A prototypical border economy plans to transform itself into a hub for U.S.-Mexico e-commerce.
The Rio Grande cuts a pass through the mountains, creating a corridor that gives El Paso its name and that in horse-and-train days made U.S.-Mexico trade easier. Today, the region encompassing El Paso (Texas), Ciudad Juarez (Mexico), and Las Cruces (New Mexico) boasts the largest population along the U.S.-Mexico border, with more than 2 million people, and is home to a vibrant maquiladora industry.
But El Paso is thinking beyond manufacturing plants and warehouses. The new millennium has spawned a virtual business world, where commerce increasingly takes place via the Internet. And the prototypical border city is vying to position itself as a hub in the international e-commerce explosion.
Mexican President Vicente Fox has vowed to bring Mexico into the 21st century through his e.Mexico program, which will connect the nation to the Internet via 9,500 Internet-based communication centers. The program includes governmental and educational components as well as an e-commerce segment designed to wire Mexico for trade, beginning with the United States and expanding to Latin America and beyond.
On June 17, the Mexican government announced that the facilitator for the e-commerce project is to be El Paso–based e.holguingroup, a company that has developed three-dimensional graphics to promote ease of use on the Internet. After its launch, the e.Mexico site will re-create a traditional Mexican plaza, with kiosks, fountains, and doors leading to each of Mexico’s 32 states. Inside the doors, users can gain access to the goods and services produced in that state.
“Our interface could make a major difference in allowing people to go to a touch-sensitive screen, get what they want … and make a smooth transition without having to worry about computer ease and Internet ease,” says CEO Hector Holguin. “We feel we can make a major impact there.”
This so-called “e.Mexico platform” is designed to transcend what’s currently found on the Internet – written words, limited graphics, and short multimedia clips – to become what Mr. Holguin describes as an art form for advanced bilingual communications. He feels this is an innovative, high-tech approach to create a system within the comfort zone of the Mexican citizenry, which has only a 3 percent computer and Internet literacy rate.
Major firms with cross-border interests will be featured on the e.Mexico platform, organized to offer a cohesive array of bilingual services and e-services. The e.holguingroup will establish a rental and marketing fee for each tenant and expects to receive a fee or commission from the transactions that occur on the platform.
But the larger goal, Mr. Holguin says, is to develop a seamless network of e-commerce along the entire border that eventually will spread throughout Mexico and key U.S. cities. “If we can show both presidents a program that can make a difference, and the benefits can create multiples of wealth along the border, I think they’ll be very supportive of it,” Mr. Holguin says.
The e.Mexico platform stands as the centerpiece of El Paso’s effort to transform itself from a manufacturing and transportation economy to a high-tech hub. Ruben Guerra, chairman of the Greater El Paso Chamber of Commerce and an El Paso investment adviser, says the city wants to raise its standard of living and increase its per capita income, which, at about $17,000, is among the lowest in the nation for a city of its size. “The maquiladoras have brought a lot of activity to the area, but what they have not brought us are the higher-tech industries and the types of jobs necessary to raise the standard of living,” Mr. Guerra says.
The local work force has plenty of first- and second-generation Mexican Americans who often lack the education needed to hold or create high-paying jobs. Even when young El Pasoans graduate from the University of Texas at El Paso (UTEP) with technology-related degrees, they often have to leave the area because there aren’t many high-paying technology jobs. “It takes an educated work force and a university system that can put out the engineers, scientists, and technicians needed to work,” declares Mr. Guerra. “They’re turning out a good crop of engineers at UTEP, but we need a way to keep them here. … That’s one of the reasons behind the technology initiatives.”
Rather than trying to lure high-tech industries away from other cities, El Paso expects to build on what it has – the maquiladora industry, for example – and develop technology based on the area’s needs. The chamber has set up an investment network to raise capital for entrepreneurs with technology-related ideas. The network has more than $4 million in commitments from individual investors and nontraditional lenders, according to Mr. Guerra.
“From a regional economic perspective, what we want to accomplish is to build intellectual capital that will lead us to wealth formation,” says Nathan Christian, chairman of the chamber’s strategic planning council and regional president for border banking at Wells Fargo Bank. “And we can only do that if we can export goods and services of higher value to the rest of the world.”
Henry Ingle, a UTEP professor and associate vice-president for technical planning and distance learning, stresses that El Paso’s vision for a high-tech future will go nowhere unless the city has an educated work force. The Internet becomes truly useful, he says, when it’s used to enhance entrepreneurs’ analytical skills and abilities. Right now, about 11 percent of El Pasoans have college degrees, compared with a national figure of 26 percent, according to the Census Bureau. To make El Paso into a hub for e-commerce, Mr. Ingle says, the next generation needs education – a challenge faced by much of the U.S. Hispanic community.
To solve the learning gap, UTEP has assumed a frontline role in the e-commerce initiative. Mr. Holguin plans to house the e.Mexico platform’s high-tech complex in an existing building at UTEP. The complex will try to tap into the best talent and resources of universities on both sides of the border – UTEP, New Mexico State University in Las Cruces, and Mexico’s Monterrey Technical Institute, which has a branch in Ciudad Juarez.
