2012: Baja California Regional Economic & Tourism Trends


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Presentation by Crossborder Group's President, Kenn Morris, made at 2012 event in Rosarito, Baja California. Focus is on regional trends in tourism and crossborder visitation, as well as economic trends and prospects of maquiladora/IMMEX manufacturing facilities in Tijuana and the State of Baja California. Touches on topic of manufacturing cost comparison of Mexico versus China, as well as stunning growth of medical device manufacturing in the Tijuana region.

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2012: Baja California Regional Economic & Tourism Trends

  1. 1. Baja California Economic & Tourism Trends 2012 Cross Border World Class Leadership Conference Rosarito, Baja California
  2. 2. OVERVIEW • Background • Regional Tourism • Regional Economy • Summing it Up
  3. 3. QUIEN SOY? WHO AM I?• Kenn Morris • Founder & President/CEO of Crossborder Group Inc. • Gerente General de Crossborder NS, S de RL de CV • Nearly 20 years of business consulting, market research and policy research in Mexico, the US- Mexico border region, and Central America • Former Director of “Crossborder Innovation & Competitiveness Initiative” at UCSD San Diego Dialogue • In 2008, appointed by Secretary of Commerce as founding member of US-Mexico Border District Export Council
  4. 4. CROSSBORDER’S BACKGROUND• Founded in 1996 in San Diego • Crossborder Group Inc. (1996, US) • Crossborder NS, S de RL de CV (2007, Mexico)• Currently with bilingual staff in two offices • San Diego • Tijuana• Leader in US-Mexico market research and strategic consulting• Specializing in: • Industry research and market entry strategies • Facility siting studies and economic models • Surveys, focus groups, and executive interviews • NAFTA/CAFTA business opportunties • Crossborder strategies & communications
  5. 5. A FEW OF CROSSBORDER’S CLIENTS …and many others – ranging from major corporations, to government agencies, to NGOs, to small start-ups…
  6. 6. Regional Tourism: On Rebound?
  7. 7. CARGO & CAR CROSSINGS AT BORDERS: BIG PICTURE Borderwide, big picture shows some signs of improvements… …but after many years of steep drop-offs in both cargo and passenger vehicle crossings
  8. 8. REGIONAL BORDER CROSSINGS: Q1-2012Regional Border Crossings: +up…• 10.4 million border crossers in Q1-2012 at SD-Baja POEs • San Ysidro + Otay + Tecate • Individuals: pedestrians, car passengers, bus passengers• Up only slightly from 2011 (.2%), but up 5.1% from 2010 low…• Crossborder expects 2012 to finish up by 1-2% over 2011…• …challenged by construction at SY POE & border crossing delays
  9. 9. HOTEL OCCUPANCY Monthly hotel occupancy data (SECTUR) appearing to show some increases in occupancy levels… …however, majority appears to be of domestic (MX) visitors still, but with some increases in SoCal residents (need to do more)
  10. 10. CRUISE SHIP PASSENGERSGood news: definite rebound incruise ship passengers toEnsenada (much better thanmany other cruise shipdestinations on MX West Coast)• Q1-2012: 117K passengers • 7.5% increase over Q1-2011• More binational coordination and investment needed…• …particularly as wine region becomes better known, great opportunities to upgrade regional attractions
  11. 11. Regional Economy: Outlook?
  12. 12. BIG PICTURE: MFG COST TRENDS FAVOR MEXICO• In US$, manufacturing costs… • US has increased +36% • Canada increased +58%• In 10 years (2000-2009), Mexico has remained approximately $5/hr• 2002-2008: USDOL estimated mfg labor costs in China increased from US$.58 to US$1.36• Since 2008…have gone even higher • Yuan has strengthened, US$ has weakened • General manufacturing labor & shipping costs have increased • 5 years: some parity MX vs China
  13. 13. COMPETITIVE COMPARISON: KPMG COMPETITIVE ALTERNATIVES• Looking at wide range of facility operating variables, as well as taxation, KPMG identified Mexico as the lowest-cost manufacturing country amongst 14 major countries studied… • 21%+ lower cost than similar mfg operation in US • Only a 5%-higher cost that similar operation in China…showing shrinking advantage
  14. 14. MAQUILADORA/IMMEX INDUSTRY TRENDSEconomic revival &competitive advantage leadingto recovery in National-levelmaquiladora/IMMEXemployment…• National: 1.9M (similar to 2007)• Baja: 222K (vs. 260K in 2007) • Tijuana: 146K (vs. 170K in 2007) • Heavy loss in electronics …
  15. 15. MANUFACTURING EMPLOYMENT OUTLOOK: 2-H 2012Crossborder Group survey ofHR staff from Tijuana-basedtechnology manufacturers inQ2-2012 (91 companies)• Question: “In the next 6 months, do you estimate your employment will increase, stay the same, or decrease?”• While majority indicate: “stay same”… • Very few: “decline” • Over one-third: “increase”
  16. 16. IN FACT, REGIONAL ADVANTAGE FOR MEDICAL DEVICES• …In fact, medical device industry continues to grow• Tijuana still North American leader in medical device manufacturing employment with 31,000+ employees (based on our 2012 surveys)
  17. 17. SUMMING IT UP…• Tourism and overall economy still weighed down by slow US economic recovery…• …but some signs of revival in both tourism sector…• …and manufacturing industries in region • Long term outlook (2012 and beyond) very positive • More outreach and education needed • Positive news about security improvements and strategic advantages need to be amplified• Likely to see more obvious recovery in 2013
  18. 18. Gracias!Contact Us at www.CrossborderBusiness.com 1-888-4XBORDER or 619-710-8120