biztucson special report az mexico 2012

O

2012 SPECIAL REPORT THE REGION’S BUSINESS MAGAZINE

A R I Z O N A – M E X I C O

$26BILLI NCONNECTION

THE

TRANSPORTATION MANUFACTURING TOURISM PRODUCE TECHNOLOGY

Produced in Collaboration with Arizona-Mexico Commission

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BizINTERNATIONAL

Arizona-Mexico: The $26 Billion

Connection Our region is a geographic and economic gateway to Mexico, providing a wealth of opportunity. Last year, $26 billion flowed through the Arizona-Sonora border in im-ports and exports. Journalist Gabrielle Fimbres has done an extraordinary job of reporting on the growing industries in Mexico that provide economic development on our side of the border. Among them: transportation, manufacturing, produce, real estate investments, technology, tourism and more. Bottom line: 235,700 jobs in Arizona rely on trade with Mexico. Nearly half of all winter produce consumed in the U.S. comes through Nogales. Clusters of high-tech manu-facturing facilities are developing in Sonora, and as many as 2,000 trucks cross the Arizona-Sonora border daily. As the middle class grows in Mexico, more visitors come to our state to spend their money, with an annual impact of $2.3 billion. “It is extremely important for us to remain the port of choice. It keeps Americans employed,” stated Margie Em-mermann, executive director of the Arizona-Mexico Com-mission, the nonprofit 53-year-old organization that facili-tates economic growth. Our special report also provides details on the expansion and improvement of ports of entry, by land, by rail and by sea, and the role they play in economic growth. Special thanks to Linda Cormier, vice president and gen-eral manager of the Tubac Golf Resort & Spa, who hosted the BizTucson “mini summit” that provided a great setting for interviews and photos of many of our expert sources. Among the experts is Tucson Electric Power’s Larry Lucero, who is serving as the first Tucson president of the Arizona-Mexico Commission. This June, Tucson will host the Arizona-Mexico Commission Summer 2012 Plenary Session. Topics include growing cross-border business op-portunities, including renewable energy and aerospace & defense. See page 81 for more details, or visit www.azmc.org. Arizona historically has shared rich business, cultural and familial relationships with our neighbors to the south. To-day, with guidance from the Arizona-Mexico Commission, the region stands poised to become a leader in international trade, bringing prosperity and opportunity to both sides of the border.

Steven E. RosenbergPublisher & OwnerBizTucson

BizTucson is published quarterly by Rosenberg Media, LLC. © Copyright 2012 All rights reserved. Reproduction in whole or in part without written permission is prohibited. Opinions expressed in columns or articles do not necessarily reflect the views of the publisher.


The Border Technology and Evaluation Center (Border TEC) is dedicated to testing and evaluating new border technologies—innovations to enhance

our security and support the free flow of trade.

Located at the UA Tech Park, Border TEC analyzes technologies developed by federal, state, and private sector sources—fairly and

impartially, in the environment in whichthey will be deployed.

The result? Better security. Safer communities. And support for a growing high tech sector that

creates new jobs and attracts new business.

To learn more about Border TEC and how it will benefit our region, contact us at 520-621-4088.

Border TEC is a project of the University of ArizonaOffice of University Research Parks.

Border TECHelping to Keep ArizonaSafe, Secure & Prosperous

www.ourparks.arizona.edu www.uatechpark.org

76 BizTucson < < < Spring 2012

Down the road from Tucson lies the gateway to extraordi-nary economic opportunity. Sixty miles from our back door, Mexico offers a platform for the region to emerge from recession as a stronger, more vibrant center of international trade. For decades, United States companies owned manufactur-ing operations in Sonora and northern Mexico. In the 1990s, however much of that business dried up as manufacturing moved across the world to Asia. Mexico is now experiencing a resurgence of business as U.S. companies are returning from China, seeking opportunities in “nearshoring” that allow for lower-cost manufacturing that is closer to home. Once known more for manufacturing low-cost, low-value products, today clusters of high-tech industry are growing in north-ern Mexico – including aerospace & defense and automotive. These growing industries add to farming, mining, ranching and other economic staples that have been part of Mexico’s fabric for generations. Thatbusinessgrowthbringsasignificanteconomic impact to Arizona. Last year, $26 billionflowed through theArizona-Sonoraborder in imports and exports. As improvements of more than $200 million to the Nogales port of entry near completion, allowing for greater and more secure movement of goods and people, Ari-zona is poised to become a leader in inter-national trade. Facilitating that growth is the Arizona-Mexico Commission. Since 1959, this public-private entity has brought together stakeholders from both sides of the border with a united goal – strengthen the bonds between the two nations by promot-ing a cooperative relationship with Mexico and Latin America through advocacy, trade, networking and information. The commission builds on longstanding generational rela-tionships between the states, both familial and economic. “The majority of people don’t understand how important

Mexico is to us in regards to our economy,” said Arizona Gov. Jan Brewer, who chairs the commission. Also on the commis-sion is Sonora Gov. Guillermo Padres Elias. “Mexico is our number one trading partner, bringing bil-lions of dollars into our state,” she said. Brewer credits AMC, which meets twice a year, with bring-ing together people on both sides of the border to solve prob-lems and strategize a robust economic future. The creation of a Transportation and Trade Corridor Alli-ance was announced at the commission’s plenary session in

Rocky Point in February. The alliance will study border infrastructure, border entry capacity and competitiveness in Arizona and Sonora. “It’s a big operation – Mexico and Ari-zona, working together,” Brewer said. “It boosts the prosperity of the citizens on both sides of the border when the econ-omy is good and everyone is working. Together we want to improve the safety, security and the prosperity of the border region.” Padres said success of both states de-pends on collaboration. “Together we make the economy work,” he said. “We cannot talk about two sepa-rate states. We are a region.” Padres said Sonora is experiencing its highest rate of growth, due in part to a cooperative relationship with Arizona and the growth of high-tech manufacturing. “We have created 45,000 new

jobsinthelasttwoyears,andtheimpactof thosejobsbenefitspeople in Arizona,” Padres said. MargieEmmermann, executive director of the nonprofitArizona-Mexico Commission and policy advisor to Mexico and Latin America for Brewer, said the commission helps Ari-zona compete against California and Texas in cross-border trade. “We are a small state competing against giants,” Emmer-

