ALBUQUERQUE, N.M. — The pandemic has busted up business activity across the state, but not at the Santa Teresa border industrial parks in southern New Mexico.
Business there is booming, with state exports to Mexico up 11% in the first half of 2020, and a wave of fresh public and private sector investment flowing into new industrial buildings and infrastructure at the parks. Commercial traffic through the Santa Teresa Port of Entry is on a steady upward trajectory, reaching record levels this summer.
The coronavirus lockdown did briefly slow border business during the spring, but when the economy began reopening in June, Santa Teresa’s previously bustling commercial activity bounced right back, said Jerry Pacheco, executive director of the International Business Accelerator and president of the Border Industrial Association.
“It was kind of a sob story at the start, as people watched in horror during the coronavirus lockdown,” Pacheco said. “Activity was down significantly in April and May, and a few firms did furlough some of their employees for two or three months. But as the economy slowly opened up in June, things bounced back rapidly, and now commerce here is running above 2019 levels.”
In many respects, the pandemic actually boosted business on the border, where Santa Teresa-based firms produce materials and components for factories in Mexico that assemble everything from computers, consumer electronics and processed foods to automobiles and industrial equipment that they then ship back to U.S.-based businesses.
‘Big supply basin’
Santa Teresa’s industrial parks house massive warehouses for products crossing back and forth across the border, backed by a network of transportation and distribution firms that manage the constant movement of goods in all directions. The entire industrial zone operates as one of the nation’s largest inland ports for truck-and-train transshipments across North America.
As online ordering for consumer products of every kind have skyrocketed in the pandemic, business at the border has surged.
“Santa Teresa is a big supply basin for Mexico’s industrial (manufacturing) base,” Pacheco said. “People everywhere sit at home ordering on Amazon, and the factories that supply those products – like Foxconn’s computer assembly facility just across the border – need the plastic, steel, electronics, components and packaging that Santa Teresa businesses supply.”
In addition, during the early months of the pandemic, supply chain disruptions from factories in China and other Asian countries – which supply goods and components to North American businesses – forced manufacturers here and in Mexico to deplete their industrial inventories. Now, with consumer demand growing again, factories are stocking back up.
“The global supply chain disruption created a lot of pent-up demand, so we’re seeing a lot more Mexican orders now for materials and components,” Pacheco said.
The pandemic even generated a boom in activity for some Santa Teresa-based firms, such as FedEx Ground services, medical instrument and food sterilization company SteriGenics, and the telecommunications firm Commscope Connectivity Solutions.
“SteriGenics is going gangbusters,” Pacheco said. “And with everyone now relying on telecommunications, trucks and trailers are piling up at Commscope’s distribution center here.”
The ‘near shore’ craze
Perhaps more important, Asian supply chain disruptions in the spring accelerated efforts by many multinational manufacturers to “re-shore” their operations back to North America to avoid bottlenecks in the future. Many are looking to set up shop just across the border in northern Mexico in a process known as “near shoring.”
“Everybody is buzzing about companies that left for China in the past and are now bringing their operations back here,” Pacheco said. “For many, it’s too expensive to operate in the U.S., so they want to near-shore their businesses in Juárez and other locations in Mexico. That bodes well for us, because our industrial base supplies those plants south of the border.”
That, in turn, is generating huge interest among real estate developers to build more industrial warehouse and manufacturing space at Santa Teresa.
Dallas-based Blue Road Investments LLC broke ground in June on a new, 315,000-square-foot “speculative” building in Santa Teresa’s Westpark Logistics Center, the newest of four industrial parks that operate in the industrial zone. The Blue Road project marks Westpark’s first spec building, which developers construct before actually lining up tenants in anticipation of growing demand for space.
Franklin Mountain Industrial – which built a 183,000-square-foot spec building in 2018 in Airport Park, northeast of Westpark – just opened a second 183,000-square-foot building in August.
Franklin Mountain executive Brent Harris said lack of industrial vacancy in the El Paso border region, combined with an expected wave in near-shoring, is driving developer interest.
