| El Paso Industrial Profile |
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View Larger Map CITY DESCRIPTION The history of El Paso ("The Pass") spans four hundred years, beginning in 1581 when Spaniards came through the Pass of the North to test the missionary and mining possibilities of New Mexico. Various Indian groups had inhabited the area for centuries. In 1536 Cabeza de Vaca and his companions came within a hundred miles of the Pass in their travels across the Chihuahua Desert. It was, however, the Juan de Oñate expedition of 1598, which brought civilization and more than two centuries of Spanish rule to El Paso. Camped on the banks of the Rio Grande, Oñate, on April 30, 1598, took formal possession of the area for his monarch Philip II of Spain and subsequently crossed the river near a site west of the present downtown El Paso, which he called "El Paso del Rio del Norte." In 1659, the mission of Nuestra Senora de Guadalupe was founded on a site that is in present day downtown Ciudad Juárez: the mission is still in use. In 1848 the United States military post that later became Fort Bliss was established. El Paso was incorporated as a city in 1873, and, with the arrival of the Southern Pacific Railroad in 1881, the future of the community was assured. Today, El Paso is rated as one of the fastest growing cities in the nation. El Paso and Juárez combine to form the largest international metroplex in the world. The southern portion of the Rocky Mountains known as the Franklin Mountains slices El Paso into Eastside and Westside, with Cd. Juárez, Mexico directly south across the Rio Grande river. The Franklin Mountains begin within the city limits and extend northward for about 16 miles. The peaks of these mountains range from 4,687 to 7,167 feet above sea level. LOCATION El Paso is located in the westernmost tip of Texas, bordering both New Mexico and Old Mexico. It is located midway between the Gulf of Mexico and the Pacific Ocean. Cd. Juárez is separated from El Paso, it's Sister City, by the Rio Grande. Cd. Juarez is the fourth largest city in Mexico and the undisputed economic center of Northern Mexico. Together, El Paso and Juarez form the largest international border community in the world.
REGIONAL INFLUENCE Currently, there are approximately 330 maquila plants in the Juarez region that employ 196,641 Mexican workers, an impressive increase from the 12 operating plants with 3,000 employees which existed at the time of the program’s inception in 1965. Accordingly, the manufacturing industry continues to be both Mexico’s and Juarez’ largest source of economic growth. Over 70 of these maquila plants are owned by U.S. Fortune 500 corporations. In addition, the production-sharing sector of the border economy has attracted companion industries to El Paso such as warehousing, distribution, and capital intensive manufacturing. According to the Greater El Paso Chamber of Commerce, Economic Development Division, the maquilas have also generated over 25,000 jobs in indirect support industries including retail sales, manufacturing support services, transportation, banking, and home building. Given the proximity of the maquilas’ to the U.S. Highway system, the twin plant industry has brought considerable gains to the El Paso economy. El Paso functions as a distribution center to the continental United States and as a place of residence for the many professionals who operate the maquila plants in Juarez. The City of El Paso is home to Fort Bliss, the largest Air Defense Artillery Training Center in the world. Fort Bliss currently stretches over 1,119,700 acres into southern New Mexico. While the primary mission of the post is air defense, it is also home to U.S. Army Sergeants Major Academy, Joint Task Force-6, and the William Beaumont Army Medical Center. Fort Bliss has a significant impact on the local El Paso Economy, estimated at approximately $1.07 billion annually. PROXIMITY TO KEY CITIES
The Workforce UNEMPLOYMENT PERCENTAGE and AVAILABILITY of LABOR Although the U.S. economic expansion of the past seven years has dramatically reduced unemployment rates in the nation, El Paso’s workforce has been impacted by the loss of jobs in the garment industry. Recent statistics indicate that new industries, a re-trained labor force, and investment in education and infrastructure are beginning to take effect. Current unemployment rates in El Paso range from 11% to 9%. Combined with improved business conditions and stronger consumer confidence, labor force participation increased in 1998 and 1999 as workers re-entered the labor market. A higher level of participation in the labor market has resulted in a declining unemployment rate and an increase in jobs created. EDUCATION and TRAINING
The Operation WAGE RATES Of all of the manufacturing inputs, labor is the only one less expensive in Mexico. Everything else costs more in Mexico, from shipping to telecommunications, to energy, to real estate, to the cost of capital. Accurate information on labor rates is therefore of paramount importance to any company considering manufacturing in Mexico. Wage rates in Mexico are controversial. The government, in conjunction with union representatives and members of the largest industrial organizations, adjust the minimum wage on an annual or semi-annual basis. There are different minimum wage rates for 88 different "professional classifications" that vary from construction supervisor to shoemaker. Few workers earn the minimum wage, especially in the export-manufacturing sector. 47% of employed workers in Mexico earn more than twice the minimum wage, and 11% earn more than five times the minimum wage. The minimum wage in Mexico is in reality a benchmark or reference wage, used by the government to direct increases in salaries that are congruent with its monetary and fiscal policies. The wage rates below are the product of a survey done by the state government on certain industrial parks in the El Paso area. Hourly Wages for executives and employees in US dollars not including benefits
Source: 1999 Texas Occupational Wage Survey Hourly salary for laborers in US dollars, including obligatory benefits
Source: 1999 Texas Occupational Wage Survey INDUSTRIAL COST
Costs increase 1% per month
(Source - Texas Gas Pipeline Index)
The monthly charge consists of a minimum charge based on meter size, plus a charge for consumption in excess of the volume specified in the minimum.
