Industrial Parks Reap Benefits of Regional Ripples

Argo Industrial Group Director Gerardo Bocard explains that San Luis Potosi’s industrial parks are benefiting from the increased global visibility of the state. “San Luis Potosi has a long industrial tradition, but what we do not have is the same tradition with marketing ourselves,” he says. Comparing San Luis Potosi to Monterrey, Bocard says: “Around the time that Monterrey propelled the success of its one major brewing company, San Luis Potosi was already home to seven brewing entities. We also had a mining industry when Nuevo Leon did not have one. Monterrey was founded 100 years after San Luis Potosi, and moreover, San Luis Potosi has been the capital of Mexico twice.” Yet the growth of the relative newcomer has outshone that of the former capital. “The state has now been rediscovered and to the delight of foreign companies, we have all of the resources needed for them to thrive here. Companies outside of Mexico have started showing interest in settling in central Mexico during the fourth wave of investment. The first wave started on the border with the US and each wave has progressively moved further down geographically,” he explains.

The Millennium Industrial Park, owned by the Argo Industrial Group, covers 200 acres, and is currently filled to 80% capacity. The majority of the 26 companies with existing operations in the park are active in the automotive industry, including Cummins, TI Automotive, Continental, Mitsumi, Flexi-Tech, and Nobel. The remaining 20% of land is available for lease and represents enough space to accommodate a minimum of four companies and a maximum of 15. The whole region seems to be enjoying the ripple effect of Nissan’s investment in Aguascalientes, with suppliers to the OEM giant arriving en masse. “The Nissan plant has taken up a lot of the human resources. However, providers do not want to be too far away from them, so they look to surrounding states. Mazda and Honda are in Guanajuato while Querétaro has a lot of competition with other suppliers from the automotive and aerospace industries. As such, San Luis Potosi provides an optimum environment for establishing their business,” Bocard explains. In terms of the commercial commitment suppliers are looking for, preference is often based on origin. “American and European companies feel that by leasing, they can concentrate capital on their core business. Constructing a building is a dead investment for them, but leasing allows them to begin capitalizing on their investment,” says Bocard. On the other hand, Bocard’s experience shows that Japanese companies tend to want to own their buildings as they prefer creating a long-term year relationship with their suppliers lasting for several decades. “It is part of the culture, and it is also practical. Nissan, for example, will see no need to change if a provider always delivers.” It was for this reason that the Argo Industrial Group decided to purchase land itself in the neighboring Logistik II Industrial Park, enabling it to sell additional land to companies looking for a long-term investment.

Investing in the right infrastructure for Millennium Industrial Park was no small expense for the Argo Group. 18MW of energy was purchased from CFE in order to ensure that each lot had at least 250KW available from the start. The group also purchased water rights from the federal government that allow for a well to be dug in the park. The excavation for the well found water at 500m but further digging to 700m ensured a deep enough reserve of water to supply the park for years. Given the desert present in and around San Luis Potosi, such a find was essential for the industrial park’s self-sufficiency. The well provides capacity for the extraction of about 30 liters of water per second, but with the current 26 companies using the equivalent of four liters of water per second.

Looking ahead, industrial parks may well make one of most lucrative investments for savvy developers. Bocard explains that most regional construction companies in San Luis Potosi concentrate on government infrastructure and housing, with only five companies doing industrial building. “Last year the federal and state governments did not have money to invest which, coupled with a small housing crisis affecting Mexico, reduced construction work significantly. Argo, however, enjoyed a very good year, and 2014 will be even better,” says Bocard. The group is in the process of finishing a 5,000m2 building that will be ready later this year. 16 acres of land have just been sold to a Japanese company for the production of air conditioning equipment. Bocard also hopes that a 10,000m2 project will shortly be agreed, capping a busy and successful year for Argo.