public at 0.9 percent in the first quarter of 2017.
The corporate governance model under the internal management scheme appeared for the first time in the REITs in the decade of the 90s. Fibra Mty adopted it in Mexico with the purpose of creating a world-class investment vehicle that reflects the confidence of its investors, a transparent structure and, above all, with excellent performance margins by eliminating the system of proportional commissions.
In this regard, Ávalos explains that with the internal management scheme what Fibra Mty did was to create an American REIT with a Mexican postal code. “We do not invent the black thread, we do not innovate absolutely in any sense, beyond what already works and works very well in the United States. The commissions that the trust administrator does not collect or the savings of not paying those commissions, are exchanged for the benefit of the investor, in his dividend. And something that is very important is that it gives us economies of scale, we grow the company at a much faster pace than the growth of expenses, then those economies of scale you are forming between the size and the operating cost of the company, remains for the benefit of the title holder. We are a company that manages the resources of investors, of the public investors in general and we are part of a company where there is no control group; our heads are the holders of the certificate and to be well aligned with them we cannot be charging commissions every time we make a purchase or sell an asset, we cannot be charging an income that is based on the size of the company, because then what it happens is that you stay motivated to grow the company and not necessarily grow well.”
For the year 2020, Fibra Mty expects its portfolio to reach an asset value of 20,000 million pesos. “We call this test ‘Mission 2020’ and the idea is to reach the 20,000 million pesos in value of assets or in investment properties for the year 2020. And this is due to the necessity and to our purpose of giving a volume to the corporation to grant it greater bursatility. How are we going to achieve it? Well, in the last three years, since we started initial public offering in the BMV, we have grown at a rate of approximately 3,000 million investments per year. If this is projected forward, it is precisely the rhythm of growth that we need to reach those 20,000 million pesos. Now, how do we obtain those resources for acquisitions? We do it in two ways, first issuance of equity, we go to the market to issue public offerings of capital; since 2014 we have made two issuances of equity after our public offering, one in May 2016 for 2,200 million in a subscription and last year, in August, another one for 1,500 million pesos, under a program called Multivalor that gave us the authorization to issue a program for up to 10,000 million pesos over the next five years; additionally to these sources of capital that we have in the stock market, we also turn to some credit, to some debt,” says in an interview Javier Llaca, Chief Operating Officer of Fibra Mty.
With the 1,500 million pesos collected in August 2017 from the sale of Real Estate Stock Exchange Certificates (CBFI) among 61 investors through a placement in the BMV, Fibra Mty will carry out several investments. “We are making several investments, one of them is an industrial warehouse in the city of Monterrey, Nuevo León, for an important industrial group; they are around 20,000 square meters. We also acquired an office building for a financial group also from the north of the Mexican Republic and we are acquiring an office building in the city of Guadalajara, Jalisco. However, with these three transactions we reach around 75 percent of the use of those resources and the rest we are allocating to other acquisitions that we cannot mention yet, because they are not public, but I can tell you that a couple of important industrial transactions are coming,”explains Llaca.
He comments that Fibra Mty is very active in the northern region of Mexico and in the Bajío zone. “While we have 55 percent of the revenue coming from office buildings, I would almost say that the industrial and office component is 50-50. We like very much the industrial sector in Mexico, we like to bet on the growth of this country in the industrial sector and we are very active and with a lot of appetite to continue making industrial investments, particularly in these markets, north, center, Bajío, west and maybe in the transismic zone that links the Gulf of Mexico to the Pacific.”
He points out that the industrial portfolio of Fibra Mty is formed by various industries, among them the automotive industry with 16.3 percent; logistics with 3.4 percent and the rest is diversified. “We have electronics companies, aluminum companies, companies in the glass sector, components, and so, we have a good diversification in economic sectors.”
Javier Llaca concludes that all industrial parks that have been developed in Mexico in the last 20 years meet all international standards. “And it’s not by chance and it’s not fortuitous.”
The culture should not be seen as a responsibility of the human resources area, but as a co-responsibility of the organization that begins with its maximum leader, regardless of the title it has. This should be part of the agenda of each one of the areas of the organizations because culture is what allows you to make viable all business destinations. The culture is directly related to the feelings and perceptions that the collaborators may have with respect to the levels of trust,” expresses in an interview Beatriz Rivas, VP of Corporate Affairs of Great Place to Work (GPTW).
She underlines that in GPTW they have detected that the manufacturing sector has begun to break certain paradigms in terms of human resources. “Until a couple of years ago the manufacturing world was closely related to the madness of people who worked for nothing, strenuous, hour after hour doing a monotonous activity; they were people who could be very emotionally detached from the organizations. And the reality is that just this year, in the list of the best places to work in Mexico, one of the first things that caught our attention was that of the 140 organizations that were recognized, 22 percent are from the world of manufacturing, which indicates that they are beginning to take greater relevance within certified organizations by GPTW and they are beginning to take more positions in the ranking, what does that mean? Their levels of confidence are growing year after year.”
Rivas highlights that the increase in the levels of confidence has allowed workers in the manufacturing sector to remain in their jobs. “We are finding, first of all, that the levels of confidence of the collaborators in the world of the manufacture are growing and this is very connected with the initiatives of the cultural measures that are being developed to maintain the interest of the collaborator in staying and avoiding the desertion.”
In fact, she mentions that there is a lot of staff rotation in the manufacturing industry. “The reality is that it is a sector that has a lot of rotation, but year after year we are seeing that the average time of permanence is increasing. This year, according to our benchmark, we find that the average permanence is 7.2 years. And this is accentuated in a world that today is almost led by the millennial generation, 50 percent of the working population in the country is millennial; we are talking about a generation in which there is a perception or a label of little desire for permanence and very high mobility in jobs.”
Likewise, she recommends manufacturing organizations to incorporate the creative thinking of the new generations as innovation, which will allow them to retain talent and maintain their levels of competitiveness. “We are talking about that 83 percent of its working population is between 20 and 65 years old, it means that there is a whole sea of opportunities to innovate, not only in the productive part of the organization, but also in policies, procedures, methodologies and solutions that we bring to the market, because at the end if the organization does not generate financial results it does not have the opportunity to survive over time, but it will allow it to be competitive in its respective market and at the same time ensure his talent.”
The VP of Corporate Affairs of GPTW emphasizes that Revolution 4.0 is bringing great changes in the organizational fund. “The technology is being transferred to the organizational world, perhaps with a little more caution or with a little more containment for a certain traditionalist generation, the Baby Boomers, who are between 55 and 70 years old. It is something that is there, that is tangible, instead it is not something that should be a strategic part of a business because it is already part of the reality with which you will face.”
In a context of changes, the manufacturing sector, being an important employer of the country and has been increasingly cautious planning its future, so they have decided to include the academy in its projects. Today many of the university careers do not even exist, which means, those that are going to be required in the next 20 to 25 years. So, how is the manufacturing world integrating more each day with the academy? The reality is that the academy is beginning to be more intuitive in the training plans it is developing to respond to the necessities those markets entering into the 4.0 Revolution are going to have.
She also highlights that in the area of gender, the world of manufacturing is also breaking paradigms. “Before, it was a sector more masculine than feminine and we are seeing women in the world grow hard. For example, there is an organization that is our client, it is in the energy sector, where 75 percent of its operative force is already women and with that we break the paradigm that man is the one that can be in this world. So the reality is that organizations are beginning to work on this matter to really be as disruptive as the outgoing world, because the reality is that technology is going to embrace many of the processes and part of the commitment they have with the collaborators that are today in payroll is to keep looking ways to develop it, so that they can continue within the organization.”
