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POPULATION

Pachuca is the capital of the State of Hidalgo. Pachuca has an estimated 244,688 inhabitants which equates to 10.96% of the state’s population of 2,231,392. The labor force accounts for 53.19% of the population. (Source INEGI 2000)

STATE DESCRIPTION

The State of Hidalgo lies in the Sierra Madre Oriental, an important part of Mexico’s silver belt. Mining has driven the local economy since before the Spanish arrival in 1534, and it continues to be the most important industry. Miners have been working for centuries along side ancient slag heaps; and today the hills that surround the area, once full treasure chests of precious metal, are riddled with tunnels and caverns. Though production has decreased in recent years, this area still produces over a million ounces of silver a year.

LOCATION

Pachuca is located in the south-central part of the state, at an elevation of 8,022 feet above sea level. The state has 84 counties or municipalities. Pachuca is located 61 miles from Mexico City, connected by a modern freeway. The city of Pachuca has a moderate climate with an average temperature of 59° F. Pachuca has been given the name "la bella airosa" or "the windy city" because during most of the year there are strong northeastern winds that can reach 50 miles per hour.

REGIONAL INFLUENCE

Pachuca is an important mining center and as the capital of the State of Hidalgo, it has an active commercial and cultural life. Numerous industries are located in Pachuca, and the surrounding areas, including automobile parts, ovenware, tools and mining equipment. The main exports of the State of Hidalgo are Livestock, Agriculture products, Coffee, and Motor Vehicles.

PROXIMITY TO KEY CITIES AND SEAPORTS

The Workforce

DEMOGRAPHIC IMPACT

The workforce in Pachuca has limited exposure to industrial jobs; the only heavy industry established is a small faction of the auto industry. The Textile industry has a presence in Pachuca, producing a well-trained workforce.

UNEMPLOYMENT PERCENTAGE

• The unemployment rate in the city of Pachuca is 4.9%
• Note- the Mexican Government considers an employed person anyone who is 12 years old and over and who has worked one hour or one day during the reference week.
• Of the economically active population of Pachuca in 1999, 4.9% were employed less than 35 hours a week or had no employment. (1999 INEGI)

SKILL RANKING

• Pachuca has few maquilas but several medium size industrial parks.
• The most credible proof of the quality of the workforce is the type of industry established in the city. The principal industries in Pachuca are as follows:

EDUCATION and TRAINING

A training program has been established by the government that provides the workers with a minimum salary while training for a period of two months. The company however, must hire 70% of the trainees at the end of the program. Companies can participate in selection of workers for the training period.

TURNOVER RATES

The state does not publish turnover statistics but we expect them to be 5% to 9% per month, depending on the size of company. The large number of small shops that offer no benefits and few promotion possibilities contribute to higher employee turnover. High labor turnover-rates are a constant problem for most maquila operations in Mexico, especially along the border. Pachuca loses much of its population to the larger market of Mexico City.

The Operation

Monthly salary for executives and employees in US dollars not including benefits

Source: Bancomext 1999-$9.00/USD

Hourly salary for laborers in US dollars, including obligatory benefits

Source State Government of the State of Hidalgo

Exchange rate at $9.50 pesos per $1.00 US

INDUSTRIAL COSTS

Costs increase 1% per month

Costs increase 1% per month

Hidalgo State Government-1999

INDUSTRIAL REAL ESTATE

A current survey of industrial parks in the city of Pachuca with a variety of options, reveal the following average prices per sq. ft. in US dollars.

Exchange rate of $9.40 pesos per dollar

INFRASTRUCTURE

Pachuca has both an international and domestic airport. There are 4,858 miles of roads in the state and access to the NAFTA highway and Mexico City is under 1.5 hours away. The municipal region of Pachuca contains the following: 546 miles of Railroad, access to water main, sewerage system, storm drainage, water treatment plant, electrical network, customs station, telephone and fax, satellite communication, workers training center, and a personnel transportation system.

CUSTOMS

There is a customs facility in the industrial park Conjunto Canteras.

TAXES

Existing taxes in Mexico are Federal and include no reductions or incentives related to the following: Income, Value Added Tax (IVA), Assets Tax, Withholdings, Import/Export, Social Security, Housing Fund (INFONAVIT), Retirement Savings (SAR), Workers Income Tax (ISPT). State taxes include a Payroll tax of 2% waived during the two initial years of operation. Random Games Tax (15%) and a Vehicle Tenancy Tax (variable).

The Support

SERVICE and SUPPLIER COMPANIES

Service and supplier companies are limited to the automotive and domestic services industries.

The Politics

UNIONS

The labor force in Pachuca is unionized but does not represent a major impediment to new starts or expansion.

OTHER BIG NAMES

ADVANTAGES

• Close proximity to extremely large market of Mexico City.
• Access to NAFTA highway through Mexico City.
• Some industry already established.

DISADVANTAGES

• Small labor force.
• The State generates only 1.6% of the GNP
• High turnover because of the migration to and from, the Mexico City area.

The Conclusion

Pachuca has been a center of culture since the Aztecs established a government in 1438. The city is somewhat secluded due to its altitude, making transportation of goods more costly. Companies looking to capitalize on the huge market of the Mexico City area will find ample support in Pachuca; most other operations will be better suited in cities closer to the U.S.A. Border.