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NEWS
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 MD Helicopters invests US$15 million in Apodaca
Monterrey, Mexico - The American company MD Helicopters will land at Apodaca with a new. plant, where US$15 million will be invested to produce helicopters fuselages to be exported to several countries.
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Automobiles production up 52%
Mexico City - Vehicles production in Mexico went up 51,8% in June, while exports recovered by 64.9% when compared to even month in 2005, declared today Mexican Automotive Industry Association (Asociación Mexicana de la Industria Automotriz - AMIA).
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14 workshops in machined items park
Chihuahua - The first industrial park for companies working on machined items in Chihuahua will be built in Ciudad Juarez, with the participation of around 14 small workshops that provide support to maquiladora industry.
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Windsor will open plant in Merida
In a world dominated by Chinese motorcycles, the Mexican company Windsor is taking a shot in competing against the Asian giant with the opening of a plant in Merida Yucatan and an export plan for the next few years to the US Southeast, Central America and South America.
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Electrolux starts construction of new plant
Governor Jose Reyes Baeza, together with several state and city officers, will participate today in the ceremony to start building Electrolux new plant to manufacture laundry products; said plant will be built in the Company's complex in Ciudad Juarez. This new plant will be located beside Electrolux's 1.8 million square feet refrigerators plant inaugurated a year ago.
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Flextronics will generate 5 thousand jobs in 3 years
Ciudad Juarez - With an investment over US$20 million, and the initial generation of 1 thousand 740 direct jobs, Flextronics, a new industrial plant, will start operations next August, and has therefore started the recruitment process.
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Investment in aircraft parts take-off
Mexico City - Foreign Direct Investment in Mexico is reaching a not very traditional sector but with a great success in foreign markets: aeronautics. In Mexico there are already more than 70 companies in the aeronautics sector that generate 10 thousand jobs and export around US$400 million every year in parts, components and structures, Eduardo Solis, Chief of Investment Promotion Unit in the Ministry of the Economy, pointed-out.
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ARTICLE OF THE WEEK
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Border Benefits from Mexican Shoppers
Part 1
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By Jesus Cañas, Roberto Coronado and Keith Phillips
Southwest Economy, Federal Reserve Bank of Dallas
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 Along the U.S.-Mexico border from Brownsville to San Diego, more than 665,000 people cross from one country to the other every day to work, study, visit family and shop. U.S. citizens travel into Mexico to find bargains, have dinner, get a haircut and go to the dentist. Mexicans venture north to buy items ranging from groceries to high-end fashions.
The Mexican shoppers are big business for U.S. cities on or near the border. Unlike retailers in most interior U.S. cities, stores in Laredo, El Paso, Nogales and other border towns are actually an export industry-in most years contributing to a U.S. trade surplus in cross-border shopping. The retail export industry provides employment for workers with low and moderate skills and helps explain why job growth in some areas along the border has been among the fastest in the nation since the 1980s.
Because cross-border shopping is so important to local economies, businesses, workers and community leaders are interested in such issues as the size of retail activity, its impact on the local economy and the factors that determine its growth. Researchers have studied the close link between the value of the peso and the ebb and flow of cross-border retailing. Another, more recent concern is the impact on retailing of more stringent border controls resulting from America's campaign against terrorism.
These topics formed the core of a January conference in San Antonio that brought together scholars and industry experts on cross-border shopping activity. It was hosted by the Federal Reserve Bank of Dallas, through its San Antonio and El Paso branches, and cosponsored by the Federal Reserve Bank of Chicago's Detroit Branch and the International Council of Shopping Centers.
The presentations shed light on the status of cross-border shopping and identified factors that may shape its future.
Cross-Border Shopping's Impact
 Most sales to Mexican nationals are in cash, making it difficult to measure cross-border shopping activity along the U.S.-Mexico border. To produce an estimate, Banco de México conducts surveys at border crossing points, asking returning individuals how much they spent in the United States or Mexico. In most years, Mexican shoppers spend more money on the U.S. side of the border than U.S. shoppers spend on the Mexican side (Chart 1).
