Sunday, June 14, 2009

Foxconn & Hon Hai Precision Industry : China's Largest Exporter Opening Dell Assembly Plant in Mexico on the Border of the United States and Mexico

The future is always in the making and it behooves us to look carefully at international economic developments, especially when they take place on our own borders.

What company known to you is the manufacturer of, among other things, iPods, iPhones, Macbooks, Playstations, Wii's, Xbox 360s, Nokia and Motorola cell phones, Kindles, and motherboards for Intel, Dell and HP?

You've heard of them, right? Foxconn is China's biggest exporter, where it employs about a half a million people, and it is one of the world's largest OEM manufacturers of electronics and computers. As we read at Philip Elmer-DeWitt's Fortune Apple 2.0 blog:
"Although it keeps a relatively low profile in the United States, Foxconn is one of the world’s largest manufacturers of electronics and computer components. It built many of the first generation iPhones, as well as MacBook Pros, MacBook Airs, iPod nanos and Mac Minis.

It also makes motherboards for Intel (INTC), Dell (DEL) and HP (HPQ), Playstations for Sony (SNE), Wii’s for Nintendo, Xbox 360s for Microsoft (MSFT), cell phones for Motorola (MOT) and Kindles for Amazon (AMZN).

Foxconn employs nearly half a million people and does most of its manufacturing in mainland China. It was China’s largest exporter in 2007."

Foxconn is the trade name of Taiwan-based and Hong Kong-centered Hon Hai Precision Industry Co. Ltd., a company founded by and still run by CEO Terry Guo (Terry Tai-Ming Gou, traditional Chinese: 郭台銘; pinyin: Guō Táimíng). The 2008 Fortune Global 500 ranked Hon Hai - with $51.828 billion in revenues - 132nd among all the firms of the world and 8th among electronics concerns. We became interested in this conglomerate because it is the OEM manufacturer of an ALDI camera that we own (see PremierImage.com.tw).

Foxconn is involved in an interesting and significant story just breaking on the border between the United States and Mexico.

It all began with golf.

Phyllis Eileen Banks writes about the still unincorporated community of Santa Teresa (near El Paso, Texas) in New Mexico as follows:
"According to Roadside History of New Mexico by Francis L. and Roberta B. Fugate, "In the early 1970s, professional golfer Lee Trevino was one of the principal backers in the design and construction of a golf course and country club known as Santa Teresa." It was originally planned with luxury homes and an airport for fly-in golfers. Later Trevino withdrew but growth continued."
Since then, Santa Teresa has been made a Port of Entry to Mexico, but you are going to have trouble finding that at Google Maps or Google Earth. The development is perhaps too new.

As written by Jose Z. Garcia of New Mexico State University in The Sunland Park-Santa Teresa Project: An Interview With Jerry Pacheco at the blog La Politica: New Mexico!, the area is booming:
"The South Mesilla Valley is today, arguably, the biggest economic development project in New Mexico history, driven by two major factors: first, is the $5 billion expansion of El Paso's Ft. Bliss, which is causing West El Paso to spill over into New Mexico between El Paso and Anthony, and, to a lesser extent into the Chaparral area. The second is the growth of Cd. Juarez on the West Side, between Anapra and the Santa Teresa border crossing, which promises to create all kinds of business synergies on the U.S. side."
In his analysis of developments, Garcia refers to:
"Jerry Pacheco, executive director of the International Business Accelerator, a consulting firm for businesses considering locating in the Southern Dona Ana County region.... [who] points to three inter-related projects, begun within the past year, that are going to transform the Santa Teresa-Sunland Park region profoundly."
The first of these is Foxconn.

Garcia writes:
"First, Foxconn, the largest manufacturer of electronic and computer equipment in the world, has just completed phase one of its assembly plant, located on the Mexican side of the border just yards away from the border and from the crossing at San Jeronimo-Santa Teresa. Foxconn is assembling desktop computers and servers for Dell at this facility--the largest maquila plant in Mexico....

By the end of the year there should be 5000 workers and depending on the state of the economy, thousands more to come, up to 30,000 workers according to current plans. With that many workers, West Juarez is assuredly going to go through a boom in low-cost housing, commercial development, and urban sprawl. On the U.S. side there will be a reciprocal demand for more upscale housing for managers, trucking facilities for the increased traffic at the port and more businesses serving the Juarez maquila sector, like Expeditors.

A key strategic reason for Foxconn to locate at San Jeronimo was the availability of ample space on both sides, very near the border crossing, and the presence of a user-friendly international border crossing. Expeditors International, a large logistic services company, has constructed a facility on the U.S. side of the fence, across from Foxconn, from which they will supply Foxconn with the inventory of parts needed to assemble Dell computers...."

Read the rest of Garcia's posting here
.

We find this business confluence of China, Mexico and the United States to be significant because it shows how the traditional political and commercial borders have become increasingly interconnected in our globalized modern world.

The ISandIS Network

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