The UTEP facility was built in 1997 with “all revolutionary and evolutionary trends of the Internet being considered in its design,” according to the e.holguingroup’s proposal. The building includes six large auditoriums wired for video conferencing and distance learning, as well as advanced-technology classrooms with a network of more than 300 computers. Mr. Holguin believes the complex will expand via Internet links to other technology centers to cover the entire border region.
Meanwhile, the Greater El Paso Chamber of Commerce has started turning one floor of its offices into a 5,000-square-foot technology center to provide technical support for educational institutions, business-to-business commerce, and electronic start-up businesses. When completed, the $10 million facility will provide everything from training programs for high school seniors to college-level computer classes and technical help for private companies, says Wes Jurey, executive director of the chamber. Ron Munden, a principal of the El Paso Venture Group, expects the technology center to serve as a model for other technology centers along the border. The e.holguingroup plans to sign agreements with UTEP, the Greater El Paso Chamber of Commerce, and the El Paso Hispanic Chamber of Commerce to launch the “virtual expansion” to other educational institutions and business groups along the border. Virtual expansion will deliver the equivalent of a billion-dollar technology complex, Mr. Holguin believes, and border crossings will become e-commerce gateways to form a major Internet exchange.
Michael Acosta, associate director at the Texas Centers for Border Economic Development on the UTEP campus, is working to establish a high-tech business incubator in El Paso that would provide opportunities for young professionals, existing businesses, or high-tech start-ups to develop their ideas. He hopes the incubator will tie in with research at UTEP, New Mexico State, and Mexican universities. UTEP, in particular, has strong telecommunications, computer engineering, and computer science programs.
Besides UTEP, the human-capital push will come from the e.Mexico platform itself. Under a program Mr. Holguin calls “Two Nations, One Cubicle,” binational teams will work on both sides of the border, solving business problems as they train. The program calls for 50 corporate sponsors that will fund a three-year program for 20 workers (10 from each country) at a cost of $100,000 per year per worker. Each corporate sponsor is to put up $2 million each year for three years, for a $6 million total investment, and in return will have a team of 20 professionals ready to work in the international marketplace. With 50 such sponsors, the entire program would create a labor pool of 1,000 skilled high-tech specialists.
Mr. Holguin predicts that the program will address the shortage of technical workers in the area and will create highly skilled teams whose work will more than compensate the sponsors for their initial investments. Moreover, he says, the 1,000 high-tech workers would have the impact of 10,000 maquiladora workers on the local economy. Salaries on both sides of the border would be equal, giving sponsors a “single billable [work] force,” which would help raise wages in Mexico.
“The border needs to be seamless, and it’s not going to be as long as there are major economic differences,” Mr. Holguin says. “If we do it in a balanced way, then the Mexicans will stay in Mexico because they want to stay in their homeland. They want to stay with their families.”
Despite the challenges, proponents of El Paso’s efforts to develop a high-tech industry say the city is perfectly situated to implement President Fox’s e.Mexico program and to create a high-tech industry along the U.S.-Mexico border. They point to El Paso’s location at the midway point along the border, and the fact that it’s equidistant between Los Angeles and Houston. They also point to the fact that the El Paso–Ciudad Juarez area has a high concentration of fiber-optic lines and is located at the convergence of two countries and three states.
Mr. Guerra says economic studies predict that the border region will have a surplus of labor over the next 20 to 30 years, at a time when other metropolitan areas will suffer labor shortages. And Mr. Holguin adds that no one understands the border market, with its bilingual and bicultural subtleties, better than El Pasoans.
“We know the border, and the border is different,” he states. “It’s not the United States and it’s not Mexico. I can wear my American hat one day, and transform and put on my Mexican hat the next day, and it’s very natural.”
To make his vision a reality, Mr. Holguin has recruited a network of strategic partners from around the country, including Hewlett-Packard, Cisco Systems, Wells Fargo Bank, and Hispanic Business Inc.
For now, Mr. Holguin says his company has gained what he calls “first-mover advantage” over competitors (particularly Microsoft) to implement e.Mexico. But maintaining that advantage means acting quickly and delivering the potential benefits on time. He says that being the first in a given market and establishing and maintaining leadership often brings about partnerships with major companies willing to settle for a supportive rather than competitive role. Such a scenario would be good for e.holguingroup, El Paso, and the entire U.S.-Mexico border, whose future may depend on the success of El Paso’s model for future high-tech initiatives.
Net Across the River
The following Internet sites relate to El Paso’s initiative to foster high-tech commerce on both sides of the Rio Grande.
Greater El Paso Chamber of Commerce (www.elpaso.org): Links to city, county, and nonprofit agencies as well as other local resources.
Mexico Online(www.mexonline.com/mexagncy.htm): Links to major offices in the Mexican government, as well as development banks, chambers of commerce, and state trade offices.
Texas Centers for Border Economic Development (www.utep.edu/txcr): Provides information about the center located on the University of Texas El Paso campus.