brownsville (texas) economic journal spring 2014

EJ Vol. 2, No. 3 / Spring 2014

Perfect LocationProximity to EagleFord Shale attractsLNG projects

Model of SuccessRelationships, quality of work key toNova/Link success

The BEDC InitiativeKey guidelines helpthe organizationachieve its mission

Final Destination:

The USS Forrestal is the latest ship to arriveat the Port of Brownsville to be recycled

Brownsville

Home of CK Technologies LLC

SOLD5.1 acres

SOLD6.2 acres

AVAILABLELot 3 (5.6 acres)






AVAILABLE

Lot 11 (4

.9 acres)

AVAILABLE

Lot 10 (2

.3 acres)

AVAILABLE

Lot 9 (2

.3 acres)

Park entrance

Paredes L

ine Road

1/4 mile to SH550 (I69 Spur)INTERSTATE

69

N

Railroad

To Port of Brownsville, Brownsville South Padre Island International Airport

Drainage Canal

G.B.I.C. Circle

Industrial C

ircleDrainage Canal

Note: Lot dimensions a

re not scale

North Brownsville Industrial Park

73-ACre mASTer PlAN iNDUSTriAl PArK ShOvel reADY CerTiFieD SiTe

SiTe DeSCriPTiON:

n inaugurated in June 2011n 73-Acre master Plan

industrial Parkn 9 lots remainingn minutes from Port of

Brownsville, Brownsvilleinternational Airport, i-69e highway, and mexico

n Acess to railn minutes from maquiladora

industry in matamoros, mexico

n Concrete roads, boulevards, and turnarounds

n 1/4 mile from Sh 550, future extension of i-69

n All utilities in place: electric, water, wastewater, natural gas

n Gas supplied by Texas Gas Servicen 4-inch gas line size with 125 lbs

of pressuren water, wastewater, electricity

supplied by Brownsville PublicUtilities Board

w 16” water line runs along Paredes line road

w 8” looped water line around the CK Technologies llC building (adjacent to park)

w An existing lift station and an 8” sanitary sewer gravityline at CK Technologies building

w Capacity at 10 mGDn Flat topographyn Site is development readyn Shovel ready certified site

A DevelOPmeNT OF The GreATer BrOwNSville iNCeNTiveS COrPOrATiON

[email protected] Economic Development Council

301 Mexico Blvd. Suite F-1 Brownsville, Texas 78520

p.956.541.1183 / 800.552.5352f.956.546.3938

www.BEDC.com

CONTACT:

A DevelOPmeNT OF The GreATer BrOwNSville iNCeNTiveS COrPOrATiON

Model of SuccessRelationships, quality of workkeeps Nova/Link bustling after26 years of existence

16Cover Photo: Courtesy Sam Merrill

WHAT’S INSIDE

Maquiladora NewsKSM announces expansion plansin Matamoros

19Brownsville Economic JournalSpring 2014BEDC.com 3

EJBrownsvilleEconomic Journal

Final Destination:USS Forrestal on itsway to the Port ofBrownsville to berecycled by All StarMetals.

Guest editorial:Waiting for Mexico’s ‘oil boom’5 Local Industry Corner:

Brownsville: A city on the rise15

12

President’s Corner:Achieving globalsuccess4

VIE

WPO

INTS

8 Perfect LocationProximity to Eagle Ford Shaleattracting LNG projects to the Port of Brownsville

6 The BEDCInitiativeKey guidelineshelp the organizationachieve its mission

11Alternative EnergyOffshore generation project seeks to diversifypower sources

Brownsville Economic Journal Spring 2014 BEDC.com 4

eDiTOr iN ChieFGilberto [email protected]

eDiTOriAl CONTeNT &DeSiGN COOrDiNATOrJorge I. [email protected]

COPY eDiTOrSylvia [email protected]

PhOTOGrAPhYBEDC Editorial Team

CirCUlATiON Sylvia [email protected]

ADverTiSiNGJorge I. [email protected]

COrPOrATe CONTACTLizzy de la Garza [email protected]

reSeArCh & eCONOmiC iNDiCATOrSDaniela [email protected]

eDiTOriAl OFFiCeBrownsville Economic Development Council301 Mexico Boulevard, Suite F1 (ITEC Campus)Brownsville, Texas 78520Tel. (956) 541-1183 Fax: (956) 546-3938

viSiT US ONliNewww.BEDC.com

FrOm YOUr mOBile DeviCe:

FOllOw US

eleCTrONiC verSiON:A free electronic version ofthis issue is available at:www.issuu.comkeyword: brownsville economic

Brownsville is at this moment anexciting place to be in regard toeconomic development.

As we move forward in making our re-gion a global competitive community, wehave seen a growing interest in developingnew business ventures that could eventu-ally become a crucial part of our localeconomy.

We have also seen some of the well es-tablished members of our local industryachieve successful projects that help usboost our economic prosperity.

In this issue, we share with our readersthree stories of success that relate to threedifferent industries – manufacturing, shiprecycling and energy – all of which play acrucial part in maintaining theBrownsville-Matamoros Borderplex aglobal fluent community.

One story is about the recent interestthe Port of Brownsville has received forliquefied natural gas projects, also knownas LNG. Several companies have initiatedtheir respective plans to set up venturesthat call for exporting LNG oversees.

Officials from these companies have allagreed that the Borderplex’ geographicallocation on the outskirts of the Eagle FordShale and the region’s well established in-frastructure, that includes a deep sea port,make it the most popular place to invest inthese types of projects.

Another story featured in our EJ fo-cuses on the recent contract All Star Metalsacquired from the U.S. Navy to dismantleand recycle the historic USS Forrestal, thefirst of the so-called “supercarriers” of themilitary.

The ship recycling industry in the U.S.revolves around Brownsville. Five ship re-cycling companies call the Port ofBrownsville home, and All Star Metals isone of them.

To put the importance of winning thecontract for the Forrestal into perspective,ASM president Nikhil Shah, said that land-ing the contract is “the equivalent to afootball team making it to the SuperBowl.”

The other story is about Nova/Link,who after 26 years in the manufacturing in-dustry, the family owned business hasachieved respect and recognition fromclients and competitors thanks to the expe-rience and success it has acquired.

Achieving global success

PreSiDeNT’SCOrNer

EJ

Jason hiltsPresident & CEO

The Economic Journal of the Brownsville Borderplex is publishedon a quarterly basis and distributed according to the fair-use doc-

trine of U.S. copyright laws related to non-profit institutions, such as

the BEDC, and for educational purposes.

Turn To Next Page

Brownsville Economic JournalSpring 2014BEDC.com 5

The Mexican EnergyReform is almost areality. Last year,

2013, represented a challengefor many to adapt to the newregulations that will be imple-mented in Mexico. Many arereluctant to change but there isno turning back.

Now, we will analyze oneof the reforms that for manywas seen as a betrayal to theMexican nation, I am referringto the much talked-about “En-ergy Reform,” which waspassed by the Mexican Senateand the House of Representa-tives on December 17 and 18respectively.

It was declared constitu-tional by the Federal Legisla-tive Body and finally enactedby the Mexican President En-rique Peña Nieto on December20 and published the next dayon the Official Gazette of theFederation.

As expected, once ap-proved negative feelingsemerged from certain social

groups. It is no mystery whothe leaders of the negativity onthis reform are and moreoverwe know the interest thatmoves them. As in all, these in-dividuals are characterized bygiving a NO to everything anda YES to nothing.

The recently approved en-ergy reform represents an op-portunity for economic growthfor states like Tamaulipas. Formany years northern Mexicohas been characterized by ac-

tivities and foreign investmentfocused on the manufacturingsector, also known as the“maquila” industry.

We are one step from be-coming a part of this much an-ticipated ‘oil boom’ and wehave an urgency to diversifyand start educating ourselveson the needs of services andproducts that are part of thesupply chain of this innovatingbusiness sector in Mexico.

Mexican and foreign com-panies are anxiously lookingforward to knowing in detail

the legal aspects of the energyreform. It is expected for thesecondary laws to be disclosedand approved no later thanApril 19, 2014. These laws willestablish the guidelines of par-ticipation for Mexican and for-eign companies in theeconomic activities of the en-ergy sector in Mexico.

Unfortunately as of this datethe outlook is still uncertain.The only thing clear is that wehave the desire to be part of thepresent and future of the energysector in Mexico. EJ

waiting for mexico’s ‘oil boom’

ernesto velarde DanachePresident & Founder of ErnestoVelarde-Danache, Inc. Mexican &International Lawyers

EJGUeST eDiTOriAl

Nova/Link is a near-shorecontract manufacturer with op-erations in Brownsville, Mata-moros and Reynosa. Thecompany began in 1988 withabout 40 operators and nowboasts a labor force of about3,000.

