AP: Tijuana, TV capital of world, Aug 18

Harry M. Cleaver hmcleave at mundo.eco.utexas.edu
Tue Aug 29 10:51:18 MDT 1995


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Date: Mon, 28 Aug 1995 00:19:03 -0400
From: Mauricio Banda <al155942 at al155942>
To: Multiple Recipients of List Mexico2000 <mexico2000 at mep-d.org>
Subject: (Bloomberg) Cemex makes information available on Internet

Infotech old weeks news from Nando.net
source   http://www.nando.net/


 Tijuana has become TV manufacturing capital of world

      (c) 1995 Copyright the News & Observer Publishing Co.
      (c) 1995 Associated Press

   TIJUANA, Mexico (Jul 18, 1995 - 08:18 EDT) -- The whirring, clicking
   and stamping that fills Samsung Mexicana's giant blue and gray plant
   has helped to make this border city the TV manufacturing capital of
   the world.

   Samsung is just the tip of the iceberg. All the biggies of TV
   manufacturing -- Sony, Matsushita, Sanyo, Panasonic, Hitachi -- have
   built plants here to take advantage of Mexico's cheaper costs.

   Collectively, they produce some six million televisions a year, mostly
   for sale in Latin America and the United States, where competition is
   very stiff and having production plants in Mexico could make a big
   difference.

   The competitiveness in the industry was underscored by Zenith
   Electronics Corp.'s decision Monday to sell control of the company to
   South Korea's LG Group in a deal worth $350 million.

   Zenith, the last U.S.-owned television maker, was weakened financially
   in the battle with its rivals. It had moved much of its assembly
   operations in 1993 from Springfield, Mo., to another part of Mexico --
   Reynosa.

   But Tijuana is the magnet. Following closely behind the TV
   manufacturers are Korean, Japanese and Taiwanese suppliers, who are
   being forced to relocate here to prevent local companies from swiping
   their business.

   The flurry of activity has rained millions of investment dollars and
   thousands of jobs on Tijuana, where industrial land prices have shot
   past those of San Diego.

   "The sweatshop economy has evolved," said Jose Galicot, a prominent
   Tijuana developer. "Tijuana needs a future and the future is becoming
   industrialized."

   For several decades now, Tijuana's low-cost labor and easy access to
   the United States and Pacific Ocean have lured maquiladoras --
   foreign-owned manufacturers that make everything from shoes to pens.

   That trend has been fueled by the North American Free Trade Agreement,
   which gives U.S. tariff breaks to items made locally, and by the weak
   peso and strong Asian currencies.

   Among the recent TV manufacturing deals:

   -- In May, Matsushita Television Co. moved its North American
   headquarters from Illinois to Otay Mesa, a San Diego border district.
   The company plans to add two more plants in Tijuana.

   -- Samsung is building a $500 million plant here, its second in
   Tijuana, which will eventually create 4,000 jobs.

   -- JVC is constructing a $36 million plant to produce television
   chassis. It will employ 600. JVC's administrative offices will be in
   San Diego.

   Sony led the charge when it opened a plant in San Diego in 1972 and
   later built one in Tijuana. It has steadily made the San Diego-Tijuana
   region its TV manufacturing base for the Americas.

   As Sony has grown -- it now employs about 6,000 people between the two
   cities and has pumped about $550 million into the region -- so has the
   entire industry.

   "There is a kind of snowball effect once you begin to have the
   infrastructure," said Steve Burke, Sony's vice president for business
   planning and general affairs.

   From the foam to the plastic casing to the molds for the plastic
   casing, all the elements to build a TV set are now home grown.

   "Critical mass has been reached," said Joe Smith, a real estate broker
   with John Burnham & Co. "All the guys are now in the same
   neighborhood. You don't have to send out to Los Angeles or Malaysia to
   gets goods and services."

   Samsung's second plant, which is under construction, is a sign of the
   industry's evolution here. For the first time, TVs will be built from
   top to bottom in Mexico, including the high-skill, high-wage
   picture-tube construction.

   To lure Samsung away from San Diego and the Mexican cities of Sonora
   and Monterrey, Tijuana guaranteed Samsung one million gallons of water
   a day to clean and cool the glass to make the tubes.

   The promise is bold for a city whose anemic water delivery network has
   failed in the past and still leaves 15 percent of the population
   without drinking water.

   Some wonder whether the TV manufacturing juggernaut has been achieved
   through reckless expansion. Tijuana, whose population is somewhere
   between one million and two million, is growing at a rate of 4.8
   percent -- almost double that of Mexico.

   Many Tijuana roads are unpaved or too narrow and rutted to handle the
   traffic, and street cleaning is a recent concept.

   Yet manufacturers remain drawn to Tijuana's cheap and educated labor
   pool and its enviable location.

   Real estate broker Smith, who increasingly spends his days showcasing
   Tijuana properties to Asian manufacturers, recalls a Japanese supplier
   who told him that for the cost of one Japanese worker, he could hire
   four U.S. workers or 20 Mexican workers.

   "Tijuana is going to grow fast, but the cost of growing without
   infrastructure is going to be paid in quality of life," Mayor Hector
   Osuna Jaime said.






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