US-Mexico border becoming tech center as firms exit California
Photo dated May 12, 2020, showing the entrance to the southern portion of the Tesla vehicle manufacturing plant in Fremont, California. EFE-EPA/ John G. Mabanglo/File
By Marc Arcas
San Francisco, Mar 29 (efe-epa).- The exodus of technology companies from California, which has been accelerated by the coronavirus pandemic, is significantly benefiting Texas and the US-Mexico border zone as a tech "hub" is being established there that takes advantage of the region's bilingual and bicultural characteristics.
Well-known tech firms like Oracle and Hewlett-Packard Enterprise, along with billionaires like Tesla CEO Elon Musk and thousands of sector employees and executives have announced in recent months that they have abandoned California, fed up with the high state taxes and what they feel is an environment that is too regulated there.
Their destination choice? Texas, a state that does not tax income - although all Americans must pay federal income tax - and with one of the country's lowest tax rates for corporations and a very loose regulatory structure.
"Last year, starting in July, we started to see a very strong increase in investments," Omar Saucedo - the spokesman for The Bridge Accelerator, a "startup" facilitator being pushed by Microsoft that operates in the border zone encompassing El Paso, Texas, and Ciudad Juarez, Mexico - told EFE in an interview.
Although relocating from California and landing in Texas was a trend that had already begun a few years back, the increase in telecommuting work due to the pandemic definitively pushed it further and, since then, cities like Austin and the El Paso/Ciudad Juarez metro area have grown precipitously.
"This is a zone with a bilingual, bicultural and binational labor force that can take advantage of the best of both worlds," said Saucedo, who emphasized that, despite the existence of a border policy, El Paso/Ciudad Juarez is a unique urban area within which people and businesses are continuously flowing back and forth.
"It's very common here for a Mexican businessman to have a presence in the US and vice versa," and this situation is a real draw for tech firms.
That is the case for PPAP Manager, a company that offers Cloud solutions so that manufacturing firms can increase their efficiency.
"Being on the border helps us since the flow of our business between the US and Mexico is much simpler. It's a region that's always open to experimentation and to trying new things: One can't forget that Ciudad Juarez was a pioneer in Mexican manufacturing," Rene Pons, the firm's cofounder, told EFE.
The heavy weight of the manufacturing industry in the region, in particular construction materials, plastics and electronic components, are creating an ecosystem full of opportunity for emerging tech firms devoted to providing services to these industries.
Besides less tax and regulatory pressure, the border region is competing with Silicon Valley in another area that's ever more important to employers: the cost of living is much lower and thus they can pay their workers lower salaries than in California.
The Zillow real estate Web site, for instance, says that the average home price in El Paso is $155,000 compared to $1.5 million in San Francisco and more than $3 million in Palo Alto, considered to be in the heart of Silicon Valley and where Hewlett-Packard was founded.
On the other side of the border, in Ciudad Juarez, prices are even more reasonable.
"I was born in the (Mexican) state of Chihuahua, and I can say that there are very talented and intelligent people here but that they were always working in the service sector," Ricardo Estrada, the founder and CEO of PID Electronics - a firm dedicatated to developing technologies that help manufacturing firms go digital - told EFE.
"Over the last five years, I'm seeing how that is changing. Businessmen are gaining ground," the young Mexican said, adding that he sees the El Paso/Ciudad Juarez region as one of North America's main innovation hubs.