Well established relation-ships and an excellent qualityof work are what have kept

Nova/Link bustling after 26years of existence.

In the end, these three dif-ferent stories, about three dif-ferent industries, help us tellone bigger story, the one abouthow Brownsville is - and willcontinue to be- an active andprosperous hub for economicinvestments no matter the in-dustry, no matter the size ofthe venture. EJ

Continued from Page 4

Achieving global success


economic Development EJBOrDerPlex reGiON

BeDCinitiative

Th

eSeven steps help the Brownsville EconomicDevelopment Council accomplish its goal

Since its creation in 1992,the Brownsville EconomicDevelopment Council has

concentrated its efforts in achievingthe organization’s main mission ofleading, facilitating, and promotingthe economic and industrial develop-ment for the Brownsville-Matamorosregion, also known as Borderplex,and convert it into a global competi-tive community.

The BEDC, a publicly-funded or-ganization, strives to build economicprosperity, enhance community sus-tainability, and create employmentopportunities in the region by utiliz-ing the resources and expertise ofpublic/private institutions in collabo-ration with the Greater BrownsvilleIncentives Corporation, entity createdto encourage and promote economicdevelopment initiatives in

Brownsville.Brownsville’s ideal geographical

position, on the U.S.-Mexico borderand at the epicenter of the Americas,along with its highly developed infra-structure, which includes a deep seaport, industrial corridors and access tonational and international roads,make it a top city for global trade andan ideal place for Foreign Direct In-vestment.

Recently, Brownsville was recog-nized as one of the best places for in-ternational and domestic business. Itsforeign direct strategy has helpedBrownsville become one of the“Cities of the Future” by fDi Intelli-gence magazine. Brownsville is alsoranked number 3 on the list of “Top10 Cities on the Rise,” put togetherby nerdwallet.com, and number 21 onthe list of “Top 25 Cities for GlobalTrade” by Global Trade Magazine.

These accolades are testament of

the great business climate and oppor-tunities prospective companies see inBrownsville while looking for thebest place to establish their economicendeavors.

To identify, contact, and helpprospective companies in their deci-sion to invest in Brownsville, theBEDC works with 7 differentprocesses that involve economic re-search, marketing, public relations,site selection, prospect development,finance and incentives and businessretention and expansion. The last twoprocesses are done once the companyhas finally selected Brownsville forits economic endeavor.

The process also includes guid-ance in acquiring permits and zoning,identifying potential suppliers, mak-ing contacts with other businessesand setting appointments with the ap-propriate community leaders.

From Staff reports

EJBOrDerPlex reGiON


The economic research involvesidentifying prospective companies fortrade missions or target industries.

The BEDC concentrates on the de-velopment and reinforcement of seventarget clusters identified as having thegreatest impact on the economy of theBorderplex: heavy manufacturing, lightmanufacturing, automotive, medical, in-ternational logis-tics, foodprocessingand researchand develop-ment, and thespace and avi-ation industry.

Oncethose goalsand objectiveshave beenidentified, theBEDC createsa large list ofabout 100prospective companies, weeding out thenon-contenders to produce a final smartlist of 20-plus companies. From these,about 10-15 are identified as “best-betcompanies,” and the BEDC beginsreaching out to them with the mission toset up face-to-face meetings with repre-sentatives from each of those compa-nies.

Before those face-to-face encoun-ters, the BEDC provides all the eco-nomic data related to the Borderplexthat is needed to present to potentialfirms.

In the prospect development process,leads come from proactive and reactivesources. Proactive leads are created byin-house done by BEDC, expert consult-ants, site selector network, or the differ-ent organizations the BEDC works incollaboration such as Port ofBrownsville, City of Brownsville, Cityof Matamoros, to name a few.

The reactive sources are the Gover-nor’s Office, inbound calls, website in-quiries, and inquiries from other outlets.

The outreach phase in prospect de-

velopment includes customized mes-sages via e-mail, cold calls, letters, andfollow-up calls. These lead to appoint-ments made for meetings, qualifiedleads that show genuine interest and arekept in continued dialogue, suspectleads that identify a potential interestand are also kept in continued dialogue,or companies that show no interest inBrownsville.

The marketing aspect of the processincludes the collection of data, com-bined with creative writing for prospect-ing activity. The data and informationcollected is presented in visually engag-ing designs and distributed throughoutthe BEDC’s various marketing toolssuch as the Economic Journal, website,social media, E-blast campaigns, andother marketing tools. The goal for themarketing process is to establish abranding for the Brownsville Borderplexand make the region recognizable toprospecting firms.

The public relations process alsocalls for the collection of data that iscombined with accurate and balancedreporting of news and information inboth, a proactive and reactive approach.

The proactive approach includes cre-ating the news and distributing on aplanned schedule to different media out-lets. The reactive approach includesmaking unannounced or non-planned re-sponses to the media.

Analyzing key business drivers,human capital, logistics and geographiclocation are all part of the important site

selection process. Once a potential siteis identified, further analysis of laborforce, logistics, transportation, key eco-nomic indicators, utility rates, amongother assessments, is done to produce acomprehensive report on a candidatesite.

Once the successful meetings havebeen accomplished and the site selectionhas led to a company identifying the

ideal site, bothparties beginthe process ofironing outthe details ofa finance andincentivespackage.

TheBEDC doesits due dili-gence, mak-ing a financialreview, aneconomic im-

pact analysisand presents proposal for review to theIncentives Committee, BEDC ExecutiveBoard, BEDC Board of Directors andGBIC Board.

If the proposal for incentives is de-nied, the company is notified and thefirm decides to choose another site oropts to stay in Brownsville regardless.

If the proposal is approved, the com-pany is notified, the incentives programis executed and a public announcementof the deal is made.

After the company confirms it haschosen Brownsville, and begins theprocess of establishing its operations,the business retention and expansionprocess begins.

This final process of recruitmentconcentrates in creating a long term re-lationship between the BEDC and thenew company or enterprise.

The Business Retention and Expan-sion Program assists companies in con-necting with the local industry andestablishing relationships that help thenew firms or enterprises grow and suc-ceed in the Borderplex. EJ

The BeDC concentrates on thedevelopment and reinforcement of

seven target clusters: heavymanufacturing, light manufacturing,

automotive, medical, international logistics,food processing and r&D, and the space and

aviation industry.


Port of Brownsville set to become center for LNG export plants

Optimal location EJeNerGY SeCTOr

Strategic geographic location

Brownsville’s strategic locationis helping it attract yet anotherindustry, this time in the energy

sector.Port of Brownsville Director and CEO

Eduardo Campirano revealed that there areat least five potential projects being pro-posed for liquefied natural gas (LNG) ex-port terminals at the Port.

LNG is natural gas that has beencooled to the point that it condenses to aliquid. Liquefaction reduces the volume ofnatural gas by approximately 600 times,making it more affordable to transport.This process helps transport natural gasover long distances making it available to

places where pipelines are neither eco-nomical nor feasible.

Five companies have submitted appli-cations to the U.S. Department of Energy(DOE) for four proposed LNG projects atthe Port of Brownsville: Gulf Coast LNGExport, EOS LNG, Barca LNG, AnnovaLNG, and Texas LNG LLC. EOS andBarca are working on a joint project.

Campirano said that a fifth project,being proposed by Next Decade LNG, ispending submittal of an application to theDOE.

DOE records show that Gulf Coast,EOS and Barca have won approval to ex-port domestically produced LNG to FreeTrade Agreement (FTA) countries. Theirapplications to export to non-free tradeagreement countries are still under review.Annova and Texas LNG await the DOE’sapproval on their respective applications.The U.S. currently has free trade agree-ments in force with 20 countries.

A recent article published by the LNGJournal identifies Brownsville as “themost popular location for LNG exportprojects” in the U.S. and the companies

looking to set up here said the reason be-hind that is Brownsville’s excellent strate-gic location.

Besides having a logistical advantagewith an international airport, a deepwatersea port, a federal highway that is part ofthe country’s interstate network and inter-national crossings for trucks and rail,Brownsville is located near the Eagle FordShale, the most active shale play in theworld.

The shale is a significant source ofboth oil and natural gas and holds an esti-mated 3.4 billion barrels of oil. Gas pro-duction more than doubled from 2010 to2011, with 2011 production at271,831,688 mcf (thousand cubic feet).

According to a report titled “EconomicImpact of the Eagle Ford Shale,” releasedin 2012 by the Institute of Economic De-velopment at the University of Texas atSan Antonio, a moderate estimate of25,104 new oil and gas wells is projectedto be built between 2012 and 2021. In2021, the report projects the production ofgas to be 864,923,000 mcf.

