Tesla in Mexico: return of US firms boosts the border area

Governor Samuel García lives between two big pieces of news: the birth of his daughter and the arrival of Tesla in his state, Nuevo León, in northern Mexico near the United States, an area driven by industries that now prefer to produce in America instead of from Asia.

The production of electric cars in the “giga factory” near Monterrey, the state capital, could begin “next January,” the ruler told AFP hours before going to the hospital for the delivery.

Garcia, 35, a regular on social media with his wife, uploads a video of his daughter’s birth to Instagram as well as his photo with Elon Musk, the billionaire owner of Tesla.

Ten days after Tesla’s investment, which according to the Mexican government will be around US$5 billion, was announced, the firm finalized the purchase of land on the highway that leads to Saltillo, the capital of the neighboring state of Coahuila.

“I think it is a huge piece of land where they are going to build the largest plant in the world (…). As far as I know, there are more than 1,600 hectares“, Explain.

With the arrival of Tesla, the youthful-looking governor is betting on the creation of some 7,000 direct jobs and between 40,000 and 50,000 indirect jobs in Monterrey, located 200 km from the border with Texas and about 600 km from Austin, headquarters of the signature.

“We have some 30 Tesla supplier companies that have already come here from November to February.”, he says, citing the computer manufacturer Quanta as an example

This Taiwanese company, which produces the “brains” of electric cars, was installed in December 2021 and in just over a year it has recruited some 2,500 people.

“it’s crazy”says a company executive who is glad that his Tesla partner will soon be close by instead of in Austin.

The French Saint-Gobain (windshield) has a factory, and Faurecia (seats) will soon have one, near Monterrey, where in December 2021 France opened a general consulate, its first in ten years in the world.

However, civil organizations temper the euphoria of the elites of Nuevo León, an industrial state with 5.7 million inhabitants that in 2022 was affected by an unprecedented drought and whose clouds of pollutants often reach the mountains surrounding the capital.

The state will have to be able to respond “in record time” to the demand “for housing, water, transportation, health and education,” warns Sandrine Molinard, general director of the Civic Council organization, anticipating a demographic boom.

“nearshoring”

The “Tesla effect” and the new world environment are felt several hundred kilometers northwest of Monterrey, in Ciudad Juárez, on the border with the United States.

This town in the state of Chihuahua is the cradle of the “maquiladoras”, factories of foreign firms that use Mexican labor to assemble different products that are exported to the United States.

The trade war between the United States and China, the covid and the stoppage of trade, the relocation of production lines, President Joe Biden’s plans to support the US economy: all have contributed to giving a second wind to between 300 and 350 maquiladoras in Ciudad Juárez, according to figures from local actors.

“it’s a boom”, summarizes Iván Pérez, general director of municipal economic development, who is concerned about the shortage of labor. “There is a deficit of about 30,000 people”.

New warehouses are being built in the “industrial parks” established along the border wall that prevents access to El Paso, the neighboring US city, so close and yet so far away for migrants stranded in Ciudad Juárez.

Four companies from Taiwan -among them Foxconn, Apple’s contractor, or Pegatron, Tesla’s supplier- “they are building 70,000 square meters of building”, explains the architect and developer of industrial buildings Jorge Bermúdez, son of one of the pioneers of the maquiladoras in the 1960s.

“In twenty years I had never seen the availability be below 5% of the available area”, confirms Eduardo Cinco, real estate consultant for companies looking for land.

This new boom, called “nearshoring” by specialists, responds to the need of large corporations to bring their production centers closer to their main customers.

But this trend does not entirely please a young industrialist, Jesús Manuel Salayandia, outgoing president of the local section of the National Chamber of the Transformation Industry.

In 60 years of the maquiladora industry in Ciudad Juárez and the north of the country, “there has not been a real technological transfer” for the benefit of the industrial development of Mexico, he laments.