Dallas Fed assistant economist Roberto Coronado took a different approach to measuring cross-border shopping. He used local personal income and employment to estimate the purchasing power of local residents. If an area's retail sales are larger than what local residents are spending, the difference is likely due to shopping by Mexican nationals. [1]
Coronado estimated net exported retail sales for El Paso, Laredo, McAllen and Brownsville from the late 1970s to 2001. Mexicans accounted for $2.3 billion a year in retail spending-26.4 percent of total retail trade in the four border cities and about 2 percent of Texas' overall retail sales. Laredo depended most on cross-border business, with 51 percent of its retail sales going to Mexican shoppers. McAllen followed at 36 percent, Brownsville at 26 percent and El Paso at 11 percent.
Why the large differences? Coronado suggested two reasons. First, Laredo, McAllen and Brownsville get the bulk of their nonresident retail sales from the Mexican interior, mostly shoppers from Monterrey, the country's third-largest city. Second, El Paso is the biggest of the four Texas border cities, and therefore the size of Mexican spending relative to local spending is not as large.
 Exchange-rate fluctuations can quickly make goods and services across the border either cheaper or more expensive for international shoppers. As a result, retail sales to Mexican nationals are sensitive to swings in the peso's value (Chart 2). The sensitivity, however, isn't uniform across the border cities. Coronado found that retail trade in Laredo, McAllen and Brownsville is highly affected by changes in the value of the peso, while the El Paso retail sector is not.
Suad Ghaddar, an economist with the Center for Border Economic Studies at the University of Texas-Pan American, estimated Mexican visitors' economic impact on South Texas' Rio Grande Valley at $3 billion in 2004, including both direct and indirect spending. [2] These expenditures supported more than 64,000 jobs. On the California border, Ghaddar put Mexican nationals' total impact at about $4.5 billion, supporting 67,000 jobs. Jobs tied to cross-border retail trade account for a large portion of employment in some areas-39 percent in California's Imperial County and 17 percent in Texas' Webb County, for example.
Alberta Charney, research economist with the University of Arizona's Economic and Business Research Center, concluded that direct spending by Mexican visitors to Arizona totaled $963 million in 2001. [3] With ripple effects, the economic impact rose to nearly $1.6 billion. The visitors came mostly from the adjacent Mexican state of Sonora, and 86 percent of the Mexican spending took place in the Arizona border counties of Pima, Santa Cruz, Yuma and Cochise.
In 2001, Charney conducted a yearlong survey of Mexican visitors leaving Arizona at border ports of entry in San Luis, Lukeville, Sasabe, Nogales, Naco and Douglas and international airports in Phoenix and Tucson. She reported that 72 percent of the respondents gave shopping as the primary reason for their trip, followed by work, at 14 percent, and family visits, at 8 percent. All told, 41 percent of their shopping took place in department stores and 25 percent in grocery stores.
About the Authors
Cañas and Coronado are assistant economists at the El Paso Branch and Phillips is a senior economist and policy advisor at the San Antonio Branch of the Federal Reserve Bank of Dallas.
Notes
1. "Texas Border Benefits from Retail Sales to Mexican Nationals," by Keith R. Phillips and Roberto Coronado, in The Face of Texas, Federal Reserve Bank of Dallas, October 2005.
2. "The Economic Impact of Mexican Visitors to the Lower Rio Grande Valley 2003," by Suad Ghaddar, Chad Richardson and Cynthia J. Brown, Center for Border Economic Studies, University of Texas-Pan American, Technical Report, May 2004.
3. "The Economic Impacts of Mexican Visitors to Arizona: 2001," by Alberta H. Charney and Vera K. Pavlakovich-Kochi, University of Arizona, Research Study, July 2002.
About Southwest Economy
Southwest Economy is published six times annually by the Federal Reserve Bank of Dallas. The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System.
Articles may be reprinted on the condition that the source is credited and a copy is provided to the Research Department of the Federal Reserve Bank of Dallas..
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MEXICO'S WEEKLY HEADLINES
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| » Maquiladora plants fear regulatory changes |
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| » GM announces installation of dies factory |
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| » Industrial production grows 5.7% in May |
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| » Vitro recycles 85 thousand tons of glass |
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| » Investments to the auto parts industry are urgent |
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