Proximity to EagleFord Shale attractingLNG projects

Written byJorge i. montero

“With our proximity to the Eagle Fordshale and multiple state pipelines, we arepoised to be the ideal provider to thosecustomers looking to buy in the range of0.5 mtpa (millions of tons per annum) to1.0 mtpa,” said Annova’s CEO DavidChung.

His company filed an application tothe DOE to receive authorization to exportdomestically produced LNG to FTA coun-tries from its proposed facility at the Portof Brownsville. The project calls for theproduction of 2.0 mtpa and is expected tobe in-service by mid-2018.

Michael Smith, principal owner andCEO for Gulf Coast LNG Export, LLC,also highlighted Brownsville’s ideal loca-tion in a statement released after the Portof Brownsville Board of Commissionersapproved a lease option agreement withthe company for 500 acres. The agreementwas made in 2012.

“We believe the Port of Brownsville isin a strategic geographic location to assurethe success of this project, and we envi-sion this to be a long-term relationshipwith the Port,” Smith said.

Gulf Coast LNG plans to construct oneof the country’s largest LNG exporting fa-cility, exporting about 2.8 billion cubicfeet per day (Bcf/d) of natural gas to othercountries. The Houston based companywants to develop, own and operate theLNG facility and export terminal at thePort of Brownsville.

According to the project, theBrownsville terminal will include fourtrains capable of liquefying up to 2.8Bcf/d of natural gas, a marine berth, fullcontainment LNG storage tanks, a pipelineconnection to natural gas transportationlines, and associated utilities.

“The huge amount of natural gas re-serves developed in the United States inrecent years, and the significant interna-tional demand for LNG, will allow for thedevelopment of multiple LNG export ter-minals in the US. The United States isnow believed to have more natural gasthan it can use in a century,” Smith said.

The project is expected to be opera-tional in 2018 and is forecasted to bringthousands of jobs during the construction

phase and hundreds of jobs once the facil-ity is operational.

EOS LNG and Barca LNG recentlywon approval from the DOE to exportLNG from a proposed floating liquefac-tion unit and storage tanker at the Port ofBrownsville to nations with a FTA withthe United States.

The two companies each won authori-zation to export liquefied natural gas in a

volume equivalent to approximately 584Bcf/yr of natural gas, from its proposedLNG terminal at the Port for a 25-yearterm.

Innovative conceptTexas LNG’s project is taking a more

innovative approach in the industry. TheHouston-based company plans to exportup to 2 mtpa of LNG to free trade agree-ment and non-free trade agreement mar-kets.

This project involves a liquefactionbarge to be fabricated offsite by an experi-enced and qualified shipyard. At the TexasLNG site, the barge will be permanently“grounded” so that it will no longer be afloating vessel. LNG would be offloadedfrom tanks contained in the hull of thebarge structure onto conventional LNGcarriers berthed alongside the facility. Off-the-shelf technology will be used for theliquefaction process as well as the gastreatment plant that will be built on site totreat pipeline feed gas by removing any re-maining natural gas liquids and other non-methane products before the liquefactionprocess, the company said.

In December, Texas LNG signed alease option agreement with the Port ofBrownsville, acquiring a 51 acre site lo-cated along the port's deepwater channel.

“The Port of Brownsville is pleasedthat Texas LNG has selected our Port todevelop its innovative LNG export proj-ect,” Campirano said. “Texas LNG's proj-ect highlights the Port of Brownsville'sstrategic position, given its close proxim-ity to the massive shale and conventionalgas resources in South Texas and its deep-water ship channel which can accommo-date most LNG export ships.”

“The Port of Brownsville's strategicgeographic location as one of the closestports to the Panama Canal will facilitateour efforts to source feed gas from SouthTexas gas fields such as the Eagle Ford,where large volumes of gas are currentlyflared and vented, thereby providing botha positive environmental and economicbenefit to the region,” Vivek Chandra,CEO of Texas LNG, said. EJ


EJeNerGY SeCTOr

QUiCK FACTS:

what is lNG?Liquefied natural gas, or LNG, is

natural gas in its liquid form. Whennatural gas is cooled to minus 259degrees Fahrenheit (-161 C), it be-comes a clear, colorless, odorless liq-uid. LNG is neither corrosive nortoxic. Natural gas is primarilymethane, with low concentrations ofother hydrocarbons, water, carbondioxide, nitrogen, oxygen and somesulfur compounds. During theprocess known as liquefaction, natu-ral gas is cooled below its boilingpoint, removing most of these com-pounds. The remaining natural gas isprimarily methane with only smallamounts of other hydrocarbons. LNGweighs less than half the weight ofwater so it will float if spilled on water.

what countries import lNG?There are 60 LNG receiving termi-

nals located worldwide. Japan, SouthKorea, the United State and a num-ber of European Counties importLNG.

how is lNG transported?LNG is transported in double-

hulled ships specifically designed tohandle the low temperature of LNG.These carriers are insulated to limitthe amount of LNG that boils off orevaporates. This boil off gas is some-times used to supplement fuel for thecarriers. LNG carriers are up to 1000feet long, and require a minimumwater depth of 40 feet when fullyloaded. There are currently 136 shipswhich transport more than 120 millionmetric tons of LNG every year.

Source: University of Houston IELE, Introduction to LNG.


San Antonio-based company works to construct liquid bulk storage facility

Additional Storage Space EJPOrT OF BrOwNSville

Construction of a 21-tank, 225,000-barrel liquid bulk storage facility is under-way at the Port of Brownsville,compliments of San Antonio-basedHoward Energy Partners.

The company, formed in 2011, wasdrawn to the area partly because of thewide variety of imported and exported liq-uids — including but not limited to petro-leum products — that cross the borderhere.

So says Mark Helmke, HEP’s seniorvice president of terminals and transporta-tion.

“There are also non-petroleum, spe-cialty chemicals that move back and forthacross the border with Mexico, so thereare a lot of bigger opportunities to developand grow a bulk liquid business, becauseof that diversity in the marketplace,” hesaid.

Another factor was Helmke’s historywith the port: he was a shareholder with aprivate company that owned three liquidterminals at the port, which were mergedinto TransMontaigne in 1997.

Helmke ran TransMontaigne, growingit from a $2 million-a-year business to a$25 million-a-year business over a periodof 12 years. He left the company fouryears ago and worked as a consultant be-fore joining HEP two years ago.

“When I met with the Howard folkswe talked about developing a terminalbusiness,” Helmke said. “Because I knewso much about (the Brownsville market)we said let’s try to develop one inBrownsville first.”

Opportunities for the company haveexpanded further with the recent deregula-tion of Mexico’s energy market, a devel-opment likely to spur even more liquidbulk activity on the border, he said.

The Brownsville project, along with an“off-spec” liquids stabilizer facility HEP isbuilding near Three Rivers, are the com-

pany’s first foray into liquid handling, ac-cording to HEP President Brad Bynum.

HEP owns and operates more than 500miles of pipeline, which handles oil pro-duction from Eagle Ford, Escondido,Olmos, Pearsall and other South Texas oilformations.

The Brownsville facility is scheduledto start limited operation Feb. 1 and rampup to full operations on May 1, Helmkesaid. The project is in the peak construc-tion phase and currently employs roughly150 people. Five full-time employees willbe required to operate the facility once it’sup and running.

Port Director and CEO Eddie Campi-rano said the jobs creation is welcome.While the HEP project is relatively small,it nevertheless adds much-needed liquidbulk storage capacity and will generate ad-ditional revenue for the port, he said.

A company called Deep South Texas is

also building liquid storage capacity at theport, and two more liquid storage projectshave been proposed, though HEP and DSTare farther along, Campirano said.

Helmke said another reason HEPchose Brownsville is that the business cli-mate was in all ways hospitable.

“Probably one of the most importantthings is we started the business ... in thePort of Brownsville because of the busi-ness friendly environment down there —not just working with the port authority,but also with the end users and importersand exporters of bulk liquid products inSouth Texas and in northeastern Mexico,”he said.

liquid storage project boosts capacity at Port

Construction of a 21-tank, 225,000-barrel liquid bulk storage facility is underway at the Port ofBrownsville, compliments of San Antonio-based howard energy Partners.

Courtesy Photo

This article was written by Steve Clark and appeared

in the Friday, January 17, 2014 issue of The Brownsville Herald


Baryonyx looks to erect a 200-turbine windfarm on 41,000 acres fives miles offshore

wind farm EJAlTerNATive eNerGY

When the principals behindAustin-based BaryonyxCorp. first hatched the no-

tion of building a wind farm off SouthPadre Island, natural gas wasn’t nearly ascheap as it is now.