“It isextremely

important forus to remain the port of

choice. It keeps

Americansemployed.”– Margie Emmermann

Executive Director

Arizona-Mexico Commission

BizINTERNATIONAL

Gateway to Economic Opportunity

$26 Billion in Cross-Border Trade in 2011

By Gabrielle Fimbres

continued on page 77 >>>

Spring 2012 > > > BizTucson 77

mann said. “The Arizona-Mexico Commission helps us make sure we are doing the right things and keeping our eye on the ball.” LarryLuceroisservingasthefirstTucsonpresidentinthehistory of AMC. He said the work of the commission is more important now than ever. “There is greater urgency today than there ever has been becauseof theeconomicsituationwefindourselvesin,”saidLucero, senior director of customer programs and services for UniSource Energy Corporation and Tucson Electric Power. The work of the commission is seen in clusters of high-tech industry that have formed in northern Mexico, Lucero said. Critical issues of transportation, safety, public health and education must be tackled. “These issues must be addressed for an active, secure and prosperous region,” Lucero said. “It all works together.” AMC was born during the Cold War climate of 1959, as suspicion was closing trade between nations. Then-Arizona Gov. Paul Fannin envisioned the possibility of expanding cul-tural and trade relations in Arizona and Sonora that could lead to mutual prosperity. AMC has 15 working bi-national committees that act as in-dustry and community advocates to grow cross-border trade, business and networking. So how does creating economic growth in Mexico help Southern Arizona? “The more wealth that is generated in Mexico translates into more dollars pumped into Arizona,” Emmermann said. “Ideally we wish the jobs were going to happen in the United States, but offshoring is going to happen one way or theother,anditismuchmorebeneficialtoArizonatohaveit take place in Mexico,” she said. “People cycle their money back to Arizona. For jobs that aren’t going to stay in the Unit-ed States, the best place for them to go from an economic perspective is Mexico.” Jaime Chamberlain, chairman of the Fresh Produce As-sociation of the Americas and president of J-C Distributing in Nogales, Ariz., said collaborative efforts through the com-mission are vital. “We need to get together as a state and protect the business we have and expand the incredible opportunities that exist across the border,” he said. Bruce Wright, who directs the University of Arizona Re-search Parks, said impeding trade with Mexico has a devas-tating economic impact on Arizona. “If the university closed its doors or Davis-Monthan Air Force Base went away, what a huge negative impact it would have on our economy,” he said. “When we frustrate trade with Mexico, it has a similar huge impact. “It is an existing industry that is creating opportunity and wealth in Southern Arizona, just like the UA or Raytheon or Davis-Monthan,” Wright added. “We need to hold on to it and defend it and support it.” Michael S. Hammond is president and managing share-holder at locally owned PICOR Commercial Real Estate, which does business in Mexico. “I tell my friends, you either need to get on board or you are going to get left behind,” he said.

Sonora Gov. Guillermo Padres Elias

Arizona Gov.Jan Brewer

Margie EmmermannExecutive DirectorArizona-Mexico Commission

Larry LuceroPresidentArizona-Mexico Commission

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Bruce WrightAssociate Vice President for University of Arizona Research Parks

Mike HammondPresident, PICOR

Luis Ramirez ThomasPresidentRamirez Advisors Inter-National


BizINTERNATIONAL “This is the future – Mexico and the United States working together.”

Building stronger ports Five years ago, the Mariposa Port of Entry in Nogales – the commercial gateway to the U.S. for much of Mexico – had become a parking lot. Trucks carrying produce, goods and high-tech components that were headed to the U.S. and Canada were stuck at the border, waiting as long as 24 hours to cross. “We were losing market share to Texas and New Mexico,” said AMC Border Coordinator Luis Ramirez Thomas, presi-dent of Ramirez Advisors Inter-National in Phoenix, who works with businesses in the U.S. and Mexico. AMC led an effort to secure funding for improvement to borderinfrastructurethatwouldallowforsafe,efficientcross-ing for legal, vital commerce. More than $200 million was secured from economic recovery funds, and the Mariposa

expansion is expected to be complete by 2014. “One of the huge success stories is the fact that it was done largely through the leadership of the Arizona-Mexico Commission, to mobilize a response to those infrastructure requirements,” said UA’s Wright. “Major improvements are takingplace.Aretheysufficient?Probablynot,buttheyareahuge step forward.” Creating a border that efficiently lets in commerce butkeeps our nation safe from illegal activity is the most critical piece of building the bi-national economy, said AMC presi-dent Lucero. “For us to be successful, we have got to put in place the infrastructure that allows us to attract business,” he said. Making sure the borders are running efficiently requiressufficientstaffing,anissuethecommissionremainsinvolvedin.Theborderhaslongstruggledwithinsufficientstaffing. “States like California and Texas are actively luring com-panies to transport goods through their ports,” Ramirez said. “We cannot be left behind. We must continue to improve our ports of entry, and the commission has been one of the prin-ciple leaders in this.” Emmermannsaidefficientportstranslatetomorejobsinthe U.S. Produce, for example, requires warehousing and dis-tribution jobs on this side of the border. “It is extremely important for us to remain the port of

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“For us to besuccessful, we have

got to put in place the infrastructure thatallows us to attract

business.”– Larry Lucero, President, Arizona-Mexico Commission




choice,” she said. “It keeps Ameri-cans employed.” Recent developments in Guaymas are expected to impact the region as the port is now processing container traffic, allowing more goods to beshipped in and out of the region. Gail Lewis, director of interna-tional affairs for the Arizona Depart-ment of Transportation, said trans-portation infrastructure is critical in getting goods to where they are go-ing. “The ports of entry are crucial and the roads that connect to the ports are just as crucial,” Lewis said. “More than $200 million is being spent on expanding the port – but no money is attached to improving the road to the Mariposa port. That needs to be addressed.” These issues and others are hashed out at AMC plenary sessions, she said. “I can’t imagine how hard it would be to work on infrastructure issues if we didn’t have that connec-tion,” Lewis said. Mexico for decades has offered an opportunity for Arizona farmers to produce crops through migrant workers. Kevin Rogers, president of Arizo-na Farm Bureau Federation, said the abilitytofeedAmericawouldbenefitfrom strong, secure borders that pro-vide for a worker program. “We need a good worker program so that hard-working people who want to come work here can,” said Rogers, a member of AMC. “It’s the lifeblood of our industry to have reliable labor to help us manage all levels of our operation,” Rogers said. “You can’t grow crops without labor, andwehavemade it difficultfor good hard-working people to come do these jobs. We are raising our kids to do other types of work, and we are in need of good,reliable labor so we can continue to feed our-selves.”

