These are trying times for American business, and as an extension, the Rio Grande Valley. Even before safety precautions brought on by the COVID-19 pandemic forced many businesses to close, many manufacturers were having trouble keeping their production lines running.
As companies and analysts review the effects of the pandemic and look to mitigate or prevent a reoccurrence of the hardships they’ve experienced this year, old doors, and new opportunities, could open up for segments of the border economy.
The pandemic actually gave some struggling business a way to stay alive. Even before COVID-19 made its mark on the U.S economy, many automakers and other domestic companies were feeling a pinch brought on by recent global trade wars. Increased tariffs on foreign steel, aluminum, certain woods and other products had cut off supplies or made prices prohibitively high on raw materials or components. Several factories already were scaling back production and laying off workers.
The current health crisis simply pushed some of these businesses that already were hurting under reduced supplies to close entirely rather than try to run as partial capacity, perhaps at a loss. As the global pandemic cut some of those supply lines entirely, the option of shuttering plants entirely became more rational.
Economists expect that as the economy reopens, many companies will rethink the idea of global supply lines and move toward a more regional approach.
Few areas are better equipped to respond to such rethinking than the U.S.-Mexican border.
Before the mass expansion toward China, India and southeast Asia, much of the component production and product assembly occurred in maquiladora plants all along our southern border. Plants in Matamoros, Reynosa and other Mexican cities build and supplied U.S. companies with the parts they needed to build their final products, which ranged from children’s toys to automobiles.
It shouldn’t take much to ramp up production at Mexican maquiladoras that already exist.
Raudel Garza, CEO of the Harlingen Economic Development Corp., said at a recent board meeting that several Fortune 100 companies participating in a recent virtual conference talked about moving overseas assets closer to home in order to suffer fewer disruptions in their supply chains. He noted that provisions in the new U.S.-Mexico-Canada trade agreement offer incentives for companies to utilize North American resources to a greater extent.
The trade war with China, which has raised the price and reduced the supply of steel and other vital metals, could bring other benefits to the Valley. An Arkansas company in 2018 began the process to acquire land and seek environmental and production permits to build metallurgical operations near the Port of Brownsville. Promoting such a facility as an option to the vulnerable supply of foreign steel could help make such a major job-producer a reality.
Certainly, no one would ever want a major health crisis like the COVID-19 pandemic. But if it opens opportunities in other areas, those avenues surely are worth following.