This has complicated things. An addi-tional challenge now for Baryonyx is tobring the cost of generating electricity viaits proposed offshore wind project in linewith that of gas-fired power plants and on-shore wind farms. Otherwise it won’t beable to compete on the wholesale electric-ity market.

Heather Otten, chief development offi-cer for Baryonyx, said the company ismaking progress on that score.

“Yes, right now we all acknowledgethat offshore is more expensive than on-shore,” she said. “What we’ve been doingin the past year or more is working on ourdesign, trying to bring our cost down, andwe’ve been very, very successful in bring-ing our cost down.”

Otten, a wind industry veteran whojoined Baryonyx in April, said no one an-ticipated that natural gas prices would fallso much. Nonetheless, the project is“within striking distance” of where itneeds to be in terms of production cost,she said.

“If you can make it work in Texas withthe power market we have you can make itwork anywhere,” Otten said. “With naturalgas setting the power prices so low wehave a much taller task.”

Baryonyx’s long-term goal is to erect a200-turbine wind farm on 41,000 acres thecompany is leasing offshore from the Gen-eral Land Office. The turbines would belocated five miles offshore, though stillvisible from South Padre Island.

The Siemens six-megawatt turbinesBaryonyx wants to use would stand 613feet above mean sea level at the highestpoint of the rotor blades, Otten said.

One year ago, in order to jump start

offshore wind in the United States, the De-partment of Energy awarded grants toBaryonyx and six other wind energy com-panies to develop offshore pilot projects.

Baryonyx is using the $4 million it re-ceived for environmental and feasibilitystudies and front-end engineering on athree-turbine demo project capable of pro-ducing 18 megawatts, or 18 million watts.

The company has dubbed the project“GO Wind,” for “Gulf Offshore Wind.”Baryonyx is partnering with Keppel Am-FELS; the turbine manufacturer SiemensAG; Offshore Design Engineering Ltd.;and Texas A&M University, the lead part-ner of the project’s academic group, whichalso includes Texas Tech and the Univer-sity of Texas (Austin and Brownsville).

Depending on the results of the variouspilot projects, three companies will re-ceive additional DOE funding — up to$47 million each — to develop full-scalecommercial wind farms.

The other contenders are on Lake Erieand in New Jersey, Oregon and two inMaine. GO Wind is the only offshore proj-ect on the Gulf coast. Baryonyx CEO IanHatton noted last year that the company’sprincipals are the only ones among thevarious contenders who have actuallypulled off an offshore wind project: theOrmonde project now operating in theIrish Sea.

Otten said the DOE, in deciding whichprojects get additional funding, will belooking for low-cost power production, in-novation and applicability of the technol-ogy used to other projects. Even ifBaryonyx is passed over for extra fundingit won’t be the end of GO Wind, she said.

“The project would not be over,” Ottensaid. “This project makes sense — pro-vided we get the right results on the avianstudies that we’re doing, and we can buildit responsibly given the turtles and every-thing. The project will go forward. Whatwill happen is it will take longer.”

Baryonyx began its bird and bat migra-tion studies this fall. The approach hasthree tiers: analysis of existing NEXRAD(radar) data; high resolution aerial photog-raphy and ATOM (Acoustic Thermo-graphic Offshore Monitoring) of avianspecies, Otten said.

“That is actually offshore and on abuoy right now,” she said.

Baryonyx’s hypothesis is that migrat-ing birds and bats five miles offshore flyat an altitude well above the height of theturbines. If this proves not to be the caseand too many animals would be killed, theproject won’t move forward, Otten said.The goal is to have two full years of avianstudies in hand, she said.

Go WIND’s Environment ImpactStatement probably won’t be complete,nor the project permitted, until 2015,Otten said. Further public input will besought as part of the process.

The end of 2016 is the earliest the pilotproject would be operational, Otten said.Ideally, after a year of studying the pilotproject construction the commercial phasewould begin, she said.

According to preliminary results of asocioeconomic study being conducted byUTB, Baryonyx’s pilot project alonewould create approximately 70 jobs withan average annual salary of $44,000 andinject $10.2 million into the local econ-omy, Otten said.

The economic impact would be expo-nentially higher with a full-scale commer-cial operation, she said.

“Texas is the leader in onshore (windenergy),” Otten said. “It seems like it’snatural to be first in offshore.”


in the Thursday, November 21, 2013 issue of The Brownsville Herald

Project seeks to diversify power sources

EJCOver STOrY

Final Destination

Hundreds of people gathered along thejetties at South Padre Island and BocaChica Beach on a foggy morning in Febru-ary to witness the arrival of the historicUSS Forrestal to the Port of Brownsville.

The decommissioned aircraft carrierdeparted the U.S. Navy’s inactive ship fa-cility in Philadelphia February 4 and em-barked on its final voyage en route toBrownsville, where All Star Metals willwork on the task of dismantling the shipand sell it as recycled material.

The Navy awarded a $0.01 deliveryorder to All Star Metals in October for thetowing, dismantling and recycling of the

aircraft carrier. The price of the deliveryorder reflects the net price proposed by thecompany, which considered the estimatedproceeds from the sale of the scrap metalto be generated from dismantling.

All Star Metals president, Nikhil Shah,said his company would take about 18months to dismantle the Forrestal.

“This is the largest ship that we’veever dismantled, and the largest ship theU.S. government has ever awarded to bedismantled. It’s a very big job to us,” hesaid. According to the company’s website,Navy personnel will be on site full time tomonitor the company’s performance dur-ing the dismantling.

All Star Metals, a subsidiary of ScrapMetal Services, has been operating as a li-

censed ship recycling and environmentalremediation contractor since 2003. Overthe years, the company has grown from itssmall shipyard to a full blown ship recy-cling and metal processing center, andtoday ranks as one of the largest ship recy-cling facilities in the United States.

The Port is home to five companiesthat especialize in ship recycling, makingBrownsville the country’s top ship break-ing hub.

A committed and trained workforce,port infrastructure and land availability, aswell as a logistical advantage since the re-gion is in close proximity to main steelprocessing plants in Mexico and the U.S.,are what make this Texas city an excellentplace for a ship recycling endeavor.



Ship recycling companies find a niche at the Port of Brownsville

The USS Forrestal arrives at the Port of Brownsville two weeks after it left the U.S. Navy’s inactive ship facility in Philadelphia. The aircraft carrier will berecycled by All Star metals, who will handle the task of dismantling the ship and sell it as recycled material.

Photo by Brad Doherty


By the numbers

Tons of scrap metal is expected to beproduced from the former “supercarrier”56,000

The scrap metal business is a very lucrative endeavor for the Port ofBrownsville. According to yearly statistics, 2,208,643 metric tons of steelproducts and other metals were moved by the port via vessel in 2013. Since

2011, close to 6 million metric tons of steel and other metals have been handled at theport facilities.“

”The easiest wayfor anyone to

understand whatmy team and i feeltoday is equivalentto a football teammaking it to the

Super Bowl

- Nikhil ShahAll Star Metals President

“Brownsville has a lot of the dynamicsthat other ports don’t have. We have a deepwater port. The weather is great year-round, coupled with a full-on labor forcethat has the ability to meet our require-ments in the recycling space,” Shah said.

Brownsville is where the vast majorityof the nation’s federal ships end up beingbroken apart and recycled. The region’sworkforce boasts an important number oftrained welders, giving the area the advan-tage when it comes to a skilled labor poolcompared to other parts of the nation.

“Going to the Super Bowl”All Star Metals has had its share of re-

cycling Navy vessels, but none have beenas big as the Forrestal.

And to understand the importance oflanding the contract for his company, Shahcompared it to a football team playing atthe Super Bowl.

“The easiest way for anyone to under-stand what my team and I feel today isequivalent to a football team making it tothe Super Bowl,” he said.

“The journey and dream is achieved,the hard work begins now – we look for-ward to working with the United StatesNavy to safely and successfully recycle theaircraft carrier, ex-Forrestal. Our team hasworked tirelessly to get ready for a job ofthis magnitude and we are ready to see thiscome to fruition.”

ship recycling companies are located at the Port of Brownsville

5The USS Forrestal

Metric tons of steel products (slabs, coils,billets and other metals) were moved bythe Port of Brownsville via vessel in 2013

2,208,643Activity at the Port of Brownsville

78,155 Metric tons of steel scrap (structure, shred-ded, and cut) were exported by rail in 2013

Metric tons of steel scrap (structure,shredded, and cut) were moved

by barge in 2013220,836.60

Metric tons of steel and other metals havebeen handled at the Port since 20116 million

Source: Port of Brownsville


EJCOver STOrY

To undertake the monumental task,Shah said his company will need anadditional 200 people. Currently, thecompany has about 300 employees.