Growing business From aerospace & defense to pro-duce and renewable energy, Mexico is ripe for growth. Wendy Vittori, president and co-founder of Arizona-Sonora Manu-facturing Initiative in Scottsdale and

an AMC member, previously worked at Motorola, one of the early com-panies to use the maquiladora trade program to manufacture products in Mexico. She witnessed the decline of man-ufacturing in Mexico as companies moved to Asia. She now sees compa-nies – like Motorola – returning. Bolstering high-tech manufactur-ing on both sides of the border “is the engine of the economy,” Vittori said. “If a company is considering a lo-cation outside of the U.S. for manu-facturing, there are tremendous op-portunities in Sonora and Mexico,” said Vittori, whose company assists businesses considering making the move. “The Arizona-Mexico Commis-sion is one of the leaders in bring-ing attention to the needs and has worked hard to bring in the invest-ments needed,” she said. “We need a safe and secure border for Arizona and we need to embrace the concept of working collaboratively.” Ramirez, of Ramirez Advisors Inter-National, said U.S. companies first opened production facilities inMexico in the 1960s. “They started flocking to Chinabecause companies were focused on the cost of labor in China,” he said. “But when companies look at the overall cost of providing products or components, we see that Mexico is a good alternative.” Luis Felipe Seldner, co-founder, president and CEO of The Offshore Group, a Tucson-based company that provides Mexico outsourcing solutions, said there are unexpected costs and huge time delays that come with dealing with China. “And what goes to China, very lit-tle comes back as far as trade,” Seld-ner said. “With Mexico, the trade is back and forth, and the impact to all of Arizona and the United States is tremendous.” Among international companies that have expanded operations into Mexico is B/E Aerospace. Doug Rasmussen, vice president and general manager of B/E Aero-space in Tucson, said the company’s manufacturing facility in Nogales, Son., allows for easy collaboration

Arizona-MexicoBy the Numbers:

• $26billionflowedthroughthe Arizona-Sonoraborderin2011– $20.5billioninimportsand $5.3billioninexports

• TheMariposaPortofEntrywas designedtohandle400trucks adayin1978.Todayasmany as2,000truckscrossinasingleday.

• 235,700jobsinArizonarely on trade with Mexico

• 43percentofallwinterproduce consumed in the U.S. comes through Nogales each year

• 22millionvisitorscrossedtheborder fromMexicointoArizonain2011, orabout140,000daily

• $7.3millionadayisspentin Arizona by people from Mexico, totaling$2.3billionannually

• Mexicanvisitorsspendmorethan $900millioninPimaCounty

• For67percentofvisitorsfrom Mexico, the main reason for coming to Tucson is shopping • Mexico’seconomyisexpected togrowby4percentin2012

Sources: Arizona-Mexico Commission, University of Arizona, Ramirez Advisors Inter-National, Metropolitan Tucson Convention & Visitors Bureau

Gail LewisDirector International Affairs, Arizona Department of Transportation

Gail LewisDirector International Affairs, Arizona Department of Transportation

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between engineers on both sides of the border. Having facilities an hour’s drive away in the same time zone makes all the difference when production issues arise, he said. Key to increasing bi-national collaboration is improved education on both sides of the border. The Sonoran govern-ment is investing in education and is training engineers to work in manufacturing operations. UA’s Wright said schools inMexico are becoming proficient at training high-caliberengineers who work for half the cost of engineers in the U.S. Internship and education programs between universities on both sides are needed to provide hands-on learning to en-gineering students so they are ready to work in the aerospace field,Rasmussensaid. Another area of potential growth for Arizona and Sonora is renewable energy. “We have an emerging solar energy industry in Southern Arizona, but all of the production is going to China,” said UA’s Wright. “Companies are having huge problems – their products are delayed and they are not meeting their dead-lines. There is a perfect argument to be made that it all ought to be made in Mexico. We have an economy that needs to find higher-wage jobs and these are the kinds of jobs weneed.” With businesses that span the border comes the need for professional services, including legal. Snell&WilmeropenedanofficeinLosCabos,Mexico,in2009. “We look at where our clients are doing business, and clients are U.S. developers doing real estate development in Mexico,”saidCurtReimann,apartnerintheTucsonoffice. “We help them work through the legal process in Mexico,” he said. Snell & Wilmer, licensed by the Bureau of Foreign Invest-menttooperateasalawfirminMexico,hashelpeddevelop-ers with projects, including El Dorado Golf & Beach Club in Los Cabos. D. Michael Mandig, an attorney with Waterfall, Econo-midis, Caldwell, Hanshaw & Villamana in Tucson, has been handling cases in Mexico for nearly 20 years. The firm assists clients with international commercialtransactions. Mandig is helping a grower of table grapes in Mexico license plant varieties, and works with a Mexican produce company that opened a distribution center in Ari-zona. He said AMC helps him grow his business. “It serves as a way for me to maintain social connections with people and provide more visibility,” Mandig said.

