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article imageUS-Mexico border businesses managing, despite drug war reports Special

By Lynn Herrmann     May 16, 2011 in Crime
El Paso - Drug-related violence in Mexico associated with cartel turf wars is having a huge impact on people living within the great country’s borders, but far away from glaring headlines, data essential for economic development reveals a much brighter picture.
National media reports continue telling of the growing violence in Mexico, with some estimates of more than 35,000 people losing their lives since the drug war began escalating, many in a gruesome manner, but so far, border traffic indicates the economy is more of a hindrance than drugs.
Bob Cook, president of the El Paso Regional Economic Development Corporation (REDCO), spoke with Digital Journal on Monday, sharing some of the data on the southern border region of the US, helping mesh facts with sensational media reports on drug-related violence in Mexico.
“What we see happening in Juárez right now is a city of competing realities. We have this mostly cartel-related violence taking place, but interestingly, while that is happening, Juárez is leading Mexico in almost every industrial indicator, in terms of new jobs and investment.”
Bob Cook  president of the El Paso Regional Economic Development Corporation.
Bob Cook, president of the El Paso Regional Economic Development Corporation.
With companies we are working with, we have helped bring 15 new company projects to Juárez, this is manufacturing, and we have only had one client choose another city outside the Juárez area over violence concerns. The other company made the decision last August to locate to Tijuana
“Those companies will create over 14,000 new jobs in Juárez,” Cook added.
“As of today we are working with 41 other companies that are considering additional jobs and investment in the city of Juárez. Our data compares, on a monthly basis, the number of industrial jobs in Juárez, measured monthly.”
An unclear trend developed during the first 18 months of data tracking on Juárez maquila employment, beginning January 2008, with 83,383 jobs lost during the period through May 2009.
“It was unclear what was causing this, because what was happening in the beginning of 2008 was both this increase of violence that we saw and at the same time, we began to enter this national and global economic downturn that we had not seen for several decades.”
Although the downward trend was noticeable, Cook said manufacturing companies were not leaving Juárez because of the violence, but many were cutting back production because of the economy and lower orders.
North-bound traffic at El Paso s border crossing remains heavy  despite drug-gang related violence i...
North-bound traffic at El Paso's border crossing remains heavy, despite drug-gang related violence in Juarez.
After that, a slow but steady rebound began occurring, with 28,146 jobs added between June 2009 and March 2011, and still continues.
Mexico’s Secretaria de Economia must issue permits for companies to operate within the maquila sector. From 2005 through 2007, 78 permits were issued for the Juárez area. From 2008 through 2010 there were 106 permits issued.
“We clearly did not see a correlation between the number of new permits being granted and violence.”
Another area of data REDCO is concerned about is industrial absorption, the amount of square feet of industrial space being newly occupied by owners or through leases.
Juárez is near the top of performance in volume among major Mexican cities, with the exception of Mexico City. It leads Tijuana, Guadalajara and Reynosa, trailing just Monterrey. “When you look at all this on a per capita basis, Juárez is outperforming every other major city, because Monterrey is four times larger,” Cook noted.
Northbound commercial truck traffic from Juárez to El Paso saw a 14 percent increase from 2009 to 2...
Northbound commercial truck traffic from Juárez to El Paso saw a 14 percent increase from 2009 to 2010.
Foreign direct investment (FDI) in the six border states of Mexico is a tracking point for REDCO, as well. The state of Chihuahua trails only Nuevo Leon in that category, with approximately 75 percent of FDI in Chihuahua traditionally directed to Ciudad Juárez.
“Again, even on a per capita basis, Chihuahua, led by Juárez, is outperforming all the other border states and throughout Mexico” according to Cook.
“These are recurring themes, and as we continued collecting data, we could not see any statistical correlation between the violence and how it was impacting industry.”
From 2009 to 2010, there was a 14.2 percent increase of northbound commercial truck traffic at El Paso’s Port of Entry, coming from the maquilas in Juárez to El Paso, data from US Customs and Border Protection shows.
The most significant indicator of all, according to Cook, is the import-export trade volume in the El Paso district, which includes the Santa Teresa port just west of El Paso. In 2010, $71.1 billion in trade went back and forth across the border in the El Paso district alone.
Those 2010 figures are the largest on record, dating back to 2004, and represent a 46.7 percent increase over 2009 numbers. “As you look at other border locations, Juárez and El Paso trade volumes led the rest of the locations along the US-Mexico border.”
“This is a lot of data to say we have not seen the cartel-related violence have a significantly negative impact on the manufacturing industry,” Cook continued, noting the drug cartels are a presence to be aware of.
“I want to be clear, we’re not saying it’s business as usual, because the environment has been capitalized on by certain opportunistic criminals, in turn causing the maquilas and citizenry of Juárez to be mindful of.
“We have seen an increase in the number of threats of carjackings, which is the number one threat to the maquila industry, not so much the industry itself, but to the employees going to and from work. A second to that would be a potential extortion,” Cook said.
