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POPULATION

Gomez Palacio is one of the three cities located in a region known as "la Laguna"; the other two cities are Lerdo and across the Nazas river Torreon, in the state of Coahuila. The tri-city metropolitan area has an estimated population of 1.4 million inhabitants. Gomez Palacio has an estimated population of 448 thousand individuals, Torreon with 728 thousand and Lerdo with 224 thousand.  Source-Coahuila and Durango State Governments 2000

STATE DESCRIPTION

• Durango is the fourth largest state in Mexico with an area of 47,561 sq. miles or 6.3% of the country’s territory, and a population of approximately 1,464,000 individuals. The state borders to the north with Chihuahua, to the east with Coahuila and Zacatecas, to the south with Nayarit and Jalisco and to the west with Sinaloa. The state is crossed diagonally from the northwest to the southeast by a tall mountain range with peaks exceeding 10,600 ft., 46% of the state’s territory is covered by coniferous forests.
• Two regions of the state have developed economically and have the necessary infrastructure to support maquila operations. The capital city of Durango in the south-central region of the state, and the "La Laguna" area in the eastern section of the state where the cities of Gomez Palacio and Lerdo are located.
• Traditionally an agricultural and mining state, Durango has become an important maquila center, especially in the textile and apparel manufacturing industries.

LOCATION

• The city of Gomez Palacio is located in the North-eastern part of the state at an elevation of 3,740 ft.
• The region developed at the end of the 19th century as a cotton growing area due to the availability of water from the Nazas River and the presence of important railroad lines.
• A four-lane toll highway connects the city to Durango, the state’s capital, in 2 hours.
• Average annual precipitation is 8 inches.

The weather in the tri-city area is hot and dry in the summer, and cool in the winter with the following average temperatures.

REGIONAL INFLUENCE:

Prior to the North American Free Trade Agreement Durango supplied over 65% of the timber used in Mexico, since then the state’s share of the market has been reduced to less than 1%. In recent years, Durango has been an exporter of people, migrating to states like Chihuahua and Coahuila in search for better paying jobs. Although Durango is the capital city, it has experienced slower growth and industrial development than the cities in the La Laguna region, partly because of the city’s distance from the Pan-American Highway linking Mexico City to Cd. Juarez. Gomez Palacio is in the "La Laguna" region, an area known for its agricultural production of cotton, milk, pecans, fruit and vegetables. Located 368 miles south of the U.S. border at Laredo, Texas, Gomez Palacio is best known today for the number of garment assembly plants located there. Over 156 million pieces of clothing and over 100 million yards of denim are manufactured in the "La Laguna" region each year.

PROXIMITY TO KEY CITIES

The Workforce

DEMOGRAPHIC IMPACT:

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SKILL RANKING:

The most credible proof of the quality of the workforce is the type of industry established in the city. The economically active population of Gomez Palacio is employed in the following industries:

EDUCATION and TRAINING

The region has a well established educational infrastructure with the following facilities:

• Elementary School to High School- Over 343 schools, including two American Schools teaching in English with U.S. personnel.
• Technical Schools- With degrees in: Electronics, Industrial Chemistry, Accounting, Smelting, Secretarial Services, Machine tooling, Apparel manufacturing, Electricity, CAD-CAM, Air conditioning and refrigeration and others.
• Two Conalep Technical Colleges
• Three Cecati worker training centers
• Four Cetis technical and industrial training centers
• Torreon’s Industrial Technical School specializing in Internal Combustion Engines and Machine tooling.
• Universities
• Nine universities including:
• Coahuila State University
• Monterrey Institute of Technology-La Laguna Campus
• La Laguna University
• UANE University
• Antonio Narro Agricultural University
• Benito Juarez University
• ISYTAC University

The state will subsidize training for new workers by paying them minimum wage salary and the corresponding social security taxes for up to sixty days. The company selects the workers who participate, and the only condition is for the company to hire 70% of workers who successfully complete the training program.

TURNOVER RATES:

The state government does not publish statistics for turnover rates. We expect turnover rates to Click Here To Register

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 than in the United States, from shipping to telecommunications, to energy, to real estate, to the cost of capital. Accurate information on labor rates is 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 is a minimum wage rate for 88 different "professional classifications" that vary from construction supervisor to shoemaker.

Few workers earn the minimum wage, especially in the export-manufacturing sector. Over 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 its 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 shown below are the product of a survey done by the government on certain industrial parks.