Prosperous partnership With higher-wage jobs comes prosperity on both sides of the border. ProsperityinMexicobenefitsArizonathroughtourismandincreased investment in the U.S. Wright, of UA Tech Park, said of the 40 homes in his foot-hills neighborhood, about a dozen are owned by Mexican nationals. As their companies grow, they buy homes here and some-times expand business here. Among the Mexican businesses that have opened operations in Tucson is La Costeña, which

Doug RasmussenVP and General ManagerB/E Aerospace

Jaime ChamberlainPresidentJ–CDistributing

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LuisFelipeSeldnerPresident & CEOThe Offshore Group




produces canned beans in what was once the Slim Fast Foods plant. When the middle class grows and there is more prosperity, Mexican residents spread the wealth here. Many send their children to school here – at the University of Arizona, Pima Community College, Salpointe Catholic High School, St. Gregory College Preparatory School and oth-er schools. They buy products here that they cannot find inMexico, orones that are far more expensive in Mexico. “If the economy is thriving in Mexico, they will spend their money here,” said J. Felipe Garcia, VP of community affairs and Mexico mar-keting at the Metropolitan Tucson Convention & Visitors Bureau. He serves as the co-chair of AMC’s tour-ism committee. MTCVB opened a tourism officein Hermosillo in 2005 called Vamos a Tucson – Let’s Go to Tucson. Visitors can buy tickets to Tucson concerts, findoutaboutspecialeventsorbookTucson hotel rooms. In 2011, the of-fice booked more than 1,000 hotelrooms here. “If you think you are not impacted by Mexican visitors, well yes, you are,” said Garcia, explaining that taxes generated support schools, li-braries and a host of services. Having safe, effective borders is a key to tourism spending. “I don’t want people waiting in line at the border,” Garcia said. “I want them waiting in line at the cash register.”

Life on the border One of the goals of AMC is to im-prove life along the border. Health, education, arts and culture and other topics are priorities for AMC. Carol Sanger, southeast regional director of the Arizona Commu-nity Foundation, said philanthropy is addressing societal challenges that

come with cross-border trade. “Education, environment, health and the arts, to a certain extent, know no borders,” Sanger said. Her agency works to improve well-ness along the border. AMC supports the development of the Douglas Boys & Girls Club. “Work on the border can be com-plicated but we are all people who love this area and we all have an op-portunity – as is seen in the vision of the Arizona-Mexico Commission – to be good neighbors,” Sanger said. Will Humble, director of Arizona Department of Health Services, serves as co-chair of AMC’s health committee. The committee recently helped set up protocol to aid in iden-tifying people with tuberculosis cross-ing the border, and has been instru-mental in assisting doctors in Sonora in diagnosing valley fever. Another focus is helping Sonora develop a regulatory system for as-sisted-living facilities in Mexico that will attract U.S. residents. “The folks from Sonora are my most pleasant stakeholder group,” Humble said. “It is just a pleasure to work with them.”

Looking toward the future While AMC continues to work on weighty issues, “the outlook is very positive,” said Lucero, AMC presi-dent. “We have learned as much from our colleagues in Mexico as we have shared,” he said. “There is still a lot of work to do, but we are moving in the right direction.” Said Hammond of PICOR, “The past has been strong, but the future is even brighter. The growing middle class in Mexico is impacting business coming from Mexico to the United States. We need to make it easier for the legal business to come into Ari-zona. It is the key to our future.”

BizINTERNATIONAL

About 500 people are expected to at-tend the Arizona-Mexico Commission’s Summer 2012 Plenary Session – Arizona & Sonora: Taking Charge of Change – June 7-8 in Tucson. Among topics explored will be cross-border opportunities in renewable en-ergy and aerospace & defense. Discussions will examine how Arizona can partner with Sonora to position the region globally in the renewable energy industry. Retention and attraction of aerospace & defense businesses to the re-gion is also on the agenda.

AMC Summer 2012Plenary Session

The Arizona-Mexico Commission is a dedicated group of business peo-ple, government representatives and citizens committed to maintaining and improving the business, social and cul-tural relationships between Arizona and Mexico. The organization offers individual and business memberships as well as sponsorships. Members of both sides of the border meet at plenary sessions twice a year, as well as other events. A53yearlegacy…Bepartofit.

Formoreinformation,gotowww.azmc.org.

Become a Member


Biz

Biz

Arizona-Mexico Commission Summer 2012 Plenary SessionArizona & Sonora: Taking Charge of Change

June 7-8 with a renewable energy opportunities summitJune7

JWMarriottStarrPass,3800W.StarrPassBlvd.

CostofJune7energysummit:$100forAMCmembers,$125fornon-members,or$25withplenaryregistrationPlenarysessionregistration:$300forAMCmembers,$400fornon-members

Formoreinformation,gotowww.azmc.org.

“We need to make it easier for the legal business to come

into Arizona. It is the keyto our future.”– Michael S. Hammond, President, PICOR Commercial Real Estate


The motor coaches from Sonora pulled into Tucson in the wee hours, jammed with passengers on a mission. “It was a shopping frenzy,” recalled J. Fe-lipe Garcia, who oversees Mexico marketing for the Metropolitan Tucson Convention & Visitors Bureau. Between November and December of last year, 47 motor coaches carrying a total of 1,800 shoppers from Hermosillo took Tucson by storm. After driving through the night, they shopped for 18 hours, hit-ting Foothills Mall, Tucson Mall and several chain stores. They then piled their bags and boxes into the motor coaches and headed for home. Mexican shoppers are critical to Tucson retailers, spending about $1 billion in stores and restaurants annually, Garcia said. “Of the Mexican nationals headed to Southern Arizona, 67 percent are coming to shop,” said Jill Harlow, director of market-ing for General Growth Properties, which owns Park Place Mall and Tucson Mall. “That is a lot of shoppers.” The malls work with MTCVB to attract shoppers. They advertise in El Imparcial newspaper and use social media to connect with shoppers south of the border. “This past holiday season, social media was really a game changer for how people approached their holiday shopping,” Har-low said. Facebook was used to share details

