| Torreon Industrial Profile |
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KEY INDUSTRIES
MAIN COMPANIES
MAIN INDUSTRIES
ADVANTAGES
DISADVANTAGES
Overview The Laguna region is an interesting export manufacturing market with one major drawback: its location. The city, which has a strong agricultural and textile manufacturing background, is now diversifying its production. The area has been a good location for companies seeking a stable work force and strong community. However, La Laguna is far from the border and relatively isolated vis-à-vis the main markets in Mexico. Other locations like Chihuahua City, San Luis Potosi and Saltillo offer many of the same advantages of the Laguna region without the location constraints. Nevertheless, if transportation issues are not a major site selection criteria, Torreon, Lerdo and Gomez Palacio may be a fine fit. The Workforce POPULATION Located in north-central Mexico, The metropolitan area called La Laguna is formed by the cities of Torreon in the state of Coahuila, and Lerdo and Gomez Palacio in the state of Durango. La Laguna area has a population of approximately 1,250,000 people and an economically active population of nearly 450,000 individuals. This population is growing at a 1.32% annual rate, below the 1.8% national average. (Source-Coahuila State Government 2004, FOMEC 2004) LOCATION The Laguna region is located on the border of the states of Coahuila and Durango, in north central Mexico, about 368 miles from Laredo, TX, and 510 miles from El Paso, Texas. The Laguna area includes the cities of Torreon, Gomez Palacio and Lerdo, with Torreon being the economic center of the three. Like most of north-central Mexico, the Laguna region sits in a high desert. The weather is hot and dry during the summer, and cool during winter with an annual average precipitation of 8 inches. Temperatures from May to August often surpass 100° F, while December and January can register temperatures below 40° F. PROXIMITY TO KEY CITIES
INDUSTRY SNAPSHOT La Laguna is an agro-industrial area with a long history of ranching and farming. Industry originally developed in this area to support those sectors, but in the past 20 years some foreign companies, primarily in the apparel and metal working industries, moved into the region looking for a stable labor force, adequate infrastructure and lower wages. The Laguna region is still very attractive for both apparel manufacturers and automotive companies with an established presence in Mexico. Companies seeking to establish a factory in Torreon are well advised to evaluate the higher costs they will incur in freight and support, which may or may not offset expected savings in wages and lower labor turnover rates. Today, the Laguna region is the primary exporter of fabrics and garments in Mexico with an annual production of over 156 million pieces of clothing and over 100 million yards of denim. The region is also home to more than 20 Fortune 500 companies. Its automotive sector is part of the most important automotive cluster in Mexico including global players such as John Deere, Caterpillar, Delphi, Johnson Controls, Linamar, Montupet, Alcoa, Sumitomo and Siebe. In addition, the area hosts electronics firms such as RCA-Thompson LG Philips and Samsung. Employment in the maquila industry concentrates heavily on the apparel, textile, auto parts and metal-mechanic industries as follows: TORREON EMPLOYMENT BY SECTOR (2003)
(Source: Coahuila State Government 2003) La Laguna area has potential for industrial growth due to its central location that offers direct access to the North American market as well as other industrial centers within Mexico. However, the area will most likely grow only after other markets better situated within Mexico’s transportation network fill their capacity for new investments. The Operation DEMOGRAPHICS AGE DISTRIBUTION LABOR AND EMPLOYMENT UNEMPLOYMENT AND SUB-EMPLOYMENT EDUCATION and TRAINING La Laguna region has a good educational infrastructure including several technical schools, colleges and universities. There are 19 public and private universities including a branch of the Monterrey Institute of Technology (ITESM). About 97.2% of the population over 15 years is literate, which compares favorably to the 90.5% national average. The governments of Torreon, Lerdo and Gomez Palacio along with the private sector have designed educational and training programs to strengthen the link between educational institutions and the industrial sector. As a consequence of these efforts, universities and technical schools have developed comprehensive agreements with the industrial sector including formal professional practices, scholarships and equipment donation among others. TURNOVER RATES Relatively high wages compared to agricultural jobs in the area, few seasonal jobs as well as a sizeable unemployed and sub employed population contribute to keep turnover rates that are among the lowest in Mexico, averaging 4.3% per month. Nevertheless, turnover rates are starting to climb as a consequence of increasing industrial activity. (FOMEC and INEGI, 2002) 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 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 Torreon 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) INDUSTRIAL COSTS dollar @ 11 pesos/USD
