Fresh Produce and Production Sharing: Bi-National Business Linkages Associated with Foundations and Opportunities for Nogales and Santa Cruz County
Every 100 direct jobs in the fresh produce industry generate an additional 52 jobs...
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FRESH PRODUCE AND PRODUCTION-SHARING: Bi-National Business Linkages Associated with Foundations and Opportunities for Nogales and Santa Cruz County
Executive Summary
The focus of this analysis has been on the fresh produce industry and cross-border trade relations with Sonora’s maquiladora sector. The analysis produced measures of their current importance for the local economy in terms of job creation, local wages, tax revenues, and total output. Their importance was further evaluated in terms of multipliers as a measure of the ripple effect and their impact on a multitude of local goods and service-producing activities.
Fresh produce industry
Nogales’ fresh produce industry encompasses several activities involved with importation, inspection, transportation, warehousing, and distribution of Mexican grown produce to North American markets. A summary of economic impacts is presented in Box 1.
Every 100 direct jobs in the fresh produce industry generate an additional 52 jobs; every $1 in wages to direct employees in the fresh produce industry generates an additional $0.29 in wages in other sectors, and every $1 in direct output in the fresh produce industry generates an additional $0.44 in other economic sectors in Santa Cruz County.
More than 80 local services ranging from business support services to legal services to commercial equipment leasing, to insurance agencies are related to the fresh produce industry. While this suggests an established and intricate network of supporting activities, most of the manufactured supplies such as forklifts and packaging materials are not locally produced. The industry is still highly seasonal resulting in high unemployment rates during the summer months.
While the total dollar value of imported fresh produce shows an upward trend, a comparison with other U.S.-Mexico border ports of entry shows Nogales’ declining share, particularly vis-à-vis Texas ports of entry. This may be a result of several factors, including the rise in export of fresh produce grown in central Mexico and shipped through Texas border ports of entry, longer growing seasons of central Mexican regions, as well as more convenient border crossings for fresh produce trucks serving midwestern and northeast markets in the U.S.
Maquiladora related trade activity
Nogales is Arizona’s major port of entry for trade with Mexico; Nogales border port of entry also facilitates import and export of merchandise from other U.S. states, the majority of which is related to the maquiladora sector in Sonora. In addition, the county’s economy benefits from the proximity of the maquiladoras south of the border through the export of locally manufactured goods and services. A summary of economic impacts is presented in Box 2.
For every 100 jobs in the maquiladora export-related sector, an additional 56 jobs are generated in the local economy through ripple effects; every one dollar in direct wages earned in export-related activities and spent locally generates an additional $0.48 in wages, while every one dollar in output (sales) generates an additional $0.47 in additional output in the local economy. About 15 manufacturing and 20 service-providing industries were identified as being related to exports to the maquiladora sector in Sonora. In the context of Ambos Nogales, Arizona’s Nogales shows a comparative advantage in service-providing sectors. The largest quantities of various components and materials used in maquiladora operations are being supplied by companies outside Santa Cruz County.