Mexican Shoppers

Pump$1 Billion

into Tucson Economy


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Melanie SuttonMarketing ManagerLa Encantada


of special events with shoppers south of the border. Businesses like Macy’s used social media to let shoppers know they could ship items to Mexico. “These dollars are so important to local retailers,” Harlow said. “Visitors from Sono-ra keep our local economy rolling and keep people employed.” At La Encantada, Mexican nationals make up between 25 and 30 percent of all shoppers, said Melanie Sutton, marketing manager. The center offers special shopping expe-riences for people from Mexico, and par-ticipates in trade shows and fashion shows south of the border. In October, stores in La Encantada took part in a fashion show in Hermosillo attended by more than 1,000 women. La Encantada hosted Fashions Night Out last September, a special event for women from Mexico with second homes in Tucson. “We sent information through Facebook and women shared it with their girlfriends,” Sutton said. About 30 women enjoyed a private recep-tion at Tiffany & Co., dinner at NoRTH and an evening of shopping. “We created a spe-cial shopping experience for these ladies,” she said. La Encantada works with resorts like the Westin La Paloma to organize special events for shoppers from Mexico. Among their favorite destinations are Tiffany, Luis Vuitton, Crate & Barrel, Lucky Brand, True Religion, Cole Haan, Apple, Blanco Tacos + Tequila and RA Sushi Bar Restaurant. The center is using Facebook to stay in touch with shoppers throughout the year. “Mexican nationals are very savvy with Facebook,” Sutton said. “Social media is the storefront and the way to get them informa-tion.” Matthew Winters, director of Tiffany in Tucson, said customers from Mexico have a high level of interest in the brand. “Since opening our Tucson store in 2006, we have developed great relationships with our friends from Mexico and look forward to many more years and additional friend-ships,” Winters said.

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Jill HarlowDirector of MarketingGeneral Growth Properties


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With great opportunity along the border comes great challenge. Among the greatest challenges is de-veloping a border that protects against the illegal flow of people, drugs, guns and currency while allowing for the ef-ficient passage of legitimate trade and commerce. “The problems Mexico has had in the last few years with violence is something that should be paid attention to at a fed-eral level, but it has not been placed in the forefront,’’ said Jaime Chamberlain, chairman of the Fresh Produce Associ-ation of the Americas and president of J-C Distributing in Nogales, Ariz. “Mexico’s problems are the United States’ problems, and U.S. problems are Mexican problems,’’ he said.

If properly staffed, the $200 million in improvements to border ports can bolster security while allowing for more efficient crossing of legitimate trade, Chamberlain said. That security is critical in draw-ing business to the border, said Doug Rasmussen, vice president and general manager of B/E Aerospace in Tucson, which also has facilities in Nogales, Son. “We have engineers and product crossing every single day and when sending engineers from Tucson to our Nogales facility, there are safety con-cerns associated with that,’’ Rasmussen said. “We have to address border secu-rity or it will be an impediment to that free flow.’’ While Sonora Gov. Guillermo Padres

Elias said his is the safest among bor-der states in Mexico, improved security is imperative in growing trade between Arizona and Mexico. To aid in that effort, the University of Arizona’s Office of University Research Parks is helping to grow border security technology firms in Tucson. “We can become the center for bor-der security technology – and there is a market for it all around the world, not just on the U.S.-Mexico border,” said Bruce Wright, director of UA Research Parks. Building on a series of studies, funded in part by the Arizona-Mexico Commission, the Office of University Research Parks launched the develop-ment of the Border Technology and

New TechnologyKey to Safer Border

By Gabrielle Fimbres and Eric Swedlund

Michael Powell (left), CEO & President; Andrew Griffis, Chief Scientist; Mark Howell, VP of Technology and Drew Dodds, Principal Field Engineer, StrongWatch

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Evaluation Center. Based at the UA Tech Park, Border TEC is becoming a center for testing border security tech-nology, Wright said. The mission of Border TEC is to help identify, evaluate, test, deploy and commercialize new and “off-the-shelf ” border security technologies. Border TEC will serve as a neutral site for the testing and evaluation of technologies from a variety of sources, including uni-versities, federal and state government and industry. More than 40 businesses in Southern Arizona are operating in the border security technology field, Wright said. They range in size from Fortune 500 companies like Raytheon and IBM to small startup companies like Strong-Watch. Already serving the U.S. armed forces with its mobile surveillance technology,

StrongWatch is branching into border security and local law enforcement. StrongWatch was formed in 2008 and won a military contract to deliver an anti-ambush and counter-sniper sur-veillance system in a thermal infrared camera that is mounted onto vehicles. The company currently has 11 employ-ees and is expected to grow. “Doing static surveillance is one thing. Being able to do it effectively while a vehicle is moving and shaking is a whole other thing,” said Drew Dodds, StrongWatch principal field engineer. “On-the-move surveillance is really our niche.” The StrongWatch systems were de-ployed to Afghanistan in 2010 and the company began working to develop other opportunities, chiefly with fed-eral law enforcement and border secu-rity. The company is currently receiv-

ing purchase orders, predominantly through Department of Homeland Se-curity grants, for local sheriff ’s depart-ments along the U.S.-Mexico border. “By working tirelessly this last year on the border, we were able to deter-mine what they need, how they operate, how this can integrate into their exist-ing surveillance and different layers of security,” Dodds said. “We’re also realizing that the system does a lot more than border interdic-tion. It’s applicable for search and res-cue operations for the same reasons. It’s a great standoff surveillance tool for SWAT and special unit teams, covert surveillance, crowd control.” Dodds said the technology is “tough, rugged and reliable – because people may need to rely on it to save their lives.”

“Doing static surveillance is one thing. Being able to do it effectively while a vehicle is moving and shaking is a whole other thing.