The Forrestal is expected to pro-duce over 56,000 tons of scrap metal.The scrap will be sold to steel mills,most of them located in the UnitedStates, which will melt this material tomake new steel, ships, automobileparts, appliances, among other con-sumer goods.

Well before All Star Metals wasawarded the contract, the companyworked diligently with Port authoritiesto create a plan for the project.

“The Port of Brownsville has beenvery supportive to All Star Metals,”Shah said, adding that his company de-signed a new area within their facilityfor the project.

The scrap metal business is a verylucrative endeavor for the Port ofBrownsville. According to yearly sta-tistics, 2,208,643 metric tons of steelproducts and other metals were movedby the port via vessel in 2013. Since2011, close to 6 million metric tons ofsteel and other metals have been han-dled at the port facilities.

A historic super carrierThe first of the “supercarriers,” the

USS Forrestal was launched December11, 1954, by Newport News Shipbuild-ing and Drydock Co., and commis-sioned September 29, 1955.

The aircraft carrier was decommis-sioned Sept. 11, 1993, after more than38 years of service. On June 16, 1999,the Navy announced the ship would beavailable for donation to an eligible or-ganization for use as a museum or me-morial. However, no viableapplications were received and the ves-sel was removed from donation hold inDecember 2003 and redesignated fordisposal.

On July 29, 1967, the ship wasrocked by a series of apocalyptic ex-plosions when a massive fire broke outon the flight deck, resulting in the

tragic death of 134 crew members. The fire nearly killed then-Lt.

Cmdr. John McCain, who was a Navypilot serving aboard the ship at thetime. He was waiting to take off whenhis plane was struck by a rocket fromthe aircraft in position behind him.

“I will never forget when that Zunirocket hit my A-4 Skyhawk after it wasaccidentally fired from across the flightdeck, rupturing the fuel tank and set-ting that horrific, costly fire,” McCain,now a senator from Arizona, said in astatement the day after the former su-percarrier began its tow toBrownsville.

“Although the ship is being towedto Brownsville, Texas to be physicallydismembered, her legacy, the bondsforged and memories created amongshipmates will live forever,” McCainsaid. “I bid her a final ‘fair winds andfollowing seas,” he said in the state-ment. EJ

Esco Marine acquired a con-tract from the federal govern-ment to dismantle the former

USNS Shoshone, a 56 year old supertanker that was part of the Suisun BayReserve “Mothball” Fleet in California.

The federalgovernment will bepaying the com-pany, located al thePort ofBrownsville, nearly $797,000 to disman-tle the vessel.

Esco Marine is a 88 acre full servicemarine yard and recycling operation thatspecializes in recyclable metals and theproper disposal of obsolete maritimevessels.

The company has recycled the USSDes Moines, a heavy cruiser built nearthe end of World War II, as well as manyother military ships. EJ

esco marine to recycle former

navy super tanker

“”

Although the shipis being towed to

Brownsville, Texasto be physically

dismembered, her legacy, the

bonds forged and memories created

among shipmateswill live forever

- John McCain, U.S. Senator from Arizona

The federal government will be paying esco ma-rine, located at the Port of Brownsville, nearly$797,000 to dismantle the former USNSShoshone, a 56 year old super tanker that waspart of the Suisun Bay reserve “mothball” Fleetin California.

Courtesy photo by esco marine

Staff reports


Brownsville, Texas, – a city on therise. But don’t just take it from us, letthe experts tell the story.

In 2013, Forbes ranked Brownsville No. 10on their “Top 10 Best Cities for Future JobGrowth” as they looked at cities expected tohave the fastest job growth through 2015. Ac-cording to economic research firm, Moody’sAnalytics, Brownsville is projected to have anannual job growth rate of 3.1%.

NerdWallet, a company founded in August2009 by former Wall Street analyst Tim Chenand former JPMorgan Chase option trader JacobGibson, named Brownsville as one of the “Top10 Cities on the Rise.”

According to their 2013 report, the follow-ing three factors were used to determine thegrowth of the cities: 1) Growth in working-agepopulation: They looked at the growth in per-centage of the city’s working-age population (16years old and over). 2) Growth in income: Theylooked at the growth in median income forworkers. 3) Growth in airport passenger traffic:They gauged how many travelers, especiallybusiness travelers, were coming to the city tofind industry and business opportunities. Bytracking passenger movement in the cities’ air-ports, they approximated how popular the citieswere.

Based on these metrics, they recognizedBrownsville as one of the fastest growing areasin the U.S., showing a 1.3% growth in employ-ment, a 17.8% growth in median income, and a0.2% growth in passenger traffic at theBrownsville/South Padre Island InternationalAirport.

But wait, that’s not it… Last year Global Trade Magazine ranked

Brownsville No. 21 on their “Top 25 Cities forGlobal Trade.” Their report took a close look atthe 25 metro areas that posted the largest exportvolume increase in 2011.

According to the report, Brownsville’s totalexports in 2011 amounted to $6 billion. Thecity’s exports increased $2.1 billion since theprevious year in 2010, showing a growth rate of52.3%.

Adding on to Brownsville’s accolades, lastyear FDI Magazine recognized Brownsvillewith an award as one of the” Top 10 SmallCities for Best FDI (Foreign Direct Investment)Strategy.”

Brownsville is a growing city with so muchpotential that it has reached the radar ofrenowned global companies, and there are manyother sets of data that point towards positivegrowth and further development in the region.

According to the U.S. Census Bureau,Brownsville’s population has grown 111.9%,compared to Texas and the U.S. which havegrown 83.1% and 39.9%, respectively, between1980 and 2013.

In addition, Brownsville has a great advan-tage in that it has a young population with a me-dian age of 28.6. If we look at employmentfigures, based on the Texas Workforce Commis-sion, Brownsville MSA employment increased24.7% between 2000 and 2013 (values representtotal nonfarm, not seasonally adjusted jobs).

Average annual unemployment rates inBrownsville have been dipping. The unemploy-ment rate in 2011 was 12.3%, in 2012 it was11%, and in 2013 it was 10.6%, closing the yearin December 2013 with a 10.2% unemploymentrate. Though the unemployment rate is stillhigh, the good news is that it is decreasing.

Another positive trend points to the Port ofBrownsville’s yearly exports and imports tradeactivity. The Texas Center for Border Economicand Enterprise Development reported that be-tween 2011 and 2013 there was a nearly 4% in-crease in total trade. In 2011 total tradeamounted to $15,235,999,414 and in 2013 itwas $15,826,131,755.

In regards to housing, according to the RealEstate Center Texas A&M University,Brownsville’s home sales also showed an up-ward shift between 2011 and 2013. Total homesales increased by 10.4% (701 homes sold in2011 and 774 in 2013) and the total dollar vol-ume of home sales increased 21.8% (2011’s dol-lar volume was $81,255,810 and 2013 was$98,965,940).

A city on the riselOCAliNDUSTrYCOrNer

lizzy de la Garza PutegnatDir. of Business Retention & Expansion

Turn To Page 19

EJmANUFACTUriNG iNDUSTrY


The game plan for Nova/Link issimple – concentrate on qualita-tive output, provide good cus-

tomer service and build relationships. In turn, the traditional means of word-

of-mouth keeps the company busy withactivity.

“Quality of our work and the relation-ships, that’s what has built Nova/Link forthe past 25 years,” said René XavierGonzález, who along with Brad Wolfe,Jason Wolfe and their executive team runthe near 500,000-square-foot operation,

which has major operations in Matamoros,Reynosa and warehousing in Brownsville.

Nova/Link is a near-shore contractmanufacturer located in the Brownsville-Matamoros Borderplex region that pro-vides a complete package of customizedmanufacturing services to help clients inthe transition of bringing their manufactur-ing operation to Mexico. Contract manu-facturers also are referred as shelteroperations, which is similar to an indus-trial incubator of sorts.

In 1988, René González (RenéXavier’s father) and Bill Wolfe (Brad andJason’s father) created Nova/Link to assist

and facilitate manufacturers with the relo-cation of their operations into Mexico.Using their combined experiences withcompanies such as FINSA Industrial Parksand General Motors, René and Bill wereable to assist and facilitate the partial andtotal relocations for several Fortune 500companies such as 3 divisions of GeneralMotors, Magnetek Mitsubishi, and Trico.

And after 25 years in the industry, thefamily owned business has achieved re-spect and recognition from clients andcompetitors thanks to the experience andsuccess the company has achieved withinthe manufacturing industry.

