ARIZONA-MEXICO SUPPLY CHAIN LANDSCAPE ANALYSIS: A

ARIZONA-MEXICO SUPPLY CHAIN LANDSCAPE ANALYSIS: A

CONSULTING PROJECT: A RIZONA -M EXICO S UPPLY C HAIN LANDSCAPE A NALYSIS : A N EARSHORING S TUDY C ONSULTANTS : G ONZALO A RICETA B RETT DAVIS A B...

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CONSULTING PROJECT:

A RIZONA -M EXICO S UPPLY C HAIN LANDSCAPE A NALYSIS :

A N EARSHORING S TUDY

C ONSULTANTS :

G ONZALO A RICETA B RETT DAVIS A BHILASH M ISHRA T OMMY O GDEN G REG O SBORNE A S SOCIATE C O N SU LTA NT :

F RANCISCO S ANCHEZ

P ROJECT G OAL : I DENTIFY M EXICAN OWNED COMPANIES IN THE MAG REGION , COMPANIES IN THE MAG REGION ENGAGING IN TRADE WITH M EXICO, COMPANIES IN M EXICO ENGAGING IN TRADE WITH THE MAG REGION , AND THE CURRENT TRADING ( EXPORTS / IMPORTS ) BEING DONE BY THESE INDUSTRIES. I DENTIFY

ECONOMIC DEVELOPMENT OPPORTUNITIES BASED ON THESE

INDUSTRIES AND TRADING TRENDS.

P ROJECT P HASES : • P HASE 1: E ARLY S TAGE – R ESEARCH & A NALYSIS • P HASE 2: M ID S TAGE – I N - DEPTH R ESEARCH , A NALYSIS & P RELIMINARY F INDINGS • P HASE 3: F INAL S TAGE – A NALYSIS R ESULTS, F INAL R ECOMMENDATIONS • F INAL D ELIVERABLE : APRIL 30 TH R EPORT

F INDINGS

FOR

FACILITATING O PPORTUNITY:

• PARTNERSHIPS BETWEEN C ITIES /S TATES • R EINVESTMENT

• I NCENTIVES

IN

B ORDER /P ORTS

TO ATTRACT

BUSINESSES

F INDINGS FOR FACILITATING G ROWTH : • I NTERACTIVE S UPPLIER DATABASE

• C ROSS -B ORDER PARTNERSHIPS • A EROSPACE / AUTOMOTIVE / M ETAL S TAMPING

Baja California (Baja California, Baja California Sur)

Northern Mexico (Chihuahua, Coahuila, Durango, Nuevo León, Sinaloa, Sonora, Tamaulipas)

The Bajio (Aguascalientes, Guanajuato, Zacatecas, San Luis Potosi, Querétaro)

Central Mexico (Hidalgo, Mexico City, Mexico State, Morelos, Puebla, Tlaxcala, Veracruz)

Pacific Coast (Chiapas, Colima, Guerrero, Jalisco, Michoacan, Nayarit, Oaxaca)

Yucatan Peninsula (Campeche, Quintana Roo, Tabasco, Yucatán)

MEXICAN REGIONS

WEST

EAST

• Population: 114.8 Million (UN, 2011 ) • Main Exports: Machinery and transport equipment, mineral •

fuels and lubricants, food and live animals Gross Domestic Product: $1.657 Trillion (2011 est.)

% of Total Exports AZ to by Commodity Type Percentage of MX AZ2010 Exports to MX

2010: By Commodity -

Others 28.21%

Total $5.05 Billion

Electrical Machinery; Equipment & Parts 32.58%

Paper & Paperboard 3.35%

Computer-Related Machinery & Parts 12.85%

Measuring & Testing Instruments 3.45%

Plastics & Articles 9.14%

Mineral Fuels; Oils & Waxes 3.61%

Copper & Articles 4.27%

Source: U.S. Department of Transportation, Bureau of Transportation Statistics, Transborder Surface Freight Data.

Percentage of Exports from AZ to MX 2011: By Region - Total $5.05 Billion

.

Source: U.S. Department of Transportation, Bureau of Transportation Statistics, Transborder Surface Freight Data.

Percentage of MX Imports to AZ in 2010: By Commodity - Total $5.63 Billion Others 20.42% Optical, Photographic, Cinemagraphic 4.34%

Vehicles Other than Railway and Train 5.71%

Edible Vegetables 27.95%

Electrical Machinery & Equipment 18.21%

Nuclear Reactors, Boilers, Machinery & Mechanisms 12.13%

Edible Fruits & Nuts 11.24%

Source: U.S. Department of Transportation, Bureau of Transportation Statistics, Transborder Surface Freight Data.

