Mexico is the new China (and that's great for Arizona)

Arizona's international border is an economic engine with huge potential, and the stars are aligning to make it more powerful yet.

Mexico offers high-skill, low-cost manufacturing and easy access to the North American market.

Labor costs are rising in China, and U.S. manufactures are relocating to Mexico with an enthusiasm reminiscent of the early days of the North American Free Trade Agreement in the 1990s, according to The New York Times.

Big names like Caterpillar, Stanley, Black & Decker, Chrysler and Callaway Golf are expanding there. But opportunities exist for companies of all sizes, including locally grown Arizona companies.

The whole nation benefits from trade with Mexico. About 40 percent of the content of goods imported from Mexico originates in the United States. That drops to 4 percent if the import comes from China.

But "there is no question that the border states are in the lead in using binational trade as a tool for regional development," according to a report that introduced an on-going series of Regional Economic Competitiveness Forums, including one in Rio Rico last month.

Bruce Wright of the University of Arizona's Tech Parks was at the forum to talk about the Global Advantage initiative, which recently promoted the Arizona-Sonora region to start-ups in Israel. The Tech Parks offer technical assistance with product development, and the Tucson-based Offshore Group handles logistics for companies that want to manufacture in Mexico.

"Sonora can compete with any place in the world for manufacturing," Wright said. This includes making precision aerospace, automotive, electronics and medical devices.

Arizona has a long-standing relationship with Sonora, and the brand-new, state-of-the art Mariposa Port of Entry at Nogales creates huge opportunities to build on the increased capacity to import goods and produce.

Traditionally the nation's gateway for winter produce from Mexico, this port can attract more diverse agricultural imports and increased manufactured goods — if it operates at peak efficiency.

It's a big "if."

Lance Jungmeyer, president of the Fresh Produce Association of the Americas, said the increased staffing promised for the port still leaves Mariposa at least 100 federal agents short of what's needed.

The Nogales border crossing has long attracted produce from western Mexico. A new highway in Mexico's interior puts Texas in a position to compete for those imports, and Texas is aggressively doing so. But Jungmeyer says the Mexican highway also allows Arizona's ports to compete for produce from eastern Mexico.

It's a silver-lining scenario that depends on efficient ports and good infrastructure in Arizona.

It isn't the only example of envisioning a more rewarding international future.

In addition to a commitment by Phoenix and the state to open trade offices in Mexico City, local government leaders from Arizona and Sonora agreed earlier this year to form the Arizona-Sonora Binational Megaregion to work on becoming more globally competitive. This is modeled on a mega-border region in California, according to Erik Lee of the North American Research Partnership.

Last weekend, Tucson Mayor Jonathan Rothschild hosted a Borderlands Trade Conference that brought together experts from business, trade and government sectors to share ideas.

The border is an asset with growing potential for economic development, and efforts to build on that will help our state prosper.

http://www.azcentral.com/story/opinion/editorial/2014/06/03/mexico-takes-china-arizona-wins/9934627/