Currently René Xavier González andBrad and Jason Wolfe run the operationswith the same intention of providing qual-ity service and maintaining successful re-lationships with clients.


delof successm

Relationships, quality of work keepsNova/Link bustling after 26 years of existence

EJmANUFACTUriNG iNDUSTrY

“Nova has been an integral part of thecommunity. Both my father Bill Wolfe andRené’s father, René González, have been acrucial part of the community in establish-ing many maquiladoras here, starting withGM and Trico and bringing Toyota to thearea,” Jason Wolfe said.

“It’s been 26 years of aggressivegrowth and thousands of resulting jobs inthe area. It’s been a good ride for us, wecontinue to grow, we continue to plan togrow, and be one of the pivotal employersin the area.”

This philosophy is evident in theirwebsite, where the company has incorpo-rated a section reserved exclusively for“testimonials” from some of their clients,who share comments about the successfulworking relationships they have built withNova/Link.

“Amerex Corporation and Nova/Linkhave enjoyed a very successful partnershipfor the past six years. Nova/Link providesa trained, reliable and quality conscienceworkforce that always meets our sched-

uled requirements efficiently and effec-tively,” wrote Ken Bowen, Vice Presidentof Operations for Amerex Corporation, amanufacturer of fire extinguishers forcommercial and industrial purposes pur-poses

Doug Freeman, Vice President ofGlobal Supply Chain & Product Develop-ment for Patagonia, an outdoor apparelgiant based out of California, mentionedthat “Patagonia has worked closely withNova/Link over the past 10 years to de-velop a reliable, smooth running, andlong-term partnership. Over the past 5years, we initiated several changes withinour supply chain that included movingaway from cut-make-trim purchasing tofull package sourcing, evolving our ERPsystem to Microsoft A/X, and introducingthe Tradecard payment platform. All ofthese changes represented unique chal-lenges to our suppliers, but Nova/Linkconsistently responded with high degreeprofessionalism, helping Patagonia reachnew heights in delivering quality product,

consistently on-time.”

The evolutionNova/Link started out with roughly

15,000 sq. ft. of space and 30-40 opera-tors. Over the years the volume of busi-ness has transformed the company andcreated the growth to its current size,Wolfe said.

Today, the company has presence inMatamoros and Reynosa with a combinedmanufacturing space of roughly 490,000sq. ft. Additionally, their 80,000 sq. ft. dis-tribution center located in Brownsvilleprovides full distribution for some of theirclients.

Depending on seasonality, the com-pany boasts a labor force of between 3,000and 3,200 employees.

The industries Nova/Link services pri-marily are automotive, aviation, electron-ics, textile and medical. In their 26 yearsof existence, they have manufacturedproducts like hospital beds, apparel, airbags, seat belts, airplane seats, amongother goods.

1988 First project launched building airport shuttle vans1988 Nova/Link expands operations and leases first 50,000 sq. ft. building1989 Nova/Link adds additional 50,000 sq.ft.1989 Nova/Link breaks into electronics, building car alarms1991 Nova/Link opens firstfacility in Reynosa1992 Nova/Link begins long history oftextile manufacturing with Fruit of theLoom as first customer1994 Nova/Link begins proprietarytrucking services1999 Nova/Link re-opens operations in Reynosa2009 Nova/Link begins firstfull package program2010 Nova/Link moves into new SIDEE facilities2013 Nova/Link celebrates 25 years in business

The company has facilities inmatamoros (pictured below) andreynosa with a combined manu-facturing space of roughly 490,000sq. ft. Additionally, their 80,000 sq.ft. distribution center located inBrownsville (pictured left) pro-vides full distribution for some oftheir clients.

Photos courtesy of Nova/Link


mANUFACTUriNG iNDUSTrY

“For the most part, the automotivesector seems to be the dominant industryright now that we are courting and fromwhere companies have looked for us,”González said, stressing the fact that it isnot the only industry they concentrate onor rely for business.

Recently, Nova/Link has been work-ing with companies in the technologyfield, since market trends point to the di-rection of that industry.

“The market dictates what kinds ofproducts are manufactured, and all areleaning towards the technical side. That’swhere I like to see it go,” González said.“Our primary industries were auto andtextile and as the years have gone on wehave been able to indulge in differentkinds of products that are more techno-logically oriented.”

Wolfe mentioned that being a familybusiness gives Nova/Link a unique ad-vantage that puts them ahead of theircompetitors.

“Being a family business, we are ob-viously able to shortcut a lot of the corpo-rate cultural mentality of some companiesand we are able to fast track programs.Since we make the decisions we are ableto make decisions and strategies that allowfor us to take on continued growth,” hesaid.

“We’ve been able to diversify our busi-ness to the point where we are in the auto-motive, aviation, medical, textileindustries. We’ve seen the evolution fromthe old days 26 years ago of making a highlabor content, but low value content prod-uct that you made in mass to a productnow that is very high in value and is muchmore responsive to the market.”

Wolfe sees Matamoros as an area withgreat potential for the manufacturing in-dustry, and the benefits of establishing op-erations in this border city go from aqualified and experienced labor force toexcellent logistical advantages.

“We have had operations in variousplaces in Mexico and being in Matamorosis one of the most manufacturing friendlyenvironments to be in because of the setup that we have here with the maquila in-dustry and the interaction withBrownsville and Matamoros,” Wolfe said.

Bumps along the roadAs part of their efforts to keep up with

the ever changing market tendencies andtry to remain relevant in a highly competi-tive industry, Nova/Link revamped itsshelter manufacturing model to offer moreoptions to companies looking to expand orthat are looking to improve the quality oftheir products.

“We have developed our model fromproviding relatively straight forward shel-ter manufacturing services to a model thatincludes startups shelter operations andfull package operations,” Wolfe said.

But like any other corporation,Nova/Link has experienced its share ofchallenges, and Wolfe said their businessmodel is what has helped them managethose challenges that have presented alongthe road, like the global recession that hitin 2008 and 2009.

“You look at the challenges that havecome at us over the years and certainly therecession hit us very hard just like it did alot of people,” Wolfe said. “Our businessmodel has been key to our success.”

“The beauty of our model is that weare flexible for our clients. Our clients are

not stuck with the overhead costs of theirown administrative staff down here,they’re not stuck with leasing a facilitythat is larger than what they need and ifthey had to reduce in volume they had tocontinue to bare that overhead, they wereable to flex down with us just like they’reable to flex up for growth. So their costwas mitigated, many of our clients sur-vived that period of time just like someothers did, but in the recovery period, theywere able to actually grow beyond wherethey were at because they were taking andabsorbing the manufacturing requirementsof the rebound when some of their compe-tition was not able to survive that period.They survived because they had an opera-tion here with us, and the flexibility thatwe provided them helped with that processof survival,” Wolfe said.

Wolfe added that another element thathelped them weather the storm during therecession was the company’s diversity.

“When the automotive industry wasdown, the textile industry may have beenup, or the medical industry may have beenup. So our diversity certainly helped us sur-vive that period of time,” he said. EJ

Agrowing number ofAmerican companies aretaking part in the

“reshoring movement,” establishingtheir manufacturing facilities alongthe U.S.-Mexico border as they lookfor better costs in manufacturing andtransporting their goods to their finalmarket destination, in many cases theUnited States.

These companies have been repo-sitioning their assembly lines on theMexican side of the U.S.-Mexico bor-

der from Tijuana to Matamoros.In Matamoros, companies such as

Nova/Link have been helping thesecompanies set up shop in Mexico, of-fering various services under thesame roof. These services includemanufacturing and logistical needs.

Other companies especializing inreshoring or shelter operations in theBrownsville-Matamoros Borderplexinclude: Tricar Maquila and Logis-tics, ORC Industries, ConsultingPoint, Inc., SGC Manufacturing, IAIBrownsville, COIMA, and MLT In-ternational Consultants. EJ

Taking part in the “reshoring movement”

EJ


From Staff reports


BUSiNeSS&eCONOmiCBrieFS

International company KSM re-cently announced it will invest $1.5million in the construction of a manu-facturing plant in Matamoros.

Tamaulipas State authorities an-nounced that the plant, which will man-ufacture electric harnesses for theautomotive sector, will start operationsin the third quarter of 2014.

Rafael Angel Ortiz Salazar, DeputySecretary for Investments and Promo-tions of the Ministry of Economic De-velopment of the State of Tamaulipas,said that at least 70 jobs will be gener-ated when production starts at the plant,in addition to the indirect jobs the ven-ture will also create. EJ

KSm expands operations, will open plant in matamoros

Port officials and a host of local andcounty dignitaries held a ribbon cuttingceremony in February to celebrate whatofficials have called a major develop-ment for Cameron County: the Port ofBrownsville’s new primary entrance theState Highway 550 connector entry.

