MCALLEN, RGV – McAllen Economic Development Corporation President Keith Patridge says a recent trade mission to Japan and South Korea was highly successful.
He said that during an economic summit there was great interest shown by Asian companies in locating their manufacturing operations in both McAllen and Reynosa.
He also learned that many manufacturing companies want to pull their operations out of China, with Vietnam, Mexico and the United States the preferred destinations.
“It was an excellent trip. The timing was almost perfect because It was right after the US-Mexico agreement had been announced but prior to Canada joining the new trade agreement,” Patridge said.
Along with Patridge, the U.S. delegation comprised Ralph Garcia, vice president of McAllen EDC, Miguel Gonzalez, the former dean of engineering at UT-Pan American, and Jorge Torres, a licensed U.S. customs broker who owns Inter Link Trade Services.
The main reason for the trip to Japan was to participate in the biennial technology summit hosted by ALPS Electronics. ALPS, which manufactures parts for the automotive and medical industries, has had a major presence in the Reynosa-McAllen area for over 25 years.
“Every other year ALPS has a technology summit where they invite their customers in to see their new technology. They showed us a bionic hand they have developed. They had new devices coming for cars, self-driving cars, for automation, for security, as well as new materials for industrial applications. It was really exciting.”
Patridge said the McAllen delegation was personally invited to the technology show by Masataka Kataoka, chairman emeritus of ALPS.
“Masataka Kataoka is part of the original founding family. We were very honored. We were invited to dinner with he and his marketing director. We had the restaurant to ourselves. It is a very special relationship,” Patridge said.
The delegation also made a side trip to Korea, with the highlight being an economic summit attended by around 24 representatives from 19 different manufacturing companies.
“It was right after the US-Mexico agreement had been announced but prior to Canada joining the agreement. We took Jorge Torres of Inter Link with us. He made a very good presentation about the U.S.-Mexico trade agreement and the new economic border zone proposal from López Obrador,” Patridge said.
Andrés Manuel López Obrador is the incoming president of Mexico. He takes office on Dec. 1.
What was striking at the economic summit, Patridge said, was the level of interest shown towards the U.S.-Mexico border region.
“It used to be Reynosa that was the focus, because of the lower cost of labor. But, under the new USMCA agreement where, in the auto sector, they are going to require a $16 an hour wage for at least 40 percent of the vehicle, they (the companies participating in the summit) said they want to know more about McAllen,” Patridge said.
“They are looking to set up the supplier companies on the U.S. side. It was very successful. So successful, in fact, that we have had two of those companies follow us back and are already looking at sites in the McAllen area.”
Patridge said Torres’ presentation on the U.S.-Mexico trade deal intrigued those in the audience.
“It did not take long for the companies to figure out the benefits because their customers in Mexico, the Fords, the General Motors, the Chryslers, the BMWs, the Mercedes, their plants are shipping not only to the U.S. and Canada, but also to South America, back to Europe and Asia,” Patridge explained.
“Mexico has trade agreements with another 45 or 47 countries. The supplier companies were very quick to recognize that, hey, they could put a plant up on the U.S. side in McAllen and also put a plant on the Mexican side in Reynosa.
“They could say to their customers, tell us where the car is going to be sold. If it is the U.S. we can produce on the U.S. side, to get you the 40 percent under the requirements of the trade agreement. Or, if it is going to be exported to South America or Central America or Europe or Asia, we will produce it on the Mexican side in Reynosa, because Mexico has all these free trade agreements with the rest of the world.”
Patridge said those in the audience were quick to pick up on this.
“You can always tell if there is a big interest because they were taking notes like crazy as we were doing the presentation.”
Patridge said he also heard about a lot about manufacturing companies planning to pull out of China because the labor costs are not as attractive as they once were.
“The companies said, we are pulling out of China, we are moving to Vietnam or Mexico or the United States. They are saying China is now more expensive than Vietnam and Mexico,” Patridge explained.
“The numbers we are getting from a company that has operations in Mexico, is that it is 14 percent cheaper in Mexico than it is in China. That was eye-opening. All of them said, we are moving out of China. U.S. companies are pulling out of China. They said, we are looking at moving more back to our plants in Reynosa.”
The McAllen EDC president gave his interview to the Rio Grande Guardian and RGV Public Radio 88 FM at the conclusion of a recent MEDC board meeting.
Editor’s Note: The images used in the slide show above were provided by McAllen EDC. Thanks to Brandon Garcia, marketing coordinator for MEDC.