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Tijuana and San Diego try to move past the border

Jeff Tyler Jun 4, 2013

Tijuana and San Diego try to move past the border

Jeff Tyler Jun 4, 2013

Tijuana and San Diego are like the Romeo and Juliet of cities; they want to take their relationship to the next level, but their parents insist on separating the two with a fence.

While Congress debates the need for tighter border security, Tijuana and San Diego want to get beyond the border and work together as a combined economic powerhouse.

A bi-national Olympics has never happened in the history of the Games, and Tijuana and San Diego would like to be first to co-host across a border. “We have capabilities on both sides of the border to have an Olympics,” says Miguel Velasco, Tijuana’s secretary of economic development.

And it doesn’t end at international sporting events. More and more, Tijuana and San Diego market themselves as a tag-team package. Later this month, representatives from both cities will present a united front when they attend the big aerospace trade show in Paris.

“We’re going to make this trip together to promote our region. We are going to bring more investment and more employees on both sides of the border,” says Velasco.

Like his counterpart in San Diego, Velasco wants the two economies to nurture each other. In order to do that, he says something has to be done about the congestion at the border. “Long lines are not good for any economy. We want the people cross soon on both sides of the border. Because they want to spend money. They want to go to a job,” says Velasco.

An economic revolution

The economic relationship between San Diego and Tijuana has changed over the years. Twenty years ago, you could find drunk frat boys from San Diego at the bars along Avenida Revolución. In front, to attract tourists, there would be a sad donkey painted like a zebra.

Today, most of those bars are gone. Instead, tourists visiting now will find the remodeled Caesar’s restaurante. First opened in 1927, Caesar’s claims to be the birthplace of the Caesar’s salad. Americans come just to watch the salad get tossed the old-fashioned way, tableside.

Companies from around the world do their manufacturing in Tijuana. Industries like aerospace and electronics, not to mention the more than 50 medical device manufacturers like Medtronic. Gerardo de la Concha started Medtronic’s Tijuana operation 15 years ago. “This region is very favorable because it has the dual possibilities. You know, high-tech on the U.S. side, and then the labor opportunity on the Mexico side,” says Concha.

As you might guess, the company moved manufacturing to Tijuana to save money. And the savings are not not just on the lowest-paid factory workers. De la Concha says companies operating in Tijuana pay about a third of what it would cost to hire that same accountant or engineer in the U.S.

He says investment in Tijuana also helps the economy in Southern California. “I can say that 95 percent of my components come from the U.S. side. My supplier base is in the U.S.,” says de la Concha. An investment in Tijuana doesn’t necessarily mean a loss for the United States. “We had some examples. People coming from Ireland, moving into this region, working in the U.S. and in Mexico and spending money on both sides of the border,” says de la Concha.

He also agrees with the idea of selling San Diego and Tijuana as a united economic region. “Take the best of each side, put them together, and then compete globally,” says de la Concha.

Of course, the big roadblock preventing a closer economic relationship is the actual roadblock: the border.

“The clothes there are cheaper”

Pedestrians line-up on the Tijuana side to walk into the US. It looks like the worst line at Disneyland, times two.

I spoke with a middle-aged Mexican woman hiding from the sun under an umbrella. She had already been waiting for an hour-and-a-half. “I’m going just to buy things. The clothes there are cheaper than in Tijuana,” says Antoni Ramirez.

Kenn Morris is runs a bi-national market research firm called Crossborder Group. His surveys show 40 to 50 percent of people standing in line are U.S. citizens, dual nationals or U.S. legal residents. Many of the Mexican nationals waiting are headed to America to go shopping.

Based on his surveys, Morris says, “We’re seeing between $10 and $15 million a day just in retail expenditures, northbound.”

That’s $10 – $15 million a day from people who endured a two-hour wait. If the wait were shorter, would more people come to shop in San Diego?

Morris says the total number of people crossing in both directions in the last decade has fallen from 60 million people a year down to 40 million people. That’s about a 30 percent drop-off, partly due to longer wait times.

The logjam at the border also messes up U.S. companies that depend on just-in-time inventories. “And then you have delays with the final products being shipped to the U.S. marketplace or the ports. So those can be two hours, three hours, and even peaks of five and six hours on rare occasions. So, all of that impacts commerce. All of that raises costs. And all of that is important for a competitive region,” says Morris.

Has security grown too tight? “It’s not an issue of security. It’s an issue of infrastructure not having been funded very much for the past decade,” says Morris.

He says the answer is more lanes, more inspectors, more technology.

Transportation between the towns

Back on the U.S. side of the border, I visited Otay Mesa, the border crossing used by commercial trucks; 3,000 big-rigs cross here each day.

“Now that I work here along the border, when I hear those trucks, I hear money being made,” says Christina Luhn, executive director of the Cali-Baja Bi-National Mega-Region, which represents companies doing business along California’s border with Mexico.

She says there can be delays of a couple hours for trucks headed into Mexico. And that hurts the bottom line for everyone involved, including the independent trucker who loses money when stuck waiting. “The longer it takes you to do your business, the less business that you’re doing. So it has huge economic impacts,” says Luhn.

She says other states far from the border don’t realize how their own economies are tied to trade with Mexico, our second largest trade partner after Canada. “Every state does trade with Mexico. And so every state needs to have the ability to get their product back and forth,” says Luhn. “It’s not about jobs leaving the US. It’s about jobs being created in the US because of all the companies that are able to do business in Mexico.”

She believes it’s in the economic interests of America to improve the congestion at the border. “This is one place where we need to spend money. It’s not spending money for its own sake. It’s an investment in the United States,” says Luhn. “The border is not something to be feared, but it’s an asset. And we have to figure out how we use that asset to our advantage.”

Hosting the Olympics would turn the border into an asset. It would jumpstart investment, forcing the federal government to bulk-up on the border to get ready for the games.

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