SH 550, formerly known as FM 511,is an alternate route between the Port ofBrownsville and Interstate 69.

Port Director and CEO Eddie Campi-rano said the Chemical Road entrancewill close and the Foust Road entrance,currently the primary entryway to theport, will operate five days a week from6 a.m. to 8 p.m.

“And on any given day, we may haveas many as 500 trucks in and out of thePort of Brownsville,” Campirano saidfrom inside the SH 550’s new entrancebooth. “The whole idea of it is to facili-tate that commercial truck traffic.”

Truckers coming from the ports ofHouston or Corpus Christi can nowreach the Brownsville port without everhaving to leave I-69, he said.

“We do hope and anticipate increaseddirect access by truck traffic to the Portof Brownsville,” he said.

The complete article can be found atwww.brownsvilleherald.com

New Sh 550 entrance to Port of Brownsville inaugurated

Moving on to the city’s tax revenues,the Texas Comptroller of Public Accountsreported a 5.74% increase inBrownsville’s local sales and use tax rev-enue between 2011 and 2013 (2011 gen-erated $31,943,876 and 2013 generated$33,778,110). The City of Brownsvillealso reported an upward shift of 4.5% inproperty tax roll between fiscal years2011 and 2013, reaching its highest valueof $5,580,529,052 for fiscal year 2013since 2001.

Shifting gears to education, our highereducation institutions have also sharedpositive trends.

Last fall semester (2013), the Univer-sity of Texas at Brownsville said enroll-ment exceeded their original estimate of7,500 students, reporting a total enroll-ment of 8,420 students and a total of8,601 when counting students in theBrownsville Early College High Schooland the Math and Science Academy. Withthe merger of University of Texas atBrownsville and the University of TexasPan-American, student enrollment num-bers will surely skyrocket at the new Uni-versity of Texas Rio Grande Valley.

Texas Southmost College also re-cently reported promising news announc-ing that their 2014 spring semesterenrollment at TSC increased 15.6% fromlast fall’s semester.

In addition, more than 1,000 of thosestudents are dual-enrollment students thisspring semester compared to the 650 stu-dents who were dual-enrollment last fallsemester. TSC expects both dual-enroll-ment and total enrollment figures to in-crease this coming fall semester as thecommunity college continues to reestab-lish itself.

The Brownsville community has a lotto be proud of. We may not be rightwhere we need to be yet, but we are suremaking progress and taking steps in theright direction. EJ

A city on the riseContinued from Page 15

The U.S. economy grew at a 3.2 percentannual rate in the October-December quar-ter on the strength of the strongest con-sumer spending in three years, anencouraging sign for 2014.

The fourth-quarter increase followed a4.1 percent growth rate in the July-Septem-ber quarter, when the economy benefitedfrom a buildup in business stockpiles.

For 2013 as a whole, the economy grewa tepid 1.9 percent, weaker than the 2.8 per-cent increase in 2012, the Commerce De-partment said Thursday. Growth was heldback last year by higher taxes and federalspending cuts.

With that drag diminished, many econo-mists think growth could top 3 percent in2014. That would be the best performancesince the recession ended in mid-2009.

The expansion in the final three monthsof 2013 was fueled by a 3.3 percent growthrate in consumer spending, a significant ac-celeration from 2 percent spending growthin the third quarter. It was the best spendingpace since the fourth quarter of 2010. Con-sumer spending is particularly important be-cause it accounts for about 70 percent of theeconomy.

Government spending fell at a 4.9 per-cent rate last quarter. State and local gov-ernment activity rose at a scant 0.5 percent

rate, but federal government spending tum-bled at a 12.6 percent rate. The 16-day par-tial government shutdown in October cutfourth-quarter growth by about 0.3 percent-age point, the government said.

The strength in consumer spending re-flected gains in purchases of durable goodssuch as autos and nondurable goods such asclothing. Spending on services also rosestrongly.

Businesses invested in more equipmentlast quarter. There was also strength from ashrinking trade deficit. But housing con-struction declined.

The 3.2 percent estimated growth ratefor the economy last quarter was the gov-ernment's first of three projections of grossdomestic product for the October-Decemberquarter. The GDP measures the economy'stotal output of goods and services.

This year, economists think the econ-omy will get a lift from continued gains inhiring. Further steady job growth wouldgive more households money to spend andhelp lift consumer spending, which ac-counts for about 70 percent of economic ac-tivity.

Source: The Associated Press

UNiTeD STATeS

economy grows at 3.2 percent rate in Q4Gross Domestic Product

3.2%

Real gross domestic product -- the output of goods andservices produced by laborand property located in theUnited States - increased at anannual rate of 3.2 percent inthe fourth quarter of 2013(that is, from the third quarterto the fourth quarter), accord-ing to the “advance” estimatereleased by the Bureau ofEconomic Analysis.

Trade in Goods and Services

-$38.7billion

Total December exports of$191.3 billion and imports of$230.0 billion resulted in agoods and services deficit of$38.7 billion, up from $34.6billion in November, revised.December exports were $3.5billion less than November ex-ports of $194.8 billion. De-cember imports were $0.6billion more than Novemberimports of $229.4 billion.

U.S. international Transactions

$94.8 billion

The U.S. current-accountdeficit — the combined bal-ances on trade in goods andservices, income, and netunilateral current transfers— decreased to $94.8 bil-lion (preliminary) in thethird quarter from $96.6 bil-lion (revised) in the secondquarter. The deficit de-creased to 2.2 percent ofcurrent-dollar gross domes-tic product (GDP) from 2.3percent in the second quar-ter. The decrease in the cur-rent-account deficit wasmore than accounted for byan increase in the surplus onincome.

employment Forecast

6.6%unemployment

rate in U.S.

Total nonfarm payroll em-ployment rose by 113,000in January, and the unem-ployment rate was littlechanged at 6.6 percent,the U.S. Bureau of LaborStatistics reported today.Employment grew in con-struction, manufacturing,wholesale trade, and min-ing.

import and export Price indexes

0.1%

U.S. import prices rose for thesecond consecutive month in Jan-uary advancing 0.1 percent, aftera 0.2 percent increase in Decem-ber. In January, higher nonfuelprices more than offset decliningfuel prices. U.S. export pricesalso rose in January, increasing0.2 percent following a 0.4 per-cent advance in December.

SOURCES: U.S. CensusBureau;U.S. Bureauof EconomicAnalysis; U.S. Bureauof Labor Statistics


Global economic Activity

0.4%

Mexico’s global economicactivity index (IGAE), theproxy for GDP, grew 0.4 per-cent in November after rising0.3 percent in October. Serv-ice-related activities (includ-ing trade and transportation)expanded 0.6 percent.

exports

0.2%

Exports fell 0.2 percent inDecember but closed theyear slightly up. In 2013,total exports grew 0.8 per-cent, held down by oil ex-ports, which declined 7.5percent. Manufacturingexports increased 2.6 per-cent.

industrial Production

0.1%

Industrial production (IP)grew 0.1 percent month overmonth in November after ex-panding 0.4 percent in Octo-ber. Three-month movingaverages show improvementin total IP, while manufactur-ing output shows some slow-ing.

Consumer Price indexInflation spiked in December,and prices were up 4 percentyear over year, their highest levelsince June 2013. The increasewas due to higher gasolineprices, combined with a rise infresh fruit and vegetable prices.Prices excluding food and en-ergy were up 2.8 percent yearover year, which is still belowthe central bank’s long-term in-flation target of 3 percent.

Peso/Dollar exchange rate

13.2pesosper dollar

The exchange rate aver-aged 13.2 pesos perdollar in January, a de-preciation of 1.4 per-cent from December,when it averaged 13. Thepeso appreciated 0.6 per-cent in December. HigherU.S. interest rates and aspike in Mexico inflationmay be helping push up thedollar relative to the peso.

employment

3.1%

Formal-sector employ-ment—jobs with governmentbenefits and pensions—in-creased at an annualized rateof 3.1 percent in December,below November’s 4.2 per-cent but above the averagemonthly rate of 2.9 percentfor the year. Formal-sectoremployment grew 4.6 per-cent in 2012.

mexiCO

Mexico’s economy expanded wellinto the fourth quarter as themonthly proxy for gross do-

mestic product (GDP) increased in Octoberand November—a continuation of growth fol-lowing a third-quarter rebound. Other recentdata are generally consistent with continuedexpansion. Industrial production, employmentand retail sales grew, although exports edgeddown. Inflation turned up, and the peso re-versed course and lost some ground against thedollar in January.

