HARLINGEN, December 8 - Brownsville’s trade with Matamoros is valued at around $8.4 billion a year, but, to the chagrin of local economic development officials, much of that value is added outside of the border region.
In fact, $6.4 billion of that $8.4 billion, be it innovation, design, or raw material, is produced elsewhere, says Mike Gonzalez, executive director of United Brownsville.
Gonzales wants to see the Rio Grande Valley capture a much greater slice of the supply chain activity that feeds the maquiladora plants in Matamoros and Reynosa.
“In Matamoros alone we have $8.4 billion of trade every year. The 116 maquilas over there, that’s how much they punch out. However, $6.4 billion of that value comes in from the outside. So, somebody else in some other metro area added value and they captured that wealth in the form of salaries,” Gonzalez said, in a speech at an economic development update luncheon hosted by the Harlingen Area Chamber of Commerce at La Sierra Event Center. “So that is one opportunity. You bring in Reynosa, even larger. That is something we have to work on as a region.”
Gonzalez argues that if the South Texas border region played a bigger role in the supply chain activities of products manufactured in local maquiladoras the region’s wealth and prosperity would grow tremendously. He pointed out that poverty levels in the Rio Grande Valley have hovered around 30 percent for decades. For youths under 18, that figure is closer to 50 percent, he said. The fastest growing job sector in the Valley is in the low-skill, low-pay arena, Gonzalez said. And, he noted that 40 percent of the Valley’s adult population does not possess a high school diploma.
“Why are we just not killing it on the economy?” Gonzalez asked. “We need to rebuild our regional economy, focus on the strengths we offer. We need to do that as a region.”
Gonzalez told the audience about what he believes was a compelling presentation made recently at UT-Brownsville by Alan Bersin, assistant secretary for policy at the Department of Homeland Security. He said Bersin made the case for the border region focusing on the economic flows that run north-south which unite the U.S. and Mexico, rather than the east-west boundary line that divides the two countries.
Gonzalez pointed out that the exchange of goods and services between the United States and Mexico has reached $1.3 billion a day. Mexico is the third largest trading partner for the United States and possesses the 13th largest economy in the world, he said, and projected that within 30 years Mexico’s economy will be larger than Germany’s, which is the fourth largest in the world right now. “You would think we are in a great position to capitalize,” Gonzalez said, noting the Valley’s geographical position.
Gonzalez said city and economic development leaders in Brownsville, Harlingen and Matamoros are working together to attract more high-paying jobs through exports, advanced manufacturing and innovation. He said they have helped form the public-private BiNED consortium in order to improve the area’s competitiveness. BiNED stands for Bi-National Economic Development Zone.
“The basic idea is to create an integrated, innovative, and competitive bi-national U.S.-Mexico border and economic mega region,” Gonzalez said. He said the idea is not a new one. “San Diego is already doing it. We stole some of their great ideas. They created a mega region. Individually, yeah, we are pretty competitive, but you put us together as a region, now we are a global force. We have a lot of the same compelling assets to offer (as San Diego).”
This past summer, United Brownsville received a $300,000 grant from the U.S. Economic Development Administration to do a supply chain analysis. “We need to look at all these components that are coming through here. What are the components we can build here? Where are the opportunities?” Gonzalez said.
Gonzalez said the mayors of Brownsville, Harlingen and Matamoros have approved resolutions in support of BiNED and that a coordinating board is being established to “get this concept moving forward.” He said those behind the BiNED project recognize that it has to expand and encompass the entire Rio South Texas region. “We need to look at what makes us competitive - technology, infrastructure, institutions, entrepreneurship, human capital. Buying everything here, sourcing everything here,” Gonzalez added.
Gonzalez had started his speech by noting that the Valley now comprises 1.3 million people. He said if it was measured as one metro area it would be the 40th largest in the nation, around the same size as the Austin-Round Rock area. “Once we start thinking about that we really start to understand how much bigger our megaphone is,” Gonzalez said.
He also said that SpaceX’s recent announcement that it is building a commercial rocket launching facility in Brownsville is an example of how the whole region can come out ahead. “We have an entire new sector we can build on. Now that we have SpaceX here how do we build an entire space cluster around it?” Gonzalez asked.
Gonzalez concluded his remarks by saying perception does matter. He said the negative image often associated with the border region must be seen as an opportunity and that opportunity can be seized by creating an advanced manufacturing hub. “It is not just about securing it (the border region) and boots on the ground. It is about an economic region that can make the U.S. and Mexico more competitive.”
Gonzalez was one of seven economic development experts to speak the luncheon. The others were Keith Patridge representing McAllen, Salomon Torres representing San Benito, Alex Meade representing Mission, Catalina Ozuna representing Raymondville, Joey Treviño representing Weslaco, Raudel Garza representing Harlingen and Alma Puenti Colleli representing the Rio South Texas Economic Council. The moderator was Julian Alvarez of the Rio Grande Valley Partnership.
In his remarks, Patridge gave an example of how the Valley is adding value to products being manufactured in maquilas across the border. He said the electronics inside the new Ford F-150 pickup truck being assembled in Reynosa were “designed by kids who were born in the Valley, grew up in the Valley; went to the UT-Pan Am school of engineering.”
Patridge said McAllen EDC has lured six major corporations to move their headquarters to the Valley and that more research and development is taking place in the region. “Where we want to get to is, we are not just creating jobs but doing the innovation, we are doing the commercialization, and we are doing the development,” Patridge said.
Teeing off of Gonzalez’s remarks about San Diego developing a bi-national economic development zone, Harlingen EDC’s Garza said there is a big difference in educational attainment between San Diego and the Valley. Garza said that 40 percent of residents living in San Diego aged 25 or older have a Bachelor’s degree, compared to 15 percent in the Valley.
“When you look at the companies that are in San Diego and you look at the companies that we try to attract, we have got a big gap to make up. It is all about education. We really need to make sure we upgrade the skills and the education levels of our own folks,” Garza said.
“If we cannot do that with our workforce then we cannot attract those companies that are in San Diego or in places like San Diego and we are not going to have the quality of life that they have because we do not have the disposable income that they do. We are not going to get Neiman Marcus, guys, until a certain level of population and income levels are met.”