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ED Now Feature: Economic Development on the Border(s)
Eli Dile   on Monday, June 18, 2018 at 9:02:00 am

By Eli Dile

Regional economic development recognizes that commerce does not adhere to political boundaries. More and more, economic development organizations are bringing together competing cities, counties, and states, recognizing the strength of the region is greater than any one jurisdiction. For EDOs along the more than 7,000 miles of border with Canada and Mexico, those partnerships sometimes span national boundaries.

U.S. trade with NAFTA partners totaled $1.2 trillion in 2014. Border communities especially have reaped the benefits of free trade, with the economies on either side of border towns now highly integrated. That’s why some communities are taking regionalism to the next level, working to break down barriers to North American trade.

Over the falls

Each year, millions of visitors flock to Niagara Falls to take in one of North America’s greatest natural wonders. And every day, thousands of commuters and truckloads of goods are carried over the Rainbow, Peace, Whirlpool, and Lewiston-Queenston bridges linking Upstate New York and Southern Ontario.

“We want the separation between Canada and the U.S. to just be the river,” said Dottie Gallagher-Cohen, president and CEO of the Buffalo Niagara Partnership. “We don’t want it to feel like a border. Everything we do we try to increase the flow of goods and people to both sides.”

Forty percent of the Buffalo, N.Y.-based chamber’s members have customers or supply chain relationships in Canada. That’s why five years ago, the chamber founded the CanAm Council, a private-sector advisory group committed to strengthening the economic linkages on both sides of the Niagara River. However, tangible results did not immediately materialize.

“When events were on the U.S. side of border, we had a lot of people from the U.S. show up, and when we held them on the Canadian side, we had a lot of Canadians show up,” said Gallagher-Cohen. “We were frustrated we couldn’t get equal parts Canadian and American business people together.”

So in 2015, the Buffalo Niagara Partnership signed an agreement with the Greater Niagara Chamber and the Hamilton Chamber in southern Ontario. Now, a business that joins any organization automatically become a member of all three.

“We’ve seen a much greater level of participation on both sides of the border,” Gallagher-Cohen said, and the arrangement was just extended for three more years. “This notion of reciprocal membership was something that was considered low-risk because the money we would make by a Canadian company joining us outright was de minimis.”

Each chamber holds events designed to draw participants over the border to explore business development opportunities. The CanAm Council also facilitates information-sharing and issues joint letters on policy priorities. For these types of partnerships to work, it’s all about building relationships, according to Gallagher-Cohen.

“All of this work comes down to people. There’s no substitute for shoe leather,” she said. Another happy coincidence that helped forge this partnership was the fact that all three chamber leaders took their jobs around the same time, so everyone was starting with a blank slate.

Three states, two countries, one region

On the opposite end of the United States sits the Bordeplex Alliance, a tri-partite regional economic development group centered on El Paso, Texas, Las Cruces, New Mexico, and Ciudad Juárez, Chihuahua. The alliance brands its region as the gateway of trade in North America, and draws on strong manufacturing and logistics sectors. The group formed out of a recognition it was in the best interest of all parties to work together to guide growth. For every four jobs created in Ciudad Juárez, at least one job is created in El Paso.

“Our economy in this region is well integrated, and despite the international and state boundaries, we recognize a very fluid and dynamic interchange of commerce,” said Jon Barela, the alliance’s CEO.

The free flow of commerce enabled by NAFTA is a key selling point for the Borderplex region. Companies locate there to take advantage of Juárez’s network of maquiladoras (factories that import industrial components and raw materials duty-free and employ cheap labor to export finished products). Ease of trade is further bolstered by a foreign trade zone and ample industrial-zoned property.

The Borderplex Alliance acts as the one-stop shop for businesses considering investing in any of the three geographies. The alliance also serves as a convener for workforce policy and promotes available real estate. Another valuable service for a bifurcated region is public finance coordination, reducing the confusion for companies navigating three different locations with three different tax codes and incentives policies.

 

“All the government entities have made the process for applying for public incentives easier and quicker,” Barela noted.

Funding and board representation is handled proportionally based on population, and the alliance has an office in each city. Instrumental in guiding this partnership is a strategic plan written collaboratively by all three parties called Borderplex 2020 (PDF). Eight private-sector-led task forces, comprised of members from all three constituencies, help execute that vision, working collaboratively on workforce, infrastructure, higher education, and other issues.

The reputation for violence along the Rio Grande is one the Borderplex Alliance is particularly engaged in dispelling. Barela is quick to tout crime statistics that show El Paso and Juárez – now that the Mexican drug war has waned – as comparatively safe to U.S. cities of comparable size. Another tool to quash that perception is data showcasing the region’s economic might. Taken together, the Borderplex region is the seventh-largest manufacturing hub in North America.

Speaking of the reputation for violence, “This false narrative about our region may make for cheap political points for people who have never been here, but the facts and the data certainly state the reality of who we are,” Barela said. “Unfortunately, that perception manifests itself into unfriendly policies in Washington. Fortunately, many of those policies have been defeated or put on hold.”

The border crossing between El Paso, Texas and Ciudad Juárez, Chihuahua

The region’s embrace of trade is perhaps best manifested in the Bi-National Industrial Park, two large industrial sites on either side of the border. The Santa Teresa Industrial Park in New Mexico abuts the San Jeronimo Industrial Park in Chihuahua (which boasts a Foxconn facility), with adjacent customs services on both sides.

“While we work together, there’s a sense of friendly competition in the region, since we have varying state incentives and tax structures,” Barela noted. “That dynamic, along with our demographics, we feel makes our region a compelling place to do business.”

That competition was evidenced by multiple proposals for Amazon’s HQ2, but one of those proposals offered a bi-national site in New Mexico and Chihuahua. Admittedly a long-shot project, the region has in fact pledged to build a master-planned city that would span New Mexico and Chihuahua. The governors of both states signed an agreement in 2013 to design a 70,000-acre community dubbed Los Santos that would encompass the existing border crossing.

NAFTA anxieties

Free trade, of course, has its share of critics. In 2017, the U.S. trade deficit with Mexico was $64 billion and the trade deficit in goods with Canada was $17.5 billion. Globalization creates winners and losers, and what has been good for border communities often has come at the expense of others, particularly in the U.S. industrial Midwest. The steel and aluminum tariffs levied by the Trump administration earlier this month is a blunt tool to correct these imbalances, and they have already been met with retaliatory tariffs from our northern and southern neighbors. Now, EDOs are pushing back against protectionist policies and advocating for an economic détente.

Two weeks ago, the Buffalo Niagara Partnership held a joint press conference with its partners at the Hamilton Chamber of Commerce to speak out against the metals tariffs. Hamilton is the center of the Canadian steel industry, and many Upstate New York manufacturers rely on Ontario-made steel. The tariffs are also likely to affect the region’s automaking industry – a Buffalo-based Ford stamping plant supplies parts to a Ford assembly plant in Oakville, Ontario.

The Borderplex Alliance routinely testifies before Congress and the U.S. Trade Representative, and the organization is upping its advocacy efforts. Though the Borderplex economy continues to grow, Barela noted that about a half-dozen large-scale projects have been put on hold due the uncertainties surrounding NAFTA.

“I have great concern that this robust recovery and the essentially full employment we are experiencing could be reversed by a trade war,” Barela said. “Mexico is an economic ally of the United States, not a foe, as it has been characterized by some in Washington.”

Whatever curve balls get thrown by Washington, organizations thinking globally and finding ways to cooperate with trading partners will be far better positioned to overcome trade fights, whether they amount to skirmishes or all-out war.

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