Sonoran Growth

Last week, I visited Horst Engineering de Mexico in Guaymas, Sonora. I hadn’t been to our maquiladora operation since last fall. Every time I return to Sonora, I’m amazed at the growth. Thankfully, the border violence that flared up in Nogales three years ago has quieted down. Now, the border (which I haven’t seen three years), is getting major infrastructure investment in preparation for even more activity.

We have seen positive quoting activity for precision machining in our core aerospace and industrial market bases. The aerospace, oil & gas, power generation, heavy truck, construction, and automotive sectors are all contributing to stronger manufacturing activity in Mexico. Our team is poised to capitalize on these opportunities. There is a lot of interest in manufacturing in Mexico right now. Southern Sonora, where we are located, is a safe working environment with a good base of skilled engineering and manufacturing workers. We work closely with The Offshore Group and their Sonoran operation, Maquilas Tetakawi.

I’m no expert on the larger economic outlook for Sonora or Mexico, but there are positive signs that the manufacturing slump is over. We haven’t seen the surge in orders that some suppliers have gotten, but we also didn’t suffer as much during the downturn. The automotive sector is a huge driver for Sonora’s economy with a major Ford plant in Hermosillo and many suppliers are also located there to support the major OEM customer. Some of these automotive shops are going gangbusters, but just three years ago, many of them were on the brink.

Guaymas is also developing a deep water port to handle the large cargo ships that clog the port of Long Beach in California. The vision is that the city would become a major hub of international shipping activity for North America. A Guaymas alternative requires better roads and railroads. That infrastructure is being upgraded throughout the state so that the south to north corridor through Sonora and Arizona becomes an even greater pipeline of commerce.

Even the little village of San Carlos that is adjacent to Guaymas is getting a slow by steady overhaul. San Carlos is where many expatriates and retirees live. It also has a tourist economy for driven by both Mexicans and foreigners. However, the recession and uptick in Mexican drug related violence hurt tourism badly. Also, Hurricane Henriette did a lot of damage in 2007 that is still being repaired.

Despite the seeming lack of foot traffic in San Carlos establishments, there were several new restaurants, new gas stations, new convenience stores, a larger supermarket, and lots of fresh asphalt. It is an election year in Sonora, so uncertainties remain about future development, but apparently some investors are deploying the “build it and they will come” strategy. I wish that there was a stronger environmental focus. Recycling is still minimal and the there is a lot of trash to deal with.

I was able to get out for a couple of early morning runs, and I was once again disappointed by all of the litter. Easter Week is a big party week in San Carlos, and it just passed. It is like their “spring break,” and loads of youth converge on the sleepy village. Broken bottles and garbage remained on the roads, tangled in the cactus, and lodged in every conceivable place. San Carlos and Guaymas are a terrible place to ride a bicycle. You would get a lot of tire punctures from all of that glass in the roads.

It really is a shame that there is such a lack of respect for the physical environment because there is a lot of nature to love in Sonora. My recent trips have been all business, but in the past I visited Nacapule Canyon, and even in the bush, there was a lot of garbage. There was no hint of Earth Day plans when I visited last week. For the sake of the environment, let’s hope that the situation improves.

My trip was short, and my flight back to Phoenix was on a Bombardier C900, so it was even quicker than the usual prop plane. I was glad to see progress at our operation and at the other companies that choose to do business in Sonora.

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