On-the-move surveillance is really our niche.”– Drew Dodds, Principal Field Engineer, StrongWatch

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When Sargent Aerospace & Defense was strategizing ex-pansion a decade ago, the company considered opening up a manufacturing facility in China or Poland. But after exploring the benefits of “nearshoring” in Mexi-co, Sargent chose to expand operations in Tucson and open a manufacturing facility in Guaymas. That strategy has allowed the company to reduce costs without having to move operations to the other side of the world. The move helps prepare the company for what is expected to be booming growth of the commercial airline industry as older planes are retired, said Lisa Short, director of export/import compliance for Sargent in Tucson. Founded in 1920, Sargent is a global supplier of precision-engineered customized components as well as flight-critical aftermarket aviation services. The company has six facilities located throughout North America – including the Guaymas facility – as well as an engi-neering design support center in India and a customer service office in Singapore. When Sargent investigated expansion into Mexico, they found a growing aerospace manufacturing cluster south of the border. “There is a lot of industry going on that we in the United States don’t see,” Short said.

One of the reasons companies choose Asia over Mexico has been a lack of skilled workers, Short said. In recent years, however, Mexico’s education system has improved, with uni-versities there producing more engineers and workers. “China put a lot of money and emphasis on education,’’ Short sad, “They have a billion and a half people and put them through excellent education programs. Mexico didn’t have that initially but it is getting there now. We are seeing the results of that and it is wonderful.’’ Both Mexico and the U.S. must continue to improve educa-tion to meet corporate needs, Short said. While there were challenges associated with opening a facil-ity in Mexico, the benefits have been great. “I argue it’s far cheaper for a company like us than if we had attempted to do this in China,” Short said. And for employees, the culture shock is not as great at mov-ing to Asia. “You can come up to Tucson for the weekend,’’ she said. “If you are in China, you are not coming home for the weekend.’’ The public and corporations must be educated about the border region and its economic possibilities, Short said. “There is a perception of ‘I don’t care about the border. Close it down. Put up a wall,’” Short said. “It’s a very narrow understanding of what this state is and can be, and the global perspective that we should have.’’

The Choice – Expand to China, Poland or Mexico


Lisa ShortDirector, Export/Import Compliance Sargent Aerospace & Defense

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B/E Aerospace With operations around the globe and $2.5 billion in rev-enues, B/E Aerospace – the world leader in manufacturing products for aircraft interiors – chose Tucson and neighboring Nogales, Son., as a cross-border production hub. “We have an incredible opportunity located here in South-ern Arizona to work with northern Mexico,’’ said Doug Ras-mussen, vice president and general manager of B/E Aero-space in Tucson. “We are able to have the people in Tucson who design the product go across the border to be on the floor with the manu-facturing engineers,’’ he said. “It allows us to be collaborative at a lower cost.’’ Founded in 1987, B/E Aerospace manufactures interior products for commercial, business jet and military markets. B/E is also the leading distributor of aerospace fasteners and consumables. The company’s Tucson location employees 500, with 275 employees in Nogales, Son., creating luxury amenities for air-craft interiors. “The big thing we manufacture in Nogales is composite parts,’’ Rasmussen said. “Those parts come into our facility where they are finished and ultimately find their way into a product we ship to airlines all over their world.’’ When design issues arise, the manufacturing facility is an hour away.

“If something doesn’t fit right, the best way to see it is when a part is being made,’’ Rasmussen said “We do all sorts of things with India. We are always videoconferencing but it’s not as good as being able to walk out, see the part being made and talk about it. “If you put the right people together to think creatively, you can come up with solutions,’’ Rasmussen added. “And in No-gales, it can be done in a day rather than in three weeks.’’

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B/E Aerospace manufacturing facility, Nogales, Son.


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About 300 miles south of Tucson, the port of Guaymas is bringing new opportunities to the region as it now process-es container traffic that allows for the movement of goods throughout the world. “Although Guaymas remains a small port when compared to the ports at Los Angeles and Long Beach, now that con-tainer traffic can be processed, Guaymas becomes a strategic alternative to companies located in Arizona and Sonora, mak-ing our states much more competitive vis a vis other parts of the world,” said Luis Ramirez Thomas, president of Ramirez Advisors Inter-National in Phoenix, who consults with busi-nesses in the United States and Mexico. “Having the regularly scheduled stops of a container ship-ping line allows companies to make strategic decisions about their global logistics chains,” he said. Ramirez said the recent development is likely to attract more business to the Guaymas area, which is home to clusters of high-tech manufacturing. “The entire states of Sonora and Arizona will benefit from this new mode of shipping at Guaymas,” Ramirez said. “It is now up to Sonora and Arizona to promote this new logistics alternative and tout the continual effort to make the region

more competitive.” Ramirez, border coordinator for the Arizona-Mexico Com-mission, said Arizona-Mexico Commission has looked at the potential for Guaymas for years, through its transportation and economic development committees. “Recent studies that looked at the Tucson-Guaymas cor-ridor were championed by the AMC,” he said. “The value that the AMC brought to the table was the need to ensure a holistic approach to the corridor – meaning that we looked at the entire corridor and identified all the obstacles to getting containers moving in and out of Guaymas. Get-ting containers to Guaymas would have not had the impact desired if you could not get the containers to and from Guay-mas.” Critical to the success of the Guaymas port are current im-provements to the Mariposa Port of Entry in Nogales. “We have some $200 million of investment going into mak-ing Mariposa able to handle any increased growth in contain-er traffic through the border and to the port of Guaymas,” Ramirez said. “It is truly exciting to see the image that we conceived years ago becoming a reality.” Larry Lucero, AMC president, said the off-loading of con-

