Vallejo-i: Mexico City Industry and Innovation ClusterBy Fadlala Akabani | Mon, 05/02/2022 - 11:00
The Vallejo industrial zone, located north of Mexico City in Azcapotzalco borough, is the epicenter of industrialization in Mexico. Created in 1944 by presidential decree, Vallejo quickly began to attract manufacturing and logistics businesses thanks to its railroad connections to seaports in the Pacific Ocean and the Gulf of Mexico. During the 1960s, Vallejo's industrial output accounted for 7 percent of Mexico’s manufacturing GDP. By the ‘70s, with more than 800 factories settled in the area, 71 out of the 500 most important companies in Mexico had operations in Vallejo.
However, despite being an industrial powerhouse for over 40 years, the closure of the “March 18” oil refinery, the earthquake of 1985, and the opening of Mexico to international free trade in the 1990s triggered a process of deindustrialization, resulting in a decrease in the number of manufacturing companies, jobs, and investments in Vallejo. The borough lost about 200,000 residents and it has not recovered since.
Currently, Vallejo hosts 1,008 economic units and 47,528 jobs in 17 different sectors, including pharmaceutical, processed food, beverages, cleaning products, electronics, machinery, construction materials, logistics, wholesale, retail, restaurants, and financial services. Multinational companies like Coca-Cola, Cemex, P&G, Danone, Kohler, Sherwin-Williams, and Neolpharma operate in Vallejo. In fact, the gross production of manufacturing industries rose to US$6.5 billion in 2021, representing 4.7 percent of national manufacturing GDP. Yet, almost a third of warehouses remain vacant.
As a response to Vallejo’s economic downturn and to provide technology and innovation-driven industries a place to settle in Mexico City, the government of Claudia Sheinbaum and the Azcapotzalco borough designed in 2019 the Vallejo-i strategy. Its objective is a US$500 million infrastructure and public services upgrade in the area to attract investments related to Industry 4.0, clean energies, data centers, logistics, and industrial corporate services. To generate high-skilled jobs and promote sustainable development, Vallejo-i has four strategic lines of action: infrastructure improvement, urban planning, research and innovation, and economic development.
In terms of infrastructure improvement, water and sewage networks have been widened and rehabilitated. At the same time, five of Vallejo’s main roads now have reinforced concrete, wider sidewalks, new bike lanes, and LED street lighting. Likewise, the inland intermodal terminal of Pantaco is expanding its container capacity and introducing new technologies for better safety and management procedures. In fact, Pantaco is the largest rail logistics center for the import, export, storage, and distribution of merchandise and raw materials in Mexico. It has customs and a bonded warehouse that allow goods to travel quickly and securely to the main shipping ports in the country and across borders.
Regarding urban planning, Vallejo has a new Urban Development Partial Program that contemplates higher construction densities and mixed land uses, for industry, services, retail, and housing. The program is designed to drive urban development by 2050, aiming to preserve industrial land use, while adding complementary services, public spaces and affordable housing for Vallejo workers. Approximately, 163 properties representing 610,534 square meters are available for redevelopment with this urban planning program.
The third line of action, research and innovation, represents substantial advantages for Vallejo compared to other industrial zones. First, in 2021, the Transfer Station and Selection Plant for Recycling and Utilization of Urban Solid Waste was opened. It is capable of processing 1,400 tons of solid waste per day. This is a key circular economy asset in Vallejo, which creates an industrial symbiosis between companies by converting waste and residues into new resources for production. The plant is the most modern complex of its kind in Latin America and a benchmark for a new waste management model. Second, the Center for Technological Development and Innovation of Vallejo fully opened in February. This is a space where the private, public, and academic sectors can meet in its laboratories to develop R&D projects, test materials, and use satellite imagery tools. Likewise, the Center has spaces for industry 4.0 entrepreneurship, business lounges, and the first data center in Latin America with an ICREA Level III Certification property of the government of Mexico City.
It is important to mention that Vallejo is surrounded by at least 12 higher-level education institutions, including Tecmilenio Ferraria University, the Metropolitan Autonomy University, and the Center for Research and Technological Innovation of the National Polytechnic Institute. In 2021, these institutions graduated 16,760 STEM students across subjects that included artificial intelligence, automation of manufacturing systems, logistics and supply chain, precision mechanics, manufacturing systems, data science, computing, robotics, and electronics systems.
The fourth and last line of action of Vallejo-i, economic development, is directly carried out by the Ministry of Economic Development. We encourage once-a-month business networking in specific sectors for companies in Vallejo. These sectors include logistics, metalworking, energy, chemical, medical devices, food and beverages, automotive, and aerospace. We have also signed special collaboration agreements with real estate developers, including the Mexican Association of Industrial Parks, to promote ESG standards and best practices in warehouses. Additionally, we provide investment advisory concerning regulation, as well as reductions in payroll and property taxes.
There is no doubt that Vallejo-i is a major strategy for enhancing economic development in Mexico City. Its robust infrastructure, strategic location and connectivity, long-term urban planning, and dynamic research and development ecosystem make Vallejo an ideal site for a 21st century industry and innovation cluster. The industrial powerhouse of Mexico is rising once again.