SANTA TERESA – The economic potential for New Mexico in U.S.-Mexico trade can be summed up in a wind blade.
Manufactured in Ciudad Juárez by Arizona-based TPI Composites Inc., trucked over the border at Santa Teresa, stored on a lot in the Santa Teresa industrial zone, loaded by a New Mexico crane company onto rail, then shipped to U.S. wind farms via the new Union Pacific rail yard: The blades boost trade, fuel business on both sides of the border and showcase the capabilities of the region’s only land port of entry, with its overweight trucking zone and unique ability to handle oversized loads. And the company that makes them is expanding this year with a second plant in Juárez.
As New Mexico looks to diversify its economy beyond industries tied to the U.S. government and commodities such as metals, potash and oil, the state’s sights are trained on this small but growing trade hub at the U.S.-Mexico border.
The past two years have brought new development momentum to Santa Teresa, business leaders say, thanks to growth in Mexico’s maquiladora industry and factors that have boosted interest in this wide-open corner of southern New Mexico. Infrastructure investments, the overweight zone for big rigs and new rail connections have stoked developers’ interest and lured providers of warehousing and logistics services to the area.
The hub’s first new industrial park in 15 years is going up, its anchor tenant putting the finishing touches on its facade. A dozen new businesses have located in Santa Teresa since 2014. Two have expanded and two more are in the process of expanding; there are a half-dozen deals in the pipeline, developers say. Some 4,400 feet of rail has been laid to link distribution centers with Union Pacific, which built a massive, $400 million rail depot two years ago.
Albuquerque builder Krishna Reddy recently visited the border crossing where Santa Teresa meets San Jerónimo, not far from the sprawl of El Paso and Ciudad Juárez, and said he was “struck by the enormous potential in that area for cross-border commerce and trade.” Then he asked, “Why is there empty space out there? As far as the eye can see, there is nothing.”
But the view is deceiving: There are 3.5 million square feet of occupied industrial space in Santa Teresa and another 1.6 million square feet occupied in San Jerónimo. At least half a million square feet of speculative industrial space is being planned on both sides of the border, developers say.
The U.S. Commerce Department reports that New Mexico exports to Mexico nearly doubled in 2014 to $1.55 billion, then grew 9 percent to $1.68 billion in 2015, a year when overall U.S.-Mexico trade contracted slightly due to the drop in oil prices.
Truck traffic at the crossing grew by nearly a third between 2011 and 2015, from fewer than 74,000 trucks to more than 96,000 trucks, according to U.S. Customs and Border Protection.
“Since the Great Recession ended, the state’s economy has been moving sideways,” said Roberto Coronado, senior economist of the Dallas Federal Reserve Bank, El Paso branch. “If you split the state, you see the northern part struggling and the southern part growing at a nice pace. The bright spot in southern New Mexico continues to be Santa Teresa and continues to be trade.”
Maquila growth
The maquiladora industry in Ciudad Juárez has shown double-digit growth over the past 18 months, thanks to strong U.S. demand for autos, electronics and other consumer goods, Coronado said.
The growth in Mexican manufacturing has meant more business for the parts and materials suppliers, and logistics services providers, in New Mexico – especially in Santa Teresa.
That is the key to unlocking the potential of the North American Free Trade Agreement, said Jerry Pacheco, president of the Border Industrial Association in Santa Teresa and executive director of the International Business Accelerator, a nonprofit trade counseling program.
“For the California Gold Rush of 1849,” he said in an interview alongside area developers, “very few people made money in the actual gold. Where the people made money was in selling to the prospectors. That is what we are doing. We’re selling space, putting up buildings, for all these companies that are participating in NAFTA. Our role here is to get in front of those deals and attract them to our region.”
MCS Industries Inc., a maker of frames and home decor, set up a distribution center in Santa Teresa in 2008 and this year moved into a new, 215,000-square-foot building in Westpark, the area’s newest industrial park, which is being built by the area’s largest landholder, Chris Lyons.
Omega Trucking is planning to move into a brand-new building on five acres in May, said Miriam Kotkowski, the company’s president and general manager.
Omega and its sister company Autotransportes Chamizal move about 350 trucks a month through the Santa Teresa port, Kotkowski said. She credits the overweight zone and the ability to cross wide loads at Santa Teresa, which is unique in the region; as well as attentive, community-oriented leadership at U.S. Customs and Border Protection as the reasons Santa Teresa is her preferred port of entry.
“We are in a growth mode right now,” she said. “Once we move to Santa Teresa, we are expecting 20 percent to 30 percent growth in the next couple of years, all related to trade with Mexico.”
The port can accommodate the enormous molds for the TPI windmill blades that Omega brings south to Juárez, for example, while the overweight zone lets trucks carry 96,000 pounds, which is what Mexico allows but is over the U.S. limit of 80,000 pounds.
The savings provided by the overweight zone to manufacturers in Mexico is not just about the distances traveled in heavier trucks but the ability to cross freight directly from the plant to a Santa Teresa warehouse without having to unpack in Ciudad Juárez first – a security risk in a region known for drug trafficking.
Ed Hazelton’s Twin Cities Services Inc. provides truck-to-rail services on a 32-acre lot in Santa Teresa. He said he is buying another 19 acres next door to allow for the growth he expects this year and next.
“Ninety-five percent of the product that comes through our facility is either destined to or coming out of Mexico,” he said – containers that were shipped to the West Coast from China, Vietnam, Taiwan and Japan, offloaded onto the UP railroad and hauled to Santa Teresa.
“As far as our business goes, we have seen steady growth,” he said.
Santa Teresa is looking forward to an influx of capital outlay funding, including $8.3 million that will pay to rehabilitate three key roads linking the Pete V. Domenici International Highway and the industrial parks, and $200,000 to expand wastewater treatment capacity.
“I know that the state is investing more money in utilities and roads,” said Gustavo Deandar, president of INDEL Food Products Inc., an El Paso-based canner of chiles under the Del Sol brand.
Deandar also leases warehouses and has been investing in Santa Teresa. He has more than 400,000 square feet in two buildings, he said, and is considering building a speculative building on a new parcel. Deandar also said, “Down the road, we are thinking we can move to Santa Teresa.”
“We hope the state keeps supporting us, and I think they will,” he said. “We feel trade with Mexico will just continue to flourish. We are counting on that, as well.”
By: Lauren Villagran (Albuquerque Journal)
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