2016 Regional Report: The Southwest

The Southwest states are well-positioned for the growth that's taking place among U.S. factories relocating to or expanding in Mexico.

On a recent afternoon, a gaggle of Mexican high school students filed through the corridors of a vast maquila, one of hundreds of similar assembly plants rising south of the border and dependent on U.S. contracts. The teens observed workers doing their jobs, then broke into smaller groups to talk casually with some of the younger employees.

Few factories opened their doors to school groups in the past. Today they do. The change is due in part to suggestions made by northern neighbors such as Woody Hunt in El Paso. The quality of Juarez City’s workforce matters to people like Hunt, a real estate and investment tycoon, because he understands that the economy of the U.S. Southwest is increasingly tied to the economy of northern Mexico.

Seeking to establish more cross-border regional rapport, Hunt helped spearhead the Borderplex Bi-National Economic Alliance in 2013. The group brings together business leaders, educational figures and government officials from both the U.S. and Mexico as a kind of border-blind economic-development co-op. “Woody likes to say, ‘A healthy economy on the Mexican side leads to a healthy economy on the U.S. side,’” says the alliance’s CEO, Rolando Pablos.

“The governors of Texas and Chihuahua State, Mexico announced a cross-border master plan to create a collaborative, world-class international trading zone.”

Texas border-crossing cities like Laredo and McAllen have for generations benefited from their geographic positioning. Increasingly, so are other cities, towns and counties across the Southwest—nowhere more so than this hardscrabble triangle defined by El Paso, Santa Teresa and Juarez City. In the summer of 2013, New Mexico’s Gov. Susana Martinez joined Cesar Duarte, her counterpart in Chihuahua State, Mexico, to announce the formation of a bi-national community encompassing Las Cruces and San Jeronimo. The governors announced a cross-border master plan to create a collaborative, world-class international trading zone.

Equidistant between the seaports of Long Beach and Houston, the new cross-border region sprawls over 70,000 acres zoned for industrial, commercial and residential use. The economy clearly benefits from the presence of the nation’s newest major rail intermodal center, as well as the huge Foxconn plant in Juarez. Trade advocates credit such progressive cooperative efforts with spurring small and midsized businesses to export more aggressively. “New Mexican exports to Mexico grew by 93% last year,” said Jerry Pacheco, president of the Border Industrial Association, representing Santa Teresa and Sunland Park employers. “By focusing on and developing New Mexico’s border region, we can bring increased economic development and prosperity to the entire state.”

Albuquerque, long dependent on federal R&D spending, is an emerging gateway, leveraging its strong infrastructure and fortuitous location at the center of the New Mexico Technology Corridor hugging the Rio Grande. Las Cruces, near Santa Teresa and the state’s largest city after Albuquerque, has also raised its export profile. The recent opening of Union Pacific’s $500 million intermodal facility in its backyard has motivated at least a dozen companies to relocate here.

“Between Albuquerque and Santa Teresa is where the concept of corridor comes into play,” says Randy Trask, manager of greater Albuquerque’s Trade Alliance program. “In a way, we’re seeing the emergence of a contemporary Camino Real trading route.”

Over in Arizona, state exports are up 12.5% the first half of 2015, representing over $1 billion in shipments. Mexico, the state’s leading trade partner, absorbs about 40% of Arizona’s exports; its appetite for U.S. products increased nearly 20% last year. Phoenix, the state’s largest city, hopes such new programs as the Metro Phoenix Export Alliance and the Metro Phoenix Export Plan will spur exports further. When Phoenix Mayor Greg Stanton met in November with Mexico City Mayor Miguel Espinosa, the men launched their own Global Cities Economic Partnership.

As more cities, towns and counties vie for position on this new Camino Real, the interconnectedness of the U.S. Southwest and Mexico’s North becomes common currency. Summarizes Pablos, “The region  has three states, two countries—and one economy.”

How the States Stack Up


  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events