MEXICO’S IMPORTANCE TO AZ Top Origin Markets for International Travelers to the U.S. (2010 vs. 2009 & 2008)

Mexican visitors spent $2.65 Billion in AZ from July’07 to June’08.

Arizona All Tourism Economic Impact by County

Source: Office of Travel and Tourism Industries – US Department of Commerce

Source: University of Arizona , Mexican Visitors to Arizona: Visitor Characteristics and Economic Impacts, 2007-08

WHY MEXICO IS GROWING

Slide content from www.teamnafta.com

A EROSPACE I NDUSTRY WITHIN THE M EXICAN S TATES / M ETROS

A UTOMOTIVE I NDUSTRY WITHIN THE M EXICAN S TATES / M ETROS

Slide content provided by COPRESON

Slide content provided by COPRESON

AUTOMOTIVE O PPORTUNITIES : Ford Plant – Hermosillo New $1.5 Billion investment Increase capacity to 500,000 vehicles per year

North America, South America, and Middle East Fusion (Summer 2012)

Fusion Hybrid Lincoln MKZ

500,000 cars X $25,000 = $12.5 Billion in Revenue

M ETAL STAMPING O PPORTUNITIES :

HQ in Connecticut

HQ in Minnesota

2006 – Horst Engineering de Mexico (Nogales, Sonora)

2011 – Incertec de Mexico (Empalme, Sonora)

2009 – Horst Medical is formed

Impact: 20% increased business Pursuing Certificates for:

 Bombardier  Embraer  Cessna

A EROSPACE O PPORTUNITIES : Precision Aerospace / Precision Products de Mexico (Phoenix, Arizona )

(Guaymas, Sonora )

R AW M ATERIALS O PPORTUNITIES: C OPPER P ROCUREMENT • Copper is a key material for many companies in the Sonoran region • Procurement Managers import copper pipes from China and Germany • These imports have up to 90 days in lead time

Opportunities For:

SOME INTEGRATION MOVEMENTS

Imports from MX in US$ 2004-2010 100,000,000

Total Imports From MX

80,000,000

Texas

60,000,000

California Arizona

40,000,000

20,000,000

0 2004

2005

Source: U.S. Department of Transportation, Bureau of Transportation Statistics, Transborder Surface Freight Data.

2006

2007

2008

2009

2010

COMPARISON WITH OTHER B ORDER S TATES

Source: Team Nafta and US Census

TEXAS CASE • C ENTRALLY LOCATED • 23 T OLLED P ORTS OF E NTRY • P ORTS SUPPORTED BY PRIVATE AND PUBLIC FUNDS

• F UNDS USED TO REINFORCE INFRASTRUCTURE OF BRIDGES AND SURROUNDING PORT AREAS

• PARTNERSHIPS BETWEEN T EXAS AND M EXICO C ITIES Source: U.S. Department of Transportation, Bureau of Transportation Statistics, Transborder Surface Freight Data.

CALIFORNIA CASE B AJA C ALIFORNIA — S AN D IEGO • L ARGEST POPULATION OF MAQUILADORAS • BAJA IS SEEKING TO INCREASE ITS COMPETITIVENESS THROUGH S OUTHERN C ALIFORNIA S UPPLIERS • S AN D IEGO B ORDER T RADE O FFICE ASSISTS TO FACILITATE NEW EXPORT RELATIONSHIPS

O TAY M ESA E AST P ORT OF E NTRY • N EW INNOVATIVE TOLLED P ORT OF E NTRY • E STIMATED COMPLETION IN 2015

G ROWTH O PPORTUNITIES : •

R EDUCE B ARRIERS •



DURING THE

B ORDER C ROSSING P ROCESSES

R EINVESTMENT IN P ORTS

E MPOWER SME S TO DEVELOP S UPPLY R ELATIONSHIPS WITH S ONORA •

ATMA’ S 77 SME S – ONLY 10% EXPORTS



S UPPORT I NDUSTRIAL PARKS TO CULTIVATE T IER 2-3 SUPPLIERS



C REATE F ORUM FOR AZ-MEX C OOPERATION AMONG E CONOMIC D EVELOPMENT I NSTITUTIONS



PARTNERSHIPS WITH U NIVERSITIES

THANK YOU FOR YOUR TIME

C ONSULTANTS :

G ONZALO A RICETA

Q&A

B RETT DAVIS A BHILASH M ISHRA

T OMMY O GDEN G REG O SBORNE A S SOCIAT E C O N SU LT A NT :

F RANCISCO S ANCHEZ