| Mexicali Industrial Profile |
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KEY INDUSTRIES
MAIN COMPANIES
ADVANTAGE
DISADVANTAGES
Mexicali is quickly becoming a force in Mexico’s manufacturing industry. The city has grown predominately by offering an alternative to Tijuana for companies exporting products to the west coast of the U.S. Heavy investments in the electronics industry are beginning to create an experienced labor pool and the growing presence of automotive and aerospace companies in Baja California are sure to expand in Mexicali as well. While the city is 120 miles from Tijuana and San Diego, the lack of major traffic congestion and general bustle of the coastal metroplex make Mexicali an option of many companies exploring northwestern Mexico. The City POPULATION
Mexicali, the capital of the state of Baja California, is home to an estimated population of 813,853 inhabitants. The city’s population, which accounts for 20% of Baja California’s residents, is growing at a rate of 2.44% per year, higher than the 1.8% national growth rate but still much lower than the 4.98% rate for Tijuana. LOCATION Mexicali is located 120 miles east of San Diego, California in the northeastern section of the Baja California peninsula, bordering with the city of Calexico, CA. Baja California shares a 159 mile border with the U.S. both in California and Arizona. The State borders with Sonora to the east, Baja California Sur to the south, and with the Pacific Ocean to the west. Mexicali is a hot and arid region with an average annual precipitation of only 3". Summers are extremely hot with temperatures often reaching 110° F while winters are mild and pleasant. PROXIMITY TO KEY CITIES San Luis is approximately an 8 hour drive from Laredo, Texas and centrally located vis-à-vis Mexico’s major industrial markets. Refer to the following table for distances to the main US and Mexican locations.
INDUSTRY SNAPSHOT Baja California’s economy largely depends on its export manufacturing, fishing, agriculture and tourism industries. While Tijuana is without a doubt the main center of activity, Mexicali, Ensenada and Tecate all are growing. The recent opening of Toyota’s truckbed plant between Tecate and Tijuana will likely trigger further growth of the surrounding areas. Mexicali was a maquiladora center even before NAFTA. Maquiladoras in Mexicali grew from companies that required larger labor pools than Tecate but wished to avoid the congestion of Tijuana. Industrial growth was further enhanced by Mexicali’s location along the border with the U.S. and established trade in the agricultural industry between the two countries. Companies continue to move to Mexicali to escape the pressures placed on logistics, infrastructure and labor in Tijuana. Today, the city is home to 123 maquiladoras, which employ over 49,000 people. (Source INEGI 2004) The Workforce DEMOGRAPHICS AGE DISTRIBUTION Click Here To Register LABOR AND EMPLOYMENT CONSIDERATIONS The economically active population in Mexicali is 331,136 individuals, or 52.5% of the total population over 12 years old. There is a big difference between the percentage of men and women that participate in productive activities: 68.1% of men are economically active while only 37.0% of women fall into this category. About 23% of the economically active population works in the manufacturing sector. The city’s labor force is distributed as follows:
(Source: INEGI, 2004)
Currently, over 49,454 workers are employed in 123 maquiladora plants. This number represents a decrease from January 2000 numbers, when 190 maquiladoras employed 58,835 workers. UNEMPLOYMENT AND SUB-EMPLOYMENT SKILL LEVEL Baja California is the state with the highest investment in education in Mexico. Over 50% of the state’s annual budget is spent on education, helping the state achieve a 97% literacy rate, much higher than the 90.5% national literacy rate. Mexicali’s residents average of 11 years of formal education, which is also above the national average of 8 years. The recent growth of specialized industries outlines a new direction for Mexicali’s local industry. Electronics, automotive and aerospace jobs are growing in this area and the workers needed to fill these positions require better training and more specialized skills. The limited number of high level educational institutions may partially offset the efforts made by the industrial sector to increase the skill level of the population, but this is a problem common around Mexico. TURNOVER RATES The turnover rates range between Click Here To Register The Operation WAGE RATES
Wages are the key driver of Mexico’s manufacturing industry. It is, therefore, one of the first and most important topics that any company moving into Mexico will consider. TeamNAFTA touches on the overall wage issues in our Info Center but we have also provided some sample wages for Mexicali 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.
Source: Area industry wage studies and interviews with local managers, $11.00 pesos/USD
*CFE.-June 2004m, ** CRE.-June 2004,*** Pemex June 2004; Note: Costs increase 1% per month INDUSTRIAL REAL ESTATE AVAILABLE SPACE There are 24 Industrial Parks in Mexicali. These parks offer all services necessary for manufacturing including water, electricity, natural gas and fiber optic telephone services. Here are current industrial real estate costs of Class “A” plants in the parks:
TRANSPORTATION Highways: Mexicali is easily accessible from the U.S. The wide network of Interstate freeways and highways that run throughout the state of California provide quick access to the city. Interstate 8, located just seven miles from the border, handles eastern and western traffic and is one of the main routes, while Interstate 10 just a few miles further north, gives access to northern California and central and eastern U.S. In addition, a modern four-lane highway to Tijuana cuts driving time to 2 hours or less. Given its Location, Mexicali has access to the Pacific NAFTA corridor, crossing via its sister city of Calexico, CA. This Pacific corridor communicates Mexico City with the entire geographic band formed by the Rocky Mountain range and the Pacific coast, passing trough the cities of San Diego, Los Angeles, San Jose, Seattle and Victoria among others. Each year more than 30 million vehicles and pedestrians cross northbound into the U.S. trough Calexico’s two ports of entry. The recently constructed East Calexico port of entry provides improved links to major trucking routes and has increased the efficient flow of goods and people between the two countries.
The Calexico port of entry reported the following figures: Air and Sea Transportation: Mexicali's International Airport, located 12.4 miles east of the city, offers daily flights to major cities in Mexico. In addition, the Imperial Valley Airport, 15 miles north across the border from Mexicali, operates commercial flights to U.S. cities, but most people prefer to fly out of San Diego. Mexicali is within a 5 hour truck drive to the San Pedro-Long Beach harbor and within 3 1/2 hours to the port of Ensenada. Both harbors facilitate cargo shipments throughout the world. CUSTOMS Mexicali benefits from a new port of entry that is capable of processing 3,000 containers per day northbound to the U.S. This facility is currently operating far below capacity, processing 800 containers per day. Several miles of highways link the city’s industrial parks with the new port of entry. Some of the services offered at the Mexicali 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 BAJA CALIFORNIA INCENTIVES
Sectors offering special opportunities: Automotive, mechanical metallurgy, aerospace, electronics, high technology, food products and beverages, plastics and medical. (Source: Bancomext) The Support SUPPORT AND SERVICE COMPANIES Manufacturing support in Mexicali continues to grow, but companies still face challenges finding local suppliers. Many firms use suppliers and support service from Southern California or Tijuana. Professional services in accounting, legal services, customs brokerage, construction, environmental and real estate brokerage are available in the city. The Politics UNIONS The manufacturing industry in Mexicali is virtually union-free, with only 3% of the workforce belonging to a union. POLITICAL INFLUENCES The PAN party governs both the State of Baja California and the city of Mexicali. Nevertheless, city leaders are pro-business and share the common goal of turning the city into a major manufacturing center. MAJOR AUTOPARTS COMPANIES AND THEIR PRIMARY PRODUCTS
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