“The El Paso/Santa Teresa region is experiencing unprecedented activity right now,” Harris told the Journal. “El Paso has only a 1.5% vacancy rate in class A spec space, and Santa Teresa has no new vacancy space other than the building we just finished. That creates a lot of opportunity for developers, and I believe we’ll see a lot more spec space being built.”
New faces in town
More firms are also setting up shop at Santa Teresa, and some are expanding existing operations.
W. Silver Recycling, an El Paso-based metal recycling firm with facilities in five states, announced plans in February to construct a 120,000-square-foot building as part of a new processing operation on 60 acres at Santa Teresa. The company has run a 10-acre shipping yard there since 2013, but opted for a much bigger operation now, given the rapid growth and favorable logistics at Santa Teresa, said W. Silver CEO Lane Gaddy.
“All the logistics and space we need are there, including rail shipping and easy access to the port of entry for rapid border crossing,” Gaddy said.
Taiwanese company Admiral Cable, which makes wires, electrical strips and computer parts, is adding three new buildings to its operations at Santa Teresa. And Taiwanese firm Xxentria Technology Materials Co., a global supplier of metal composite materials, said last week it will set up a bi-national manufacturing and distribution operation in both Santa Teresa and the San Jerónimo industrial park just across the border where Foxconn operates.
Xxentria will be the fourth company to open in San Jerónimo, which also includes RR Donnelley & Sons Co. and candy maker Sunrise Convections, which just built a 220,000-square-foot factory there.
A more efficient border
Santa Teresa and San Jerónimo are joined at the hip, with Santa Teresa-based firms supplying materials and components for San Jerónimo operations, and government agencies and private investors collaborating together to build needed infrastructure on both sides of the border. The Santa Teresa Port of Entry, for example, is coordinating with Mexican officials to provide hazardous materials management at the border for the first time this fall, said port Director Fernando Thomé.
“We’re working with our partners on the south side so that everybody gets ready together to manage hazmat services for both north and southbound traffic,” Thomé said.
That could bring more business from U.S. companies exporting fuel products to Mexico.
“We’ve been approached by several companies putting deals together to bring bulk fuel by train from Houston to Santa Teresa, but they need hazmat capability to ship it south of the border,” Pacheco said.
The port offers a rapid alternative to congested border crossings in El Paso, where it generally takes two hours or more for northbound trucks to enter the U.S. In contrast, it takes less than 20 minutes at Santa Teresa, Thomé said.
As a result, northbound commercial crossings reached an all-time monthly record of 13,402 trucks in July. That’s up nearly 50% from July 2015, when 8,957 trucks crossed at Santa Teresa.
Investing in infrastructure
A lot more infrastructure development is underway throughout the industrial parks, including a $20 million addition last spring to Union Pacific’s massive rail yard, a $400 million intermodal transshipment center that UP opened in 2014. UP added a “block swap yard” to load up trains with cars headed to just one destination, avoiding stops at other locations along the way.
Logistics company Ironhorse Resources Inc., which provides rail links from Santa Teresa’s Gateway Rail Park to UP’s intermodal transshipment yard, is also adding another 2.5 miles of linear feed track to its existing rail.
The Doña Ana County International Jetport north of the industrial parks also received $9.9 million in upgrades since last fall. And a new, $2 million pipeline to supply natural gas to businesses in San Jerónimo was recently installed.
All the infrastructure and investment growth makes Santa Teresa an ideal location for developers, said Blue Road co-founder and managing partner Joe Zingaro.
“We started peeling back the layers and saw a lot of really cool, difficult-to-replicate infrastructure that’s very unique,” Zingaro said. “It’s centrally located next to Mexico’s manufacturing capital (Juárez), with a massive (Union Pacific) transshipment center, FedEx and Foxconn all in a couple-mile radius. As a long-term investor, there’s too much to like for us not to do something there.”
Chris Lyons, Santa Teresa’s largest landowner, said the industrial zone is hitting its stride.
“It’s a good place to be right now,” Lyons told the Journal. “It’s still early and there’s a lot of work to do, but we have a good foundation to build on. Santa Teresa is reaching its inflection point.”