Logistically Speaking: Location, Location and Logistics

As Brownsville emerges as a growing borderplex, logistics are proving just as important as location.

The southernmost city in the continental United States is not, as you might think, Miami, but in fact, Brownsville, Texas, which is also the only U.S. city both on the Mexican border and on the Gulf of Mexico. Brownsville, and its sister city, Matamoros, Mexico, make up a maquiladora community, a “borderplex” if you will, of 1.4 million people whose secret weapon against a sputtering economy is logistics.

Of course, if you follow the international geopolitical news, the “elephant in the room” in any conversation about the Brownsville/Matamoros borderplex is gang crime on the Mexican side, which Rodolfo Saucedo, director of CODEM (Matamoros Economic Development Committee), admits is an issue when it comes to recruiting companies to locate their facilities in the area. Saucedo’s solution, though, is a simple one. He encourages prospects to talk to any of the 150 or so multinational companies (mostly in the automotive industry) that are situated in Matamoros, and they’ll find out that products are being made and shipped on time, employees are not being hurt or targeted by the gangs, and the necessary technical and engineering skills are available. In fact, Saucedo says, Matamoros has the lowest turnover rate in Mexico, at 12% per year.

And, as I indicated, logistics is the weapon that could turn out to be the peacemaker. It all starts at the Port of Brownsville, known as “the front door to Latin America” because of its strategic location, as well as one of the two points (along with Port Manatee, Florida) along M-10, the Marine Highway connecting the Gulf of Mexico from west to east. In 2011, the Port of Brownsville had a record year for cargo tonnage, at over 5.4 million tons of inbound and outbound cargo. And just last month, the port was awarded $12 million by the federal government’s TIGER IV program (Transportation Investment Generating Economic Recovery) to build a new cargo dock, as well as upgraded rail access.

As part of a recent press tour to Brownsville, I had the opportunity to not only see a part of the country I’d never been to before, but a region that was making the most of its somewhat limited opportunities to forge a reputation as an emerging player in the global supply chain. Each of the many companies we met had a unique reason for being in Brownsville.

Take Keppel AmFELS, for instance, the largest private employer in the region, with 2,400 employees. AmFELS builds, repairs and refurbishes offshore oil rigs and other mobile platforms, and they ply their trade in what’s said to be the largest full-service yard on the Gulf Coast. With a “near-market, near-customer” strategy, AmFELS works on the rigs at the Port of Brownsville, and then either tugs the finished platforms to customer site (if it’s in the Gulf of Mexico), or via other shipping methods if the site is overseas.

So given its location on the Gulf Coast, Brownsville is a natural choice for a company like AmFELS (whose parent company is based in Singapore), but it’s not strictly a matter of geography. According to G.S. Tan, AmFELS’ president and CEO, “South Texas is quite different from other areas. Employees here have a sense of belonging to the company.”

That sentiment is echoed by Nik Shah, CEO of All Star Metals, one of only four companies that have gotten approval from U.S. Maritime Administration (MARAD) as a ship recycler. “Eighty percent of all ship recycling in the U.S. happens in Brownsville,” Shah explains, for a number of reasons: good weather, a right-to-work labor force, proximity to the port, as well as access to steel (Brownsville is one of the top three U.S. ports for steel imports and exports). “Brownsville is the only place where we can do ship recycling properly,” Shah states.

Carling Technologies, a Connecticut-based manufacturer of electrical switches and circuit breakers, has been in the area for nearly 40 years, with manufacturing and logistics located in Brownsville and assembly located in Mexico. Carling came to Brownsville back in the 1970s because of the maquiladora concept, as well as the fact that the cost of living in Brownsville is about as low as anywhere in the United States, according to Francisco Miranda, plant and DC manager. The location is excellent for logistics, Miranda explains, thanks to easy access to the Gulf port, the airport and cross-border trucking.

In short, Brownsville is staking its claim to the new economy based on its cost-effective logistics and manufacturing capabilities. As nearshoring gains in popularity, with more companies bringing work back to the Americas, Brownsville finds itself in a good location.

Follow me on Twitter @supplychaindave.

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