Ports of Entry Key to Future By Gabrielle Fimbres

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tainers in Guaymas supports the growing impression that the “worst of the recession is behind us. “This is a wonderful development – demonstrating the com-mitment that Mexico has to improving the infrastructure neces-sary to improve the economic competitiveness of this region,” Lucero said. Improvements to the Mariposa port will help grow trade, said J.B. Manson, president of Pacific Brokerage in Nogales, Ariz. “Thousands of jobs are dependent on the flow of these prod-ucts,” he said, allowing Arizona to diversify its economy. Founded in 1928, Pacific Brokerage works with exporters and importers to effectively move goods internationally. Manson said improvements to ports will make the region the most effective and the most secure. Using state-of-the-art hardware and software, Pacific Broker-age works with U.S. Customs and other government agencies to expedite access of shipment information efficiently, to get it where it’s going. “Our ports of entry are on the path to becoming the most ef-ficient with the latest in design and technology so that producers and shippers can meet their just-in-time logistics requirements,” he said. “For us in Nogales and the border, trade is not something in the headlines or some statistic – we live it every day,” Manson said. “We need those that are not on the border to understand this and the opportunities that the border offers.” Port and infrastructure developments are also important to Swift Transportation. Swift, with corporate headquarters in Phoenix, generates more than $3.4 billion in revenue and oper-ates more than 16,000 trucks. Swift provides border crossing services along the Mexican border and has more than 40 truck facilities in the United States and Mexico. “Swift has been doing business in Mexico for many years,” said Jerry Moyes, founder and CEO of Swift Transportation. “Cross-border business has become a very important part of Swift’s overall business, particularly in areas that offer tremen-dous growth potential,” Moyes said. “We are happy to see the investment being made on the ports of entry between Arizona and Mexico, ports of entry that are the gateway for over $25 billion worth of trade.”

Since 2004, the Levin family has been improv-ing transportation and logistics that are vital to cross-border trade through the Port of Tucson. The company, located in the Century Park Re-search Center near Kolb Road and Interstate 10, is expanding its capacity in providing rail-orient-ed transportation options in the region, adding 20,000 feet of track this year. The transportation and logistics center aids businesses in the region with access to rail and intermodal container transportation options, and has a 15-year contract with Union Pacific Rail-road. Mike Levin, who is VP of marketing and the son of founder and owner Alan Levin, has seen an increase over the past two or three years in business with Mexico. “As we improve transportation and logistics in the area, it puts Tucson in a good position to bring new companies to town,” Levin said. “There is a firm base of logistics and transporta-tion professionals in this region.” He said with the company’s proximity to Mex-ico, he hopes to facilitate increased trade and business relationships between companies north and south of the border. The company regularly assists with goods headed to the Ford plant in Hermosillo, among other manufacturers. Levin said healthy trade with Mexico benefits Arizona. “It creates jobs for Arizona,” Levin said. “Whether it’s distribution or warehousing, there is an opportunity for more jobs to be created.”

Port of TucsonGrowing

Transportation Opportunities


Alan LevinOwnerPort of Tucson

“Having the regularlyscheduled stops of a container shipping line allows companies

to make strategic decisions about their global logistics chains.”– Luis Ramirez Thomas, President, Ramirez Advisors Inter-National

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Jerry Moyes, Founder & CEO, Swift Transportation

J.B. Manson, President Pacific Brokerage


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The region’s hotels, restaurants, casi-nos, attractions and sporting events rely on tourism from Mexico to thrive. When Casino Del Sol opened its new resort with tremendous fanfare and cel-ebration on 11/11/11, bands popular with concert goers from Mexico head-lined the big event. More than 5,000 fans danced and sang to Pepe Aguilar, Alejandra Guzmán and Intocable at the sold-out concert. “It was an unbelievable show,” said Steve Neely, executive director of mar-keting at Sol Casinos. The concert symbolizes the signifi-cance of the casino’s relationship with travelers from south of the border. “Visitors from Mexico are very im-portant to us,” Neely said. “The Pascua Yaqui Tribe has had a long-standing re-

lationship with Sonora.” Mexican visitors are drawn by the hotel, gaming, nightlife and dining, Nealy said. “Mr. An’s is a huge draw throughout Sonora,” he said. Casino del Sol makes sure guests are comfortable, he said. “So many of our employees – the majority – are bilin-gual, so when someone from Mexico comes in they don’t have to look far to find someone who speaks Spanish.” The casino does aggressive print and outdoor marketing in Mexico. “Two ar-eas growing in popularity are social me-dia – our ‘likes’ are going through the roof on Facebook – and email blasts. We also find texting works very well.” The casino partners with the Metro-politan Tucson Convention & Visitor’s Bureau, whose Hermosillo office sells

concert tickets and books rooms. While Neely did not share numbers, he said the Mexican audience “is ex-tremely important to us and makes up a substantial part of our guests. Many visitors have family here. We try to be-come a part of the family.” Treena Parvello, director of market-ing and public relations for Desert Dia-mond Casinos and Entertainment, said her company has a lengthy and positive relationship with communities in north-ern Mexico. “We use the entire range of advertis-ing and outreach, including billboards, electronic and print media, earned media and others to market to this re-gion,” Parvello said. “In addition we participate in cross-border trips with the Metropolitan Tucson Conven-

Attracting Touristsfrom Mexico


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Steve NeelyExecutive Director of Marketing Sol Casinos

Baxter the Diamondbacks Mascot, with fans at Spring Training in Monterrey, Mexico

Spring 2012 > > > BizTucson 91

tion & Visitor’s Bureau that have been very productive in building personal relationships with our counterparts in Mexico.” Desert Diamond sponsors major events, including the recent Desert Dia-mond Cup that drew Mexican visitors. “For more than a decade we have sponsored events and activities that have unique appeal in Mexico,” she said. “The most recent example is our title sponsorship of the Desert Dia-mond Cup, which has brought world-class soccer to the region. Fans are able to see soccer superstars like Rafa Mar-quez and David Beckham up close and in action.” Also popular among Mexican visitors are boxing events at Desert Diamond, including trips to the border by Sugar

Ray Leonard and Oscar de la Hoya to meet with fans. “Desert Diamond Casinos has taken great pride in putting on these events, and in bringing Sugar Ray and Oscar to places like Nogales to meet the pub-lic,” Parvello said. Mexican tourists are also important to the Arizona Diamondbacks. “We have thousands of fans in Mexi-co who travel north to watch our games live throughout the season,” said Dia-mondbacks President & CEO Derrick Hall, who is on the board of directors of the Arizona-Mexico Commission. “We have enjoyed tremendous re-lationships with fans, community and business leaders due to years of out-reach and target marketing,” he said. The Diamondbacks have held sev-

eral exhibition games with local teams in Hermosillo, as well as with Mexico’s World Baseball Classic team and the White Sox, all with the goal of devel-oping lifelong Diamondback fans in Mexico. While no numbers of fans from Mex-ico were available, about 20 percent of fans at home games are Hispanic. “The response has always been posi-tive, illustrating the love that those pas-sionate fans have for our great game,” Hall said.

