Silicon Border seeks Asian cost structure

MEXICALI, B.C., MEXICO—In October 2008, the Silicon Border Science Park achieved another milestone when Silicon Border (San Diego, CA)—the company that initiated the Science Park project—and real-estate investment firm ING Clarion Partners (www.ingclarion.com) officially inked the joint-venture agreement sealing the collaboration and financing of what is anticipated to be “… a gateway for North America to become a global leader in capital-intensive, high-technology manufacturing,” according to the press release at www.siliconborder.com.

The Silicon Border Science Park is located in Mexicali, just two hours east of San Diego across the border from Calexico, CA in Baja California, Mexico and is targeting solar, liquid-crystal display, nanotechnology, aerospace, optoelectronic, and semiconductor companies. In late May of this year, solar-cell manufacturer Q-Cells (Bitterfeld-Wolfen, Germany) announced plans to locate its manufacturing facility here for the Americas—North, Central, and South—with an investment of up to $3.5 billion in the 10,000 acre Park. Clearly, the investment represents a major vote of confidence for the vision of project initiator and chairman and CEO of Silicon Border D. J. Hill, who envisions the Silicon Border Science Park as “Providing Asian cost structure in North America.”

Hill and other ex-semiconductor-industry colleagues, who had spent a lot of time overseas, watched as U.S. companies like Intel, National Semiconductor, and Texas Instruments began to locate manufacturing facilities in Asia due to the favorable tax structure and labor pool. “While outsourcing to Asia was profitable and a good thing,” said Hill, “The practice was starting to ‘hollow-out’ U.S. companies, whose manufacturing sites became increasingly disconnected from domestic R&D and design activities.” Hill added, “A moderate earthquake in Taiwan in late 1999 shut down the semiconductor supply chain for a week. Price spikes started us thinking about the value of North-American manufacturing sites; not to mention that the events of 911 and growing rifts between China and Taiwan are still on the minds of strategic thinkers and have caused the U.S. to start looking inward.”

Hill surmised that if Asian cost structure could be replicated in North America, companies would be incentivized to locate major manufacturing operations right at the doorstep of the U.S.—especially considering that the U.S. is a major consumer of semiconductor-based electronics and will ultimately be the largest consumer of solar panels. Hill and his colleagues quickly narrowed their focus to Mexico. Discussions with Mexican officials including the governor of Baja California and then-president Vicente Fox settled on Mexicali as an ideal border location with similar infrastructure and labor pool as Asia, as well as an abundance of water and electricity necessary for high-technology manufacturing. Creation of an ideal tax structure was critical to the project, and was supported by Mexico’s government and assisted by California governor Arnold Schwarzenegger. Cross-border fertilization between Mexico and the U.S. is so important to the Science Park, says Hill, that it will eventually have its own border crossing.

“We are providing the infrastructure within the project to insure that world-class standards for high-technology manufacturing are met,” said Mike Oliver, executive VP of business development at Silicon Border. “Companies like Austin Commercial and CH2M Hill will be building many of the facilities here in the Science Park; high-technology companies have the best environmental standards anywhere. And high standards in construction and infrastructure will be the key to bringing in major companies and investors to this crucial North American project.”

Oliver estimates that in the next ten years, the Silicon Border Science Park could generate 100,000 jobs, both within Mexico and the U.S. Please contact Mike Oliver at [email protected] for more information.

—Gail Overton

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