Monday, October 20, 2008

T-MEX Trade Competiveness Conference Important for Texas Economy

Periodically, TEEX Director Gary Sera will share his thoughts and unique insights on this blog in a segment called The Director’s Take. Here’s the first installment of what will surely be a different approach to letting you know what is going on at the Texas Engineering Extension Service …
The Director’s Take:I am told by many that TEEX is the best-kept secret in Texas, so perhaps this blog will help to inform you on some of our initiatives.

If you do know something about TEEX, it’s probably the
Texas Fire Training School, which is the largest fire school in the world, or Texas Task Force 1, which leads the search and rescue operations for the state during major events like Hurricane Ike. However, I’ll bet you didn't know about our role in helping Texas and the U.S. in the economic development arena.

Leveraging Texas-Mexico
Recently, TEEX partnered with the Global Research Center at Texas A&M University to establish the
Mexico-Texas Trade Corridor Consortium. Under the leadership of Dr. F. Barry Lawrence, this consortium should help Texas mitigate the trend of western firms outsourcing their manufacturing to Asia. This trend has a lot of momentum, but the long-term viability of shipping products across the Pacific Ocean is questionable given the high cost of logistics and rising wages in Asian markets. Ultimately, global firms are likely to cede control of local markets to their local specialists. What this means is that Texas has the opportunity to create manufacturing centers closer to the customer that minimizes transportation costs and lead times. A&M's Global Research Center states, "This regional manufacturing process is already well under way with many such centers already started that tend to begin with a particular industry theme ...”

You may not be aware that China buying from the U.S. accounts for less than 15 percent of the trade between the two, while Mexico buys 35 percent. The Global Research Center sees the potential for this imbalance to tilt more in the favor of the U.S. as the
maquilas buy products from American firms to complete their production. This symbiotic relationship is not possible with the Pacific Ocean in between. Chinese products are more likely to go to Europe or some other final market for their next stage of production.

Toyota in Texas
When Toyota located its manufacturing plant in San Antonio, this represented a strong example of what could happen. Toyota recognized that three of the largest cities in the U.S. are in Texas, with nearby major markets in Louisiana and Oklahoma. Cars and their respective subassemblies are difficult and expensive to ship. Proximity to suppliers is a big priority and Toyota sees the maquila region as a major opportunity for supplies. Generally, this could lead to a final assembly manufacturing boom in South Texas supported by a raw materials and subassembly growth in Northeast Mexico. Other industries, such as electronics and aerospace, could follow with a focused marketing approach.

This regional manufacturing center needs logistical support to be successful. Much remains to be done as the investment in infrastructure and process improvements will be significant. The key objective of the Mexico-Texas Trade Corridor Consortium is to bring together groups of companies (manufacturers and shippers), logistics providers, government and economic entities. Together, they will study and develop the attributes of establishing an infrastructure that optimizes global supply chain throughput from worldwide sources through Mexican value-added and, ultimately, to American final assembly processes in Texas.

Stakeholder conference
The first meeting of this consortium - the
Texas-Mexico Trade
Competitiveness Conference - will take place Nov. 13, 2008, at Texas A&M International University in Laredo, Texas. The conference is free and open to the public. Three additional conferences will be scheduled through 2009 in South Texas and Mexico (dates and locations to be announced).

1 comment:

Anonymous said...

Nicely done Chuck. Site looks great.