For the average person when the name Tijuana comes up, the general rule is that ideas such as international border city, tourism destination, culinary experience and gambling casinos might come to mind, what few people are acquainted with is the fact that Tijuana also happens to be one of the largest multi-sector manufacturing destination for international groups in Latin America, and that one of the largest, oldest and most developed manufacturing industry is surely Electronics.
Because of the natural business dynamic between the north of Mexico and the United States, this last one being among the top consumer markets in the world, the border has always represented an opportunity in terms of manufacturing for lesser costs than in the US, which at the same time minimizes shipping expenditure because of the proximity, the dynamic was more formally accentuated when as a consequence of a few factors but very noticeably rutted in second world war when the USA had changed industrial focus to supply the military demands abroad, In this way it’s economy became more industrialized and generated gaps within the agricultural workforce supply, and because the Bracero (meaning arms in Spanish) program was created to import labor force from Mexico in the form of workers, mainly for the Agricultural industries in the United States, however in 1964 once the war had ended, the USA wanted to abort the program and dispatch a large sum of Mexican workers back to Mexico, so in order to minimize a troublesome impact for Mexico both governments agreed to stimulate new work opportunities along the border line providing new jobs for those thousands of Mexicans that where about to become jobless and relocated, this is when “Maquiladoras” where created, this term applies to foreign companies that where working under a special scheme that the two countries agreed upon where American groups could establish assembly or manufacturing plants importing raw materials from USA without paying taxes for the sake of transformation in Mexico at a lesser cost and that would be later fed back to the market as finished goods, this way providing jobs for the former “braceros”. The result was that in less than a year the population in Tijuana doubled and American companies arrived by the dozens, this later became the norm and companies started gathering in Tijuana from around the world a tendency that keeps growing today.
After a few decades of growth in manufacturing along the border region, it became evident that formalizing mechanisms to facilitate this natural dynamic where required and as part of a national effort that included several exporting industries, a treaty between Mexico USA and Canada was proposed in the early 90’s and signed in 1994. This was the first of its kind for Mexico and it allowed gradually the free flow of products and services between these countries, the result was the immediate growth of imports and exports between the three countries and also a structuring of schemes that would make it more efficient for manufacturers to source parts and materials, integrate them into finished goods and then deliver them to the market, so mainly what would happen in many cases is that a company in the United States or Canada would end up setting up operations in Mexico, taking advantage of cheaper highly qualified labor and general set up costs, a well designed tax scheme, the proximity to the market and of course the free flow of raw materials, supplies and services, creating a transnational block between the three economies that combined the best elements from each and ultimately generated regional wealth. This virtuous alliance helped attract the likes of electronics manufacturers from several economies and produced extraordinary economic results for Tijuana, so much so that for example before the year 2,000 Tijuana had risen to become the Television Capital of the world, producing at that time an output of over 20,000,000 television sets per year. Even after later intrinsic technological shifts within the television industries Tijuana remained world champion for over 3 decades and even today attracts television related groups, many of them coming from Asian countries.
From over 600 manufacturing groups operating in Tijuana at least 120 belong to the Electronics field, that’s 20% of the local industry and from a State wide perspective Tijuana City is home to over 63% of Baja California’s Electonics Industry and as a city at least 50% of all exports are related to the electronic fields, bare in mind that this is one of the most dynamic exporting cities along the border of Mexico.
Among the first large companies to establish manufacturing facilities in Tijuana within the electronics field, names that stand out are: Plantronics a company from California and long time collaborator of NASA specializing in communications electronic headsets, they first opened operations in Tijuana over 40 years ago, have grown several times during that time and now employ over 2000 skilled workers. Another large group arrived from Japan in 1988, SMK was founded in 1925 in Tokio and mainly manufactures wireless connectivity equipment such as control remotes, after 31 years in Tijuana they now employ over 1260 qualified workers and keep growing. Since then many international groups established operations in Tijuana, coming from USA, Canada, Europe and Asia, particularly Asian investment has been prominent historically coming from Japan and South Korea, for instance Samsung established one of it’s largest industrial centers in Latin America since 1988 with an area of 600,000 square kilometers and accumulated investment of over USD 800 million this is also one of the regional champions, other South Korean groups include Hyundai and IM a more resent investment worth over USD 90 million. From Japan companies such as Sony, Panasonic, Hitachi, Matsushita and several others have successfully ran manufacturing facilities in Tijuana City for decades.
Without doubt one of the most mature sectors which also allows it to act as a well polished cluster, regional companies in this field have access to a sophisticated and highly developed supply chain, a highly qualified talent pool and easy access to the market, just a few reasons that can show why after several decades, international electronics companies continue to choose this region as a destination for their manufacturing operations. Within the last decade groups such as Foxconn and Hisense have established successful operations in Tijuana as many more are preparing to join in and become more competitive by establishing in this region.