Events in San Diego and Baja California have highlighted the importance of industrial supply chain opportunities between U.S. businesses and Baja California. The San Diego Regional Chamber of Commerce believes that economic growth can be experienced by harnessing these supply and sourcing opportunities. So what does cross-border commerce look like and what do U.S. businesses have to gain?
During a recent discussion in March hosted by NAIOP (National Association of Industrial and Office Properties) San Diego that featured former Mayor Jerry Sanders, the issue of cross-border manufacturing was discussed as it relates to the impact on jobs and commercial real estate development. Sanders, who currently serves as the President and CEO of The San Diego Regional Chamber of Commerce, expanded upon the importance of the cross-border terminal and the need for cross-border rail.
Mentioned was the Cali Baja Bi-National Mega-Region Initiative, a long-term economic development strategy which includes San Diego County, Imperial County and Baja California in Mexico. This Mega-Region is a unique location for businesses to invest as it has the largest concentration of population along the U.S.-Mexico border. The immediate pros include the opportunity for businesses based in the U.S. close to the Mexico border to maintain their corporate business operations in the U.S. but manufacture their products in Mexico. This ability to contract manufacture offers businesses a significant cost reduction due to the differentiated wage and land cost structure.
The development of the cross-border terminal, a pedestrian bridge that would allow Americans and foreign travelers to cross the border directly into and out of Tijuana’s General Abelardo L. Rodriguez International Airport, is included in a series of border improvements which would aid in the Mega-Region’s success.
In addition to the effort to institute a cross-border terminal, Sanders also discussed the advantages of rebuilding the historic cross-border railroad that would provide the Mega-Region with cross-border freight train service. The rail service would aid in diminishing the significant amount of truck traffic that is experienced along the Mega-Region’s main interstates. By transferring the transportation of components manufactured in Mexico and delivered to the U.S. from trucks to rail, the Mega-Region is able to remain competitive and deliver products more efficiently.
On a state level, cross-border operations allow businesses based in California to maintain their corporate business operations, instead of moving to other, more business- friendly states.
Among the advantages of cross-border manufacturing is the by-product of the maintenance and creation of jobs. More businesses will look to the Mega-Region when considering opening a headquarter or satellite location. From automotive and aerospace to electronics and medical devices, including companies such as Toyota and DJO Global, U.S. businesses are already taking advantage of the cross-border supply chain opportunities. Toyota Manufacturing de Baja California assembles Tacoma pickups at a plant located outside Tecate and transports them by truck to the U.S. Whereas DJO Global has been operating in Tijuana for decades and has helped to attract many of their major suppliers to Mexico in order to keep up with their demand.
San Diego and Imperial Valley have the capability to economically benefit from its border ties with Baja California and the Mega-Region Initiative aims to strengthen those ties and create jobs on both sides of the border.