Output growsMexico’s global economic activity index

(IGAE), the proxy for GDP, grew 0.4 percentin November after rising 0.3 percent in Octo-ber.

Service-related activities (including tradeand transportation) expanded 0.6 percent,while goods-producing industries (includingmanufacturing, construction, utilities and min-ing) grew 0.1 percent. Agricultural output fell6.5 percent.

The most recent consensus forecast indi-cates that the economy grew 1.3 percent in2013 and that it will grow 3.4 percent in 2014.

Industrial Production RecoveringIndustrial production (IP) grew 0.1 percent

month over month in November after expand-ing 0.4 percent in October. Three-month mov-ing averages show improvement in total IP,while manufacturing output shows some slow-ing.

Meanwhile, U.S. IP grew 0.3 percent inDecember after rising 1.1 percent in Novem-ber. Mexico’s industrial production typicallytracks U.S. IP, due in part to the U.S. automo-tive industry’s large presence in Mexico.

Inflation ticking upInflation spiked in December, and prices

were up 4 percent year over year, their highestlevel since June 2013. The increase was due tohigher gasoline prices, combined with a rise infresh fruit and vegetable prices.

Prices excluding food and energy were up2.8 percent year over year, which is still belowthe central bank’s long-term inflation target of3 percent.

The central bank lowered its policy rate to3.5 percent in October over concerns that theeconomy was continuing to slow. It was thethird monetary policy easing this year. EJ

SOURCE: Federal Reserve Bank of Dallas

economy continues growth

SOURCE: Federal ReserveBank of Dallas

4%


Texas factory activity increasedfor the tenth month in a row inFebruary, according to business

executives responding to the Texas Manu-facturing Outlook Survey. The productionindex, a key measure of state manufacturingconditions, rose from 7.1 to 10.8, indicatingoutput grew at a slightly stronger pace thanin January.

Other measures of current manufactur-ing activity also reflected a pick up. The ca-pacity utilization index edged up to 9.1,with a quarter of manufacturers noting anincrease. The shipments index rose again inFebruary, coming in at 13.3. The new ordersindex continued to indicate demand growthand was 9.5, down from 14.4 in January butabove the levels seen toward the end of lastyear.

Perceptions of broader business condi-tions were not as positive this month as theywere in January. The general business activ-ity index fell to zero after eight positivereadings in a row. The company outlookindex also declined, from 15.9 to 3.4, hit-ting its lowest reading since last spring.

Labor market indicators reflected con-tinued employment growth and longerworkweeks. The February employmentindex edged up for a third consecutivemonth, rising to 9.9. Eighteen percent of

firms reported net hiring compared with 8percent reporting net layoffs. The hoursworked index shot up from 3.4 to 12, reach-ing its highest level in more than two and ahalf years.

Upward pressure on prices and wagescontinued in February. The raw materialsprice index fell to 21.9 but remained highrelative to what it was for most of 2013.The finished goods price index held steadyat 11.2, a level well above the average overthe last couple of years. Looking ahead, 43percent of respondents anticipate further in-creases in raw materials prices over the nextsix months, while 33 percent expect higherfinished goods prices. Compensation costsincreased at a slightly stronger pace thismonth. The wages and benefits index rosefrom 21.6 to 25.8, hitting a six-year high.

Expectations regarding future businessconditions remained optimistic in February,although most indexes of future activity fellfrom their January levels. The index of fu-ture general business activity moved downbut posted a still-robust reading of 15.2.After hitting a three-year high last month,the index of future company outlook fell 12points to 20.6. EJ

SOURCE: Federal Reserve Bank of Dallas

TexAS

manufacturing picks up againemployment

6.0%

The unemployment rate de-clined to 6 percent in De-cember from 6.1 percent inNovember. The Texas rateremains lower than the U.S.rate, which was 6.7 percentin December. Texas gained21,400 jobs in Decemberafter adding 16,100 jobs inNovember. Texas employ-ment stands at 11.31 million.

monthly exports

0.9%

Texas exports rose 0.9percent from October toNovember after rising4.5 percent from Sep-tember to October. No-vember exports were12.1 percent higher thanat the same time lastyear.

Production index- Texas manufacturing

7.1

Texas factory activity increasedfor the ninth month in a row inJanuary, according to the TexasManufacturing Outlook Sur-vey. The production index, akey measure of state manufac-turing conditions, edged upfrom 6 to 7.1, indicating outputgrew at a slightly stronger pacethan in December.

Natural Gas Prices

10.6%

Natural gas prices rose to$4.69 per million Btu inJanuary, a 10.6 percent in-crease from the Decemberlevel. The price was 40.8percent higher than in Janu-ary 2013.

Crude Oil Prices

3.2%

The West Texas Inter-mediate crude oil pricedecreased 3.2 percent to$94.64 per barrel in Jan-uary and was down 0.1percent year over year.

Texas rig Count

836

The Texas rig count fell to836 in January from 843in December but was up1.8 percent year over year.

SOURCE: Federal ReserveBank of Dallas


Border Crossings

ConstructionemploymentCivilian Labor Force: 164,800

Employed: 149,200

Unemployed: 15,600 9.5

Unemployment rate: 9.5%

Brownsville-Harlingen MSA data for December 2013Source: Texas Workforce Commision

BrOwNSville BOrDerPlex

The Brownsville-Harlingen metro-politan statistical area saw thelargest decline in unemployment

among the state’s nine major MSAs fromNovember to December, according to a newreport of seasonally adjusted employmentrates from the Federal Reserve Bank of Dal-las.

At the same time, job growth continuesto be weak, according to an economist withthe Dallas Fed.

The unemployment rate dropped from10.1 percent to 9.8 percent during the pe-riod. According to data from the Dallas Fed,the decline in the Brownsville-Harlingen un-employment rate follows a trend that beganin late 2011 and early 2012.

This trend came on the heels of a sharpincrease in the unemployment rate thatbegan in early 2008 and peaked at more than12 percent in the last quarter of 2010, as theeffects of the recession trickled down to theRio Grande Valley.

Unemployment in the Brownsville-Har-lingen MSA fell steadily from mid-2003until 2008.

The jobless rate was around 5.5 percentin 2008 before it began to climb again, Dal-las Fed data show.

But Keith Phillips, senior economistwith the Dallas Fed, said unemploymentrates are volatile month to month and don’t

necessarily tell the whole story.In fact, job growth in the Brownsville-

Harlingen MSA was only .4 percent, and itdidn’t break 1 percent anywhere in the Val-ley, he said. Noting the large number of fed-eral jobs in the Brownsville-HarlingenMSA, Phillips said the anemic job growthlast year is largely due to cuts in federalspending, which fell 13 percent nationwidelast year.

Employment in home health was hit harddue to a reduction in federal support for thesector, he said.

Still, there were some positive signs forjob growth late in 2013, Phillips said.

“There was some improvement in thefinal quarter, but I think overall you got hitpretty hard by the federal government(cuts),” he said. “Month to month that un-employment rate can swing, and the smallerthe region, the more volatile it is.

“I think federal government cuts aregoing to be a lot smaller this year, and that’sgood news coming into the new year.”


in the Thursday, January 29, 2014 issue of The Brownsville Herald.

Unemployment rate drops

RailNorthbound: 43,632Southbound: 41,981

TruckNorthbound: 177,008Southbound: 190,815

VehicleNorthbound: 4,784,585Southbound: 2,544,864

PedestrianNorthbound: 2,117,807Southbound: 1,781,808

Data is annual total for 2013Source: Texas Center for Border

Economic and Enterprise Development

Residential Building Permits: $60,374,626

Commercial Building Permits: $60,522,051

Total Permits: $120,896,677

Data is annual total for 2013Source: Rio Grande Valley Partnership

Landings & TakeoffsEnplaned Passengers: 7,622*Deplaned Passengers: 8,379*Total Passengers: 16,001*

Revenue Landed WeightsAmerican Airlines:4,134,400*United Airlines:4,271,408*Other: 2,667,432*Total: 11,073,240*

Cargo Weights (lbs)Cargo Enplaned: 136,633*Cargo Deplaned: 53,114*Total: 189,747*

Annual total for 2013Landings & Takeoffs: 36,938Passengers: 197,935Revenue Landed (lbs): 140,968,023Cargo Weights (lbs): 1,941,263

Brownsville South Padre island international Airport

*Data for January 2014

Source: Brownsville South Padre IslandInternational Airport


™™™

“Texas is a state where a dream can be put to work.”- Texas Governor Rick Perry

It’s a commitment to create and sustain an environment that fosters business and entrepreneurship, trains the workforce of the future, and helps

to your growth and success Come to Texas, we’re

Wide Open for Business

brownsville (texas) economic journal spring 2014

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