The state of Durango has been transformed during the past five years and looks set to play an important role in the Mexican economy in the future.
Governor Ismael Hernández Deras – who took office in September 2004 for a six-year term – has placed great emphasis on improving the infrastructure of this formerly isolated state and in attracting new investment. The city of Durango, with a population of 525,000 out of a total of 1.5 million for the entire state, has changed dramatically during the past five years: a number of the historic, colonial buildings in the centre have been remodelled, and foreign tourists have discovered its appeal.
At the heart of Durango’s infrastructural development has been the construction of the $1.1bn Mazatlán-Durango highway, with connections to Matamoros and Altamira. Mazatlán is one of the most important ports on the Pacific coast while Altamira is one of the main ports in the Gulf of Mexico; the journey time between the two via Durango is only 15 hours. Only 80 kilometres of this new route remains to be built in the Sierra Madre mountains between Durango and Sinaloa.
To the north-east of Durango state, a new four-lane highway connecting with El Paso, Texas, via Parral in Chihuahua state, will be completed next year. Other highways under development will connect Durango with Tepic, Culiacán and Fresnillo.
This year, Durango city came in 18th place for cost-effectiveness in the small cities category for fDi’s North American Cities of the Future rankings; it was third among small Mexican cities.
Mr Hernández Deras says: “We want to incorporate the state as part of a highway axis that connects the Pacific Ocean with the Gulf of Mexico and beyond. This will give us the chance to promote and stimulate a great deal of investment, especially from Asian countries that want to assemble parts for the southern US and that want to enter the US consumer market. Already we are making progress in reaching out to companies whose shipping costs for assembled products in Asia are very expensive.
“We are in a special geographical location: we are in the transoceanic axis between Mazatlán and Altamira, and the Durango-El Paso highway is now under construction.”
Among the 32 states of Mexico, Durango has had the third lowest number of strikes during the past five years, and also has some of the lowest labour costs in the country. Durango state enjoys particularly good natural resources, including forestry and farmland, and is a major sector for meat and milk production. Traditionally, it has also been important for gold, lead, zinc and silver mining, and the metal mechanics and lumber industries.
The state is also rich in water resources and a new water-treatment plant is being developed. A 450-megawatt electricity generation plant is in the late stages of development, involving an investment of $450m by the Spanish energy company Union Fenosa.
The state of Durango also has eight technology colleges, two new state universities, and three new private universities. A further two state universities are being developed in the indigenous region in the south of the region and another in the area around Laguna and Gomez Palacio.
The state-run Instituto Tecnológico de Durango is one of the oldest technology institutes in the country and among the most prestigious. Universidad Juárez del Estado de Durango is another important state university and the acclaimed private technology college of Tecnológico de Monterrey has campuses in Durango city and Laguna.
Some 4700 students graduate each year from Durango state universities and nearly 1900 people reach postgraduate level. Among the total labour force of 802,000 people, 151,000 are aged between 15 and 19 and 129,000 are between 20 and 24.
Mr Hernández Deras says that Durango has been much less affected by the narco-trafficking problem that has afflicted other states in Mexico – although it has seen an increase in drug-related violence during the past year.
Jorge Reynoso Martinez, the secretary of economic development of the state of Durango, says that it has many advantages: “One of the most important is its considerable connectivity with the Asian market via the Pacific Ocean. This means that the state has great future potential. Today, we are developing our logistical-industrial centres under the concept of an inland port: one in Durango and the other in Gómez Palacio. They have the same basic concept: an inland bonded warehouse or controlled area and an inland customs office.
“We want to include Durango in the globalised economy in a more efficient way. It is a great advantage for the producers if they can bring together their goods and if they can deal with customs transactions in one specific place,” the secretary says.
He adds that the development of the new power plant means that Durango will have an assured supply of electricity for at least the next 25 years.
The state is also part of a regional development alliance, called the Agreement for Regional Progress, which brings together the northern Mexican states of Coahuila, Chihuahua, Nuevo León, Tamaulipas and the US state of Texas. The states’ governors meet twice a year – a useful forum for a co-ordinated approach to regional development.
High ethical standards
José Antonio Rincón Arredondo, president of Corporación Durango, Mexico’s biggest paper producer with annual sales exceeding $1bn a year, says: “Our company was born in Durango, we live in Durango and we will always be here. This is not only for sentimental issues; it’s because it is a land with many opportunities, a population with high ethical standards. Durango city is attractive, and the state enjoys a highly committed government.”
Enrique Villa Peraza, manager at Johnson Controls, a US multinational that produces specialised chemicals for refrigerators and air conditioners from a plant near Durango, says: “The main advantage of being located in Durango is the labour force; the containers for our chemicals must be welded in a special way and our plant has a training centre specifically for this, which produces the best welders in the entire corporation.
“The plant manages to retain its staff for many years, only losing 0.5 per cent of staff per year. We have a plant that is very efficient, with low labour costs and high productivity. It is very competitive.”
The state offers companies financial support to acquire land, construct plants, train staff and acquire technology. Other help includes tax exemptions for up to four years and discounts in notaries’ fees.
Ramón Pallares Fragoso, director of operations in the Durango plant of Draka, a Dutch cable producer for the aviation and car-making industries, says: “One of the factors that attracted Draka to the city was support from the city and state governments. The company received favourable tax treatment, legal assistance and help in looking for employees, suppliers and potential clients.”
International companies that plan on making major investments in the state include Yazaki, Sumitomo Electric, Vijai Electricals and Merkafon Teleperformance.
Durango’s strategic geographical position in Mexico, its high quality of life, and its skilled labour force might force others to take notice soon, too.