LABOR COSTS-Rates include all mandatory benefits and payroll taxes

Source Bancomext-1999 Rate $9.40 pesos/US dollar

SALARIES FOR EXECUTIVES AND EMPLOYEES

Rates include all mandatory benefits and payroll taxes

Source Bancomext-1999 Rate $9.40 pesos/US dollar

INDUSTRIAL COSTS

Source Mexican Dept. of Energy and Durango Government

Electricity USD @ 9.00

Costs increase 1% per month

Fossil Fuels USD @ 9.00

Costs increase 1% per month

Water USD @ 9.00

Bancomext-1999

INDUSTRIAL REAL ESTATE

There are eight industrial parks in the area. In Gomez Palacio, the largest park is "Parque Industrial Lagunero" with 220 manufacturing companies employing 19 thousand workers. Water intensive companies are typically not allowed. Several park developers offer shelter operations.

Average prices in US dollars per sq. ft.

Industrial Real Estate US dollars/sq. ft.

Exchange Rate $9.40 pesos/dollar

INFRASTRUCTURE

• Excellent educational infrastructure.
• Six four star hotels and two five star hotels in the city.
• Rail links north to the Chihuahua and Cd. Juarez, south towards Mexico City, east towards Monterrey, Nuevo Laredo, Reynosa and Matamoros.
• Torreon’s International Airport, just 20 minutes away from Gomez Palacio, offers daily direct flights to Mexico City, Cd. Juarez, Monterrey, Dallas, San Antonio and Los Angeles among other cities.
• Natural Gas is available at selected industrial parks.
• The region has an ample water supply for industry provided by two Nazas river reservoirs and several wells.
• Numerous industrial parks with all the necessary services including fiber-optic telephone networks.
• Private English-speaking schools from elementary to high school.
• Adequate warehousing and distribution facilities.
• Modern 4 lane highway connecting Gomez Palacio to Saltillo, Monterrey and Nuevo Laredo.
• Luxury hotels, restaurants, museums, sports clubs, recreation centers, and public and private golf courses. Nearby reservoirs offer facilities for boating, fishing and water sports.
• Many residential areas are close to the industrial parks.

CUSTOMS

• Mexican customs operates a facility in Torreon.

TAXES and INCENTIVES

• The state collects a 2% payroll tax. As an incentive to attract investment, the state government offers total exemption on the 2% Payroll Tax for a period of one year.
• Real Estate Taxes on Property Transfers: This is a one-time tax of 2% of the purchase price of the property.
• Fee to Register Real Estate Property: A one-time tax of 7.5 per thousand of the property’s acquisition price.

The Support

SERVICE and SUPPLIER COMPANIES

Gomez Palacio has good service and support for the garment industry and to a lesser extent the automotive industry. Distance from the U.S. border increases freight, logistics and support costs. Competent and experienced legal, accounting and customs brokerage services are offered in the city.

The Politics 

UNIONS

Unionized labor in Gomez Palacio does not represent a major impediment to new starts or expansion and because of the area’s need for jobs.

POLITICAL INFLUENCES

The governor of Durango, Mr. Angel Sergio Guerrero, is a member of the Ruling PRI party and he is a strong advocate of bringing industry to the state.

ASSISTANCE

• Public assistance to obtain local, municipal, state and federal permits.
• The budget for the industrial and commercial development of the city has been increased almost four times since the government’s previous administration.

OTHER BIG NAMES

ADVANTAGES

• Lower turnover and better labor rates than in Saltillo, Monterrey or any "boom" border city.
• Area’s specialization on apparel manufacturing.
• Good support and service structure for companies in the apparel industry, and to a lower extent the auto-parts industry.
• Excellent educational infrastructure.
• Good quality of life for workers and executives.

DISADVANTAGES

• Limited service and support structure for most companies.
• Recent growth has put pressure on the labor market.
• Distance from border will mean higher freight costs, logistics and support.

Conclusion

The region originally grew as companies in the apparel industry looked for a region with an abundant, well-educated and stable labor force, adequate infrastructure and lower wages. Most of these companies were driven from border cities like Tijuana and Cd. Juarez by rising wages and excessive labor turnover rates. For similar reasons, automotive firms from Saltillo decided to expand or add to their operations in Torreon. Today the region’s success is also its worst enemy, as wages and labor turnover rates are on the rise.

The "La Laguna" region is still very attractive for both apparel manufacturers and automotive companies with an established presence in Saltillo, but he region’s original advantages over border cities is somewhat diminished. Companies seeking to establish a factory in Torreon are well advised to evaluate the higher costs they will incur in freight and support, with the expected savings in wages and lower labor turnover.