| Chihuahua Industrial Profile |
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Market ProfileChihuahua has a solid position among Mexico’s secondary manufacturing markets and has experienced stable economic growth in the past ten years. Chihuahua has not historically been the first location for companies moving into Mexico, but rather a growth market for maquilas with a track record of manufacturing in Mexico. Much like Mexicali is an overflow market for Tijuana, Chihuahua has followed on the growth in Juarez and has been to able grow when the major border market begin to get overcrowded. The only real drawback of Chihuahua is its distance from the border, raising transportation costs and limiting the ability to get immediate support and services.
2008 Economic Development Office KEY INDUSTRIES
RECENT ACTIVITY
ADVANTAGES
DISADVANTAGES
The City POPULATION The Chihuahua is home to 825,327 people, which represents close to 25.46% of the State’s 3,241,444 inhabitants. This population is growing at a 2.4% annual rate, faster than the rest of the country which has a 1.8% annual growth rate. It is estimated that 55% of Chihuahua’s population is 21 years old or younger. (Source: Centro de Informacion y Estadistica del Estado (2004 INEGI - February 2008) LOCATION Chihuahua City is located at the geographic center of the state of Chihuahua, which shares borders with Texas and New Mexico to the north, Durango and Coahuila to the east, Sinaloa to the south, and Sonora to the west. Chihuahua is the largest state in Mexico representing 12.56% of the country’s territory and covering a total area of 95,400 Sq. miles; an area comparable to Arizona in the US or to France in Europe. The city is located relatively close to the U.S. border, only 234 miles south of El Paso, Texas and Ciudad Juarez. The 4-lane Panamericana highway links the city to the U.S. border with an average driving time of 3.5 hours. Chihuahua sits at 4,806 ft and the weather is hot and dry during the summer, and pleasant and cool during the winter. Summer temperatures range from the mid 80’s to over 100°F and winter average low/highs in the 40’s and 60s respectively. Annual precipitation averages 14.4 inches.
INDUSTRY SNAPSHOT Chihuahua is experiencing sustained industrial development. Several new manufacturing firms have recently moved into the city and overall industrial activity is increasing as new tenants are exploring Chihuahua as a possible manufacturing location. The city serves as an alternative destination for maquiladora operators who require quick access to the border crossing at El Paso/Juarez but who wish to avoid both the higher costs and higher turnover rates of the border area. The rapid growth of the maquiladora industry has contributed to the general well being of the population. It is important to note that, from all interior (non-border) locations in Mexico, Chihuahua has the largest maquiladora presence. In total, there are 79 maquila plants employing 43,374 people. Several existing companies are in the process of expanding current locations to accommodate additional production lines. The entire state of Chihuahua is a thriving economic center; there are more than 350 established manufacturing and assembly plants in the state with annual purchases of $2.5 billion USD in materials and components. Chihuahua's annual Gross State Product is $6.2 billion, or 2.9% of Mexico's total GNP. Agricultural activities are still important in the state, as Chihuahua is the leading producer of apples and nuts and second in pine and oak trees nationwide. The state is also the nation's leader in raising cattle and sheep. The area also has a strong mining presence and is the leading producer of non-ferrous minerals and zinc. Silver mining is also an important industry for the state. The WorkforceDEMOGRAPHIC IMPACTAGE DISTRIBUTION Click Here To Register LABOR AND EMPLOYMENT UNEMPLOYMENT AND SUB-EMPLOYMENT SKILL LEVEL The National Employment Agency gives special attention to Chihuahua due to the skill level of its highly qualified labor force. In fact, the city’s workforce is one of the best in the country due to a variety of industrial processes and advanced technology that it is used in almost every plant. Evidence of the quality of the workforce is the type of industry established in the city. The main maquiladora plants in Chihuahua employ personnel in the following industries:
The city of Chihuahua has 14 universities and more than 28 technical education institutions. Technical schools on the city offer degrees in programming, accounting, electricity, welding, electronics, machine tooling, instrumentation, and other disciplines relevant to the maquiladora industry. One branch of the most prestigious universities in Latin America, the “Tecnologico de Monterrey”, prepares some of the better engineers of the country. The city ranks among the top in the nation for level of education and R&D investment. Training programs offered by state government and educational institutions are flexible to the needs of industry. The state sponsors training programs that cover a worker’s minimum wage for a period of 60 days while in training. TURNOVER RATES The OperationWAGE RATES Wages are the key driver of Mexico’s manufacturing industry. It is, therefore, one of the first and most important topics any company expanding in Mexico will consider. TeamNAFTA touches on the overall wage issues in our Info Center, but we have also provided some sample wages for Chihuahua below. While we have access to more detailed wage information, we typically present that information in a tailored report addressing a company’s specific labor needs.
Average hourly wages paid in Chihuahua: 2003 - 2008
Source: Area industry wage studies and interviews with local managers, $11.00 pesos/USD INDUSTRIAL COSTS dollar @ 11 pesos/USD
TRANSPORTATION Chihuahua’s overall accessibility and adequate transportation system makes it an attractive location for manufacturing plants who want to serve the U.S. markets. The city benefits from an exceptional highway that leads to the northern border crossing in Ciudad Juarez, 234 miles from the city. Another direct highway to the Santa Teresa port of entry offers an excellent infrastructure for all international trading, making it easier to get to the U.S. and avoiding Juarez’s traffic. Chihuahua has an excellent road network; the new 12-lane freeway Periferico de la Juventud, allows for speedy distribution around the city. In addition, the city counts with 26 inter-city and 6 intra-cities bus lines. The Chihuahua international airport offers daily non-stop flights to Dallas, Houston, El Paso, Mexico City, Guadalajara and Monterrey while a daily rail service connects to Juarez/El Paso. CUSTOMS U.S.-Customs handles commercial traffic from Chihuahua at El Paso, Texas. Agricultural imports are handled at Santa Teresa, NM. Mexican Customs operate facilities in Ciudad Juarez and Chihuahua City. Some of the services offered at the Ciudad Juarez customs office include:
INCENTIVES The government offers incentives in relation to payroll taxes, training programs, and assistance in the procedures for meeting requirements at three levels of government (federal, state, and municipal). Additional incentives can be negotiated, depending on the location of the new project, type of manufacturing activity, and the creation of jobs. The incentives subject to negotiation include: infrastructure works, fees with the State Public Registry, and construction permits. STATE OF CHIHUAHUA INCENTIVES
Sectors offering special opportunities: Electronics, Automotive, Aerospace, Software, Biomedical, Agroindustrial, and Mining The SupportSUPPORT SERVICE COMPANIES Chihuahua’s smaller size and interior location also means fewer services and support capabilities than those found in border cities like Cd. Juarez and Tijuana. That is one of the tradeoffs companies make in search for a more stable labor force. Diminished access to services and a further distance to the US can significantly increase costs for highly specialized operations. The PoliticsUNIONS Unionized labor in Chihuahua is minimal. Less than 10% of the plants are unionized and there is no obligation to be unionized in the state. Most maquiladoras are unionized under the Mexican Workers Confederation (CTM). Within CTM, companies can choose among 3 local unions for their labor supply. Some of the labor unions that have presence in Chihuahua include: the National Union of Workers (UNT) and the Revolutionary Confederation of Workers and Farmers (CROC) among others. POLITICAL INFLUENCES The new Governor of Chihuahua, Mr. Reyes Baeza (2004 - 2010) from the PRI party is planning to implement programs and set incentives to attract Foreign Direct Investment, showing great interest in the maquiladora industry. The new Government is planning to offer tax incentives and services through its well-managed Economic Development Department, one of the best in the Mexico. Market Map
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