*CFE.-June 2004, ** Pemex.-June 2004 INDUSTRIAL REAL ESTATE There are seven industrial parks in the Laguna region. Most have available infrastructure and developed land for new construction. The industrial parks are also set up along classic standards found in Mexico; one or two main entrances with a common boulevard. This creates a common area for employees and many believe it leads to a higher turnover rate as employees can easily move from one company to another. List of Industrial Parks in La Laguna:
AVAILABLE SPACE A current survey of industrial parks with a variety of site options reveals the following average prices in U.S. dollars per sq. ft. for Class “A” construction
Exchange Rate $11.00 pesos/dollar TRANSPORTATION A network of highways run through La Laguna region, including the Panamerican highway which crosses Mexico from north to south, offering access to the cities of Durango, Saltillo, Monterrey, Zacatecas and Cd. Juarez. Given its northern central location, La Laguna provides with access to the three main NAFTA corridors:
La Laguna has a railroad station located in Torreon, which is connected to the national railroad system. The railroad services are provided by two private companies which are FERROMEX and LCD. Just minutes away from the city, Torreon’s International Airport offers 28 daily direct flights to Mexico City, Cd. Juarez, Monterrey, Dallas, San Antonio and Los Angeles. CUSTOMS Mexican Customs operates a permanent facility in Torreon used primarily to clear exports. Additional customs facilities are located at the border crossing points of Ciudad Acuña and Piedras Negras in Coahuila; Nuevo Laredo in Tamaulipas, and the modern Colombia Bridge in Nuevo Leon. Some of the services offered at the Torreon 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 job creation. The incentives include: infrastructure works, fees with the State Public Registry and construction permits. STATE OF COAHUILA INCENTIVES (Torreon) Payroll Tax Incentive For a one year period, those companies that perform below the allowed contamination indexes, that do not require water for their productive process and that generate new jobs will be exempted of paying the 100% of the Payroll Tax that is established in the State of Coahuila. Training Scholarships Program Incentive The State of Coahuila offers training programs for a period of 30 to 90 days for the non-qualified labor force. The State commits to cover between 1.5 and 3 times the minimum wage for each scholarship holder, while maquilas must commit to hire at least the 70% of the trained personnel. STATE OF DURANGO INCENTIVES (Lerdo and Gomez Palacio)
Additionally, for companies that create more than 500 jobs, the government of the state of Durango commits to level out land, construct or pave roads, construct electrification works, water hookups, wastewater collectors, wells, and railways sidings. The Support SUPPORT SERVICE COMPANIES The Laguna Region has a good service and support infrastructure for the garment industry and to a lesser degree for the automotive industry. Competent and experienced legal, accounting and customs brokerage services are offered in the region. Nevertheless, careful review of the city’s capabilities on essential inputs and support services is required before committing an operation. The Politics UNIONS
Unions in La Laguna are pro-business and are characterized by their collaborative approach with management decisions. There are several labor unions in the area, including the Mexican Workers' Confederation (CTM) and the Revolutionary Confederation of Workers and Farmers, (CROC), Other Unions with presence include the Confederación Nacional de Organizaciones Populares (CNOP) and the Sindicato Unico de Trabajadores Electricistas de la Republica Mexicana (SUTERM), among others. POLITICAL INFLUENCES Mr. Enrique Martinez and Mr. Angel Sergio Guerrero, Governors of Coahuila and Durango respectively, both from the right wing PRI party, have shown a strong interest in promoting manufacturing activity. Both Governments offer tax and fee incentives in order to attract foreign direct investment (FDI). OTHER COMPANIES IN LA LAGUNA Industrial Market Map
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