A subject of mass media reports is cross-border migration, and Cook noted REDCO’s numbers do not back up some claims.
In terms of cross-border migrations, previous reports have shown various US public officials have indicated that as many as 30,000 to 100,000 Juárez citizens have migrated to El Paso. Other public statements have been made stating as many as 200,000 to 400,000 people have left Juárez during the last three years.
Freight train along the El Paso-Juárez border  part of the record-setting $71 billion import-export...
Freight train along the El Paso-Juárez border, part of the record-setting $71 billion import-export trade in the El Paso district in 2010.
Regarding those reports, REDCO’s Cook stated: “We cannot find any data that will support either of those claims. This is important to us, because our job is to recruit business and industry to the region, so we need to have an accurate accounting, as best we can, as to the available labor force is on both sides of the border.”
Hearing such public statements on population loss or migration requires REDCO to accurately account for those numbers so it can pass the information to potential companies regarding available work force.
“In Juárez, today’s labor turnover rate is the lowest we have seen in two or three decades,” according to Cook.
To help lend credence to the REDCO numbers, Mexico’s Federal Electricity Commission (CFE) reported a 7 percent increase in Juárez electricity consumption in 2010. “That number is not consistent with a population loss in Juárez,” Cook pointed out.
On the El Paso side of the border, there are no indications of a mass migration into the city. El Paso has sold 2,847 fewer homes since the violence increase in Mexico began in 2008 than were sold in the previous three-year period.
El Paso maintains a consistent apartment occupancy rate, with those rates being 94 percent or higher during the last five years, another indicator a mass migration into the city is not occurring.
Although there has been a growth in the number of apartments being built, there has been a tremendous growth at Fort Bliss. This brings other factors into play, including school enrollment in both the public and private sector.
REDCO numbers show a growth of about 6,300 students over the last three years and factoring in the growth at Fort Bliss, all but about 1,000 students are accounted for.
All told, including retail sales, tax collections, school enrollment, home sales, and apartment rentals, there is nothing to indicate a mass influx of people into El Paso.
In El Paso’s retail arena, a stroll through the city’s streets shows cross-border drug-related violence is a non-issue. Vehicle traffic coming across the bridge is lined up on a daily basis. Freight trains and commercial truck traffic is thriving. Shops in the border district are packed with people coming and going.
No guns! A road sign in Juarez  Mexico
No guns! A road sign in Juarez, Mexico
Gun battles between the drug cartel and government forces in Mexico’s interior appear to be a major problem, with almost-daily reports indicating the violence shows no sign of abating. MSNBC reports that, according to the US-Mexico Cahmber of Commerce, one in ten Mexican companies reported employee kidnappings in 2010.
During the same year, 60 percent of those companies reported employees being threatened or beaten.
MSNBC also notes cargo theft is becoming increasingly selective, with industrial chemicals or specially processed metals being requested by specific clients, according to Mexico’s Freight and Auto Transport Association.
Armed security escorts are now seen on Mexican toll roads, the only means of rapid transit in the country. Some are hired by corporations, others are provided by the government. Armed guards now stand by for daily deliveries to various factories in the country, but while drug-related violence makes the news, other factors are at play.
“People think that everything in Mexico is a constant shootout, but that’s not the case,” said Keith Patridge, MSNBC reports. He is associated with the McAllen Foreign Trade Zone, an organization promoting cross-border businesses in deep south Texas.
Patridge notes the international border is merely a river, fence or wall. “We're a city, a metropolitan area, that happens to span the border. The south side of our city happens to have labor that is among the most competitive in the world. The north side of town is the largest market in the world,” he added.
El Paso Saddleblanket Co.has seen little impact on retail sales from a highly organized drug war in ...
El Paso Saddleblanket Co.has seen little impact on retail sales from a highly organized drug war in Mexico.
Dusty Henson, owner of El Paso Saddleblanket Company, located along Interstate 10 just minutes from downtown El Paso, took a few moments to visit with Digital Journal on Monday. “There are two kinds of money in El Paso: there’s old drug money and there’s new drug money,” he jokingly began the interview.
Laughs aside, extreme violence just across the border has had little impact on his store, featuring two huge showrooms situated on two acres, selling Southwest merchandise ranging from pottery to home furnishings.
“Any time you deal with the government, you have red tape that tends to slow things down, but we’re not noticing any real changes.”
“What has happened here, the cowboy free-lance drug dealers aren’t around, it’s much more organized than that, with Chicago, New York, Miami, and places like Columbia and Mexico City being the big players,” Henson said.
“The guys around here are river contractors, moving their goods from point A to point B, that’s their job description, so you probably don’t want to be a free-lancer, it’s far too organized. It stands to reason the drug industry is putting a lot of money into the economy, both here and in Juárez,” Henson added.
While media reports have focused on the tremendous amount of violence associated with a drug trafficking situation that has placed Mexico’s President Felipe Calderon squarely on his heels, the economic reality along the border is showing little impact, both in terms of data and hard reality.
More about Drug war, El paso, Juarez, Economy, Drug cartel
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