Southern Border States Partner with Mexico to Advance Manufacturing Relationships

Tucson, Arizona skyline

Local U.S. government bodies and economic development commissions along the Arizona border are joining forces with their Mexican counterparts to streamline their supply chain and drive regional growth in manufacturing.

Despite labels on where products are made, cross-border material sourcing and logistics are increasingly blurring the lines. Many products that are now assembled in Mexico have materials sourced in the United States. And products that are assembled in the U.S. often have materials from China, Latin America and beyond.

Many border cities and regions are finding that it’s beneficial to pool resources and increase collaboration to drive regional growth across the international boundary. Officials in Arizona, for example, are currently promoting the Arizona-Sonora Megaregion as a regional superpower in manufacturing by sharing the resources of Mexico’s supply chain and the talent and infrastructure in Tucson and Phoenix. Aerospace, automotive and medical device manufacturers are currently thriving in the megaregion, and new agreements are formally increasing the ties and collaboration between Arizona and the Mexican state of Sonora.

Jessica Pacheco, President of the Arizona-Mexico Commission (AMC) and Jose Mario Cadena, President of the Economic Development Council of the State of Sinaloa said the efforts are about “developing closer relations with Mexico to facilitate cross-border trade, attract new investment and promote job creation for the benefit of all Arizonans.”

Lucid Motors announced last year that it would locate in the region and establish its manufacturing operations in Casa Grande, Az. Through the close working relationship between Sonora and Arizona, the company will secure supply parts in Mexico and manufacture the vehicles in the U.S. The Casa Grande facility will employ 2,000 workers.

“This has been a net positive for the job growth and economic growth of Arizona and we intend to continue it.”

Binational collaborations are growing in other areas along the U.S.-Mexican border as well. In California, for instance, the Cali Baja Bi-National Mega-Region spans San Diego County, Imperial County and Baja California, the northernmost and westernmost state in Mexico. The combined region currently has more than 3,600 manufacturing companies in operations with a skilled workforce of more than 280,000.

Carl Nettleton, an analyst with Nettleton Strategies, said that educational initiatives such as the CaliBaja Education Consortium, also are growing business interconnections through the development of advanced manufacturing and technology. The consortium will allow students from high school to graduate level to do research and take classes at UC San Diego and various institutions in Baja California.

While statements from the Trump administration regarding a border wall and a potential renegotiation of NAFTA could present challenges to such partnerships, the governors of both Sonora and Arizona seem undeterred. Arizona Governor Doug Ducey said at a meeting of the Arizona-Mexico Commission in early June that regardless of what happens in Washington, they will continue their long collaborative relationship. “I think in many ways we can be a model and an example for a relationship that can work, that can help benefit Arizona’s and America’s economy,” Ducey said. “This has been a net positive for the job growth and economic growth of Arizona and we intend to continue it.”