Note: AWC (Average Winter Consumption) is the average amount of water used during the most recent December, January and February Billing periods. INDUSTRIAL REAL ESTATE A current survey of the industrial parks in the El Paso area with a variety of options reveals the following average prices (sq. ft. in US dollars)
INFRASTRUCTURE
Airlines
Railroad
Telecommunications
As an urban center located within a geographic region that includes all of west Texas and southern New Mexico, El Paso is the hub for medical care and services in the surrounding area. The city’s health care facilities include eight private hospitals, one public hospital and the William Beaumont Army Medical Center. In 1997, 21% of all US-Mexico imports and 17% of US exports were handled through El Paso-Juarez ports of entry. The city’s transportation infrastructure has expanded to accommodate the demand for services found in the region. CUSTOMS LOCATIONS There are over 40 customs brokerage firms in El Paso that serve as a liaison between the importer and the US Department of Customs. TAXES There is no corporate or personal income tax in Texas. The property tax structure, sales and use tax and its exemptions, sale of component structure, freeport exemption and franchise tax, which do apply in El Paso, are set out below. Property Tax Structure for Entities within the City of El Paso, Texas (First four entities plus one school district)
Source: City Tax Office, 1999 These rates apply to land and improvement and are levied per $100 of assessed value. Land - Generally, when a new structure is built, the land value on the existing tax roll will be used. Improvements - The El Paso Central Appraisal District used cost schedules developed by the Professional Appraisal Company for the 1995 reappraisal. In appraising a manufacturing facility, an appraiser would classify the building as a warehouse. The base rates in the schedules are added to the base rate for deviations not carried in the class for such items as manufacturing use, wall height variation, dock height foundation, evaporative cooling and sprinkler systems.
Source: Texas Comptroller 2000 Sale of Component Parts to Manufacturers The state sales tax is only applicable to end-users and does not apply to component parts sold to original equipment manufacturers. Texas Sales and Use Tax Exemptions To make manufacturing in Texas more competitive, the 1987 and 1989 State Legislatures granted a sales and use tax exemption on machinery and equipment. The exemption program was phased in during 1990 and was completed in 1995. Machinery and Equipment Eligibility Rules:
Freeport Exemption Any inventory that remains in El Paso but is exported out of Texas within a period of less than 175 days will not be subject to ad valorem taxation. Franchise Tax
The franchise tax is imposed upon all corporations that do business in the state or are chartered or authorized to do business in the state. It is a tax on the privilege of doing business, measured by net taxable capital and net taxable earned surplus apportioned to Texas. Apportionment is done by using a single gross receipts formula, and allowable deductions apply to both the capital and earned surplus components. The tax rate on net capital assets is 0.25 percent, or $2.50 per $1,000 of net taxable capital. If it is an initial franchise report, this portion does not apply. (Taxable capital is computed by adding the corporation’s stated capital, as defined by state law, and the corporation’s surplus.) The tax rate due on taxable capital assets and on taxable earned surplus paying the greater of the two amounts. There is no minimum tax, and no taxes are due on liabilities of less than $100. The Support SERVICE and SUPPLIER COMPANIES Support services, supplying local and regional industries with a variety of products and services have experienced exponential growth in El Paso and Juarez. As local industry continues to expand, the demand for industrial support services has increased significantly. Support industries for international trade include legal and financial services, architectural engineering, environmental consulting, translation and language training, warehousing, distribution and equipment leasing. Most major transportation companies have operations in El Paso. The Politics Unions
El Paso is in a Right-to-Work state with low unionization (six percent in the El Paso area).
OTHER BIG NAMES Largest Employers in the El Paso Area:
ADVANTAGES
DISADVANTAGES
SPECIAL CONSIDERATIONS Growth in the El Paso service industry is due, in part, to the proliferation of back office and call center operations. The US call center market is growing at about 6% annually. Call center and back office operations typically include fund-raising, collections, help desks, reservation centers, outsourcing services, catalog retailing, financial operations, information retrieval services, medical records processing, telemarketing and check processing. In addition to extensive knowledge of the Hispanic market and proximity to Latin American markets, El Paso offers these operations a number of benefits. The city’s bilingual labor force is certainly a primary advantage. El Paso’s state of the art telecommunications infrastructure featuring cable on-line service, international toll-free and high-speed data transaction processing provides an additional competitive edge. El Paso offers businesses competitive labor rates plus a strategic geographical location. The area also offers excellent location for companies seeking qualified workers in the call center industry, or companies who need to be near their Mexican counterparts. El Paso is a city with a good climate, and is located close to the border and other key Mexican cities. The economic outlook for the El Paso metropolitan economy remains favorable. With a population growth rate of approximately 2 percent per year, El Paso continues to easily outgrow the rest of the nation as a whole. Personal income is projected to increase by more than 5 percent per year in both 2000 and 2001. The decline observed in the city’s unemployment rate since 1996 will continue as the El Paso economy expands. Industrial Market Map
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