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Treena ParvelloDirector of Marketing & Public Relations Desert Diamond Casinos and Entertainment

Derrick HallPresident & CEO Arizona Diamondbacks

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“We have thousands of fans in Mexico who travel northto watch our games live throughout the season.”– Derrick Hall, President & CEO, Diamondbacks


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For years, PICOR Commercial Real Estate has done busi-ness along the border, helping companies grow. “About 10 years ago we made the conscious decision that it was going to be a major part of our business,” said Michael S. Hammond, president and managing shareholder at locally owned PICOR. “Usually when you create a new strategy, there is a lot of optimism – and then you get into it and say, ‘Geez, I didn’t see this, I didn’t see that.’ But the more we get involved in cross-border trade, the more opportunity we see, not less,” Ham-mond said. PICOR has a multi-year commitment to cross-border com-merce and investment, Hammond said. The Tucson company is a licensed real estate broker in Sonora, working with U.S. and Mexican firms on lease and real estate purchase require-ments on both sides of the border.

Among clients PICOR has helped grow in Mexico is global giant Kimberly-Clark. PICOR also represents Mexican individuals and entities with interest in Arizona investment property and those firms with business space requirements in Southern Arizona. Among those clients is Transportes de Autobuses del Pacifico, a trans-portation company entering the U.S. market through Arizona. The Arizona-Mexico Commission has aided in the success of these projects by bringing together people from both sides of the border, Hammond said. “As a businessman, I am looking for opportunity,” said Ham-mond, who is also president of Southern Arizona Leadership Council. “Through the Arizona-Mexico Commission, I am connecting with small businesses in Sonora who are looking to do business here.”

PICOR – 10 Years ofCross-Border Success


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Since 1924, the Bracker family has thrived on the Nogales border selling clothing and goods to folks from Mexico. The last few years have been challenging, with stricter bor-der policies, agonizing crossing delays and a devastated econo-my. “Families who came up to vacation and shop five or six times a year are now coming three times because crossing is so dif-ficult,” said Bruce Bracker, whose grandparents, Charlie and Pearl, set up shop in Nogales, Ariz., 87 years ago. “Each time they don’t come, you are losing out on retail, hotel, restaurant and attraction dollars.” Bracker is hopeful that a growing middle class in Sonora and improvements to the border will boost sales. His four Nogales stores sell soft goods – from deeply discounted clothing to high-end designer items, including ball gowns costing thousands of dollars.

Bracker said sales peaked in 2007, but declined with tight-ened border security and waits of several hours to cross into Arizona. “People get tired of waiting in line to spend their money.” He is seeing the impact of the recent trend of “nearshoring” – American companies returning some of their production to Mexico. “It’s creating a new middle class in Mexico, and that is helping to maintain what we have here.” He predicts the $200 million in improvements to the Mari-posa port of entry will make a “huge difference.” The port must be adequately staffed to minimize wait times, he said. “If it’s too difficult for people to cross here, they will cross somewhere else,” Bracker said. “We have to fix these issues or there are jobs that will leave Arizona – and once they leave, they are gone.”

Nogales Retailer HopefulDespite Border Challenges


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Chances are that tomato topping your burger or bell pepper sprinkled on your salad came from Mexico. Nearly half of all produce consumed in the U.S. comes through Nogales in the cooler months. A highly efficient system of packag-ing, transportation, warehousing and distribution is required for those fresh veggies to end up on your table. While that juicy Roma may be grown by farm-ers in Mexico, getting it to you means jobs for Southern Arizonans. “Mexico will only continue to grow in protected agriculture and that will cause jobs to grow in the U.S.,” said Jaime Chamberlain, chairman of the Fresh Produce Association of the Americas and president of J-C Distrib-uting in Nogales, Ariz. The produce distributorship, which has been owned by Chamberlain’s family since 1971, imports Mexican fruits and vegetables from September through June. “At least 65 percent of our packag-ing is made by American companies – boxes, strapping, corner boards, pallets. It comes from U.S. companies, is im-ported into Mexico and then imported back into the U.S.”

Other distributorships have been popping up in Nogales, providing jobs for Arizonans. “Just in the produce industry this past summer, another 15 new distributor-ships opened up,” Chamberlain said. “The majority are associated with own-ers who are Mexican growers. They are trying to be fully integrated to grow, to pack, to ship and to sell their own product here in the United States. That is a very important part of Mexican growth.” As industry grows in Mexico, ben-efits spread to the U.S., despite the contention that agriculture in Mexico is putting U.S. growers out of business, Chamberlain said. “American farmers aren’t going un-der because we are getting more pro-duce from Mexico,” Chamberlain said. “They are going under because they have structural problems with the soil or viruses and diseases. Growth in other countries does not mean we are shutting down business in the U.S. The more you grow, the more opportunities there are in the U.S.” Martin Ley’s family business is an example of one company that has ex-panded into the U.S. For decades, Ley’s

family has grown tomatoes, peppers and other produce in northern Mexico. Ley’s grandfather immigrated to Cu-liacan, Sinaloa from China, starting a line of wholesale grocers called Casa Ley in the 1950s. The family branched into farming in 1980 and in 1991 opened a 125,000-square-foot distribu-tion center in Nogales, Ariz., along with centers in McAllen, Tex., and Philadel-phia, Pa. The family business has more than 5,000 employees in the operation that spans both sides of the border. Ley, who is VP of Del Campo Su-preme in Nogales, Ariz., said interac-tion with government agencies through the Arizona-Mexico Commission has been crucial to his business success. “We always must be working with government agencies, industry, retail organizations and others to be success-ful,” Ley said. “It takes a lot of coordi-nation, and getting everyone to sit down at the table to talk so we can continue operating in a proper and optimum way is very important. We brainstorm ideas, and the commission is a great fa-cilitator for that.”

Produce Feeds theAmerican Economy


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