San Antonio poised to become 'NAFTA' capital.

When San Antonio was chosen recently as home to the North American Development Bank (NADBank), it was just one more affirmation of the city's emerging status as the gateway to free trade with Mexico.

Endorsed by both governments, the selection of San Antonio as the site for the NADBank, set up under the North American Free Trade Agreement (NAFTA) to help fund environmental and infrastructure projects along the United States-Mexico border, is symbolic of the cultural and historical ties between the city and its southern neighbor that date back more than 275 years.

Trade with Mexico Means Capital and Jobs for San Antonio

With the passage late last year of NAFTA, virtually everyone agrees that there are tremendous opportunities for trade with Mexico. Mexico is already the United States' second-largest trading partner, having surpassed Japan in 1992, and trailing only Canada. A study by University of Texas at San Antonio projected that the current $60 billion in trade between the two countries will more than double by the turn of the century -- and that was before the free trade agreement.

According to Mario Hernandez, president of the San Antonio Economic Development Foundation, San Antonio has been reaping the benefits of its proximity to Mexico for some time.

"Of 45 new companies that have relocated to the Alamo City since 1990, 14 came to serve the U.S. and Mexico markets from this location," Hernandez said. "The vast majority of the billions of dollars in annual trade with Mexico comes through San Antonio."

San Antonio Mayor Nelson Wolff agreed.

"We've been told that this could be the most significant economic shift ever to occur in North America," he said. "And we believe we're positioned to benefit more from it than any major American city."

Others share Mayor Wolff's vision. World Trade Magazine last year named San Antonio one of its Top Ten U.S. cities for international trade. A recent New York Times article proclaimed San Antonio the "new crossroads of North America." Some have even hailed the Alamo City as a Hong Kong to Mexico's China.

San Antonio -- A Natural Location for Distribution of Goods

Geographically, the city's ties to Mexico are nearly as strong as its cultural ones. It is safe to say that all roads to Mexico lead through San Antonio, the closest major American city to Mexico's three largest markets: Mexico City, Monterrey and Guadalajara. Goods flowing to and from Mexico to New York, Chicago, Atlanta, Denver and Dallas, for example, all funnel through San Antonio via Interstate 35 from the north and Interstate 10 from the east and west. Two of the three trunk railroads that serve San Antonio extend into Mexico with regular freight and passenger schedules. Most of the 29 truck lines that serve San Antonio pass through the city to serve Mexican points of entry. And the San Antonio International Airport has daily non-stop flights to Mexico City, Monterrey and other key Mexican cities.

Mexican Trade Offices

Largely because of its geographic location, shared language, history and culture, San Antonio is also a city where people from both sides of the border feel comfortable doing business. One sign of this is the Mexican trade offices, or "casas," that have opened in San Antonio in recent years, evidence that the city has been positioning itself for increased trade with Mexico, with or without NAFTA.

In fact, the city leads all other U.S. cities in the number of these casas that have been established. Five of these -- Casa Jalisco, Casa Nuevo Leon, Casa Tamaulipas, Casa Morelos and Coahuila Trade Mission -- are operated by Mexican states with the goal of promoting economic development. Each casa helps facilitate cross-border business and assists companies in making contacts and forming joint-venture partnerships.

Furthermore, the City of San Antonio has trade offices in Guadalajara and Monterrey to assist local companies interested in developing business in Mexico. A third "Casa San Antonio" is planned for Mexico City.

"Of all the cities in Texas and the rest of the country that we considered, San Antonio was the choice for us," said Luis Cruz, executive director of Casa Morelos. "Entrepreneurs in Mexico prefer to do business in San Antonio because the city understands our culture."

Business Opportunities with Mexico

Many companies in San Antonio are already conducting business south of the border. A recent survey of local businesses by city officials and local chambers of commerce found that 200 companies routinely deal with Mexico.

MSAS Cargo International, an international leader in freight management, opened a major new 200,000-square-foot warehousing and distribution center in San Antonio. Here, Far East components and American communications equipment are gathered and sent to maquiladoras in Mexico for assembly. The final products are then distributed across the United States from the San Antonio warehouse. Recent U.S. Customs Service approval to become the largest trade zone operator in San Antonio has given MSAS added leverage in convincing overseas shippers to route products through the city.

"Geographically, San Antonio is in a prime location," explained Jean Jabsen, local manager of MSAS. "Our facilities are adjacent to Interstate Highway 35 -- one of the busiest traffic lanes to Mexico -- and just three hours trucking time from the most active border points. This makes same-day and next-day trucking operations very feasible."

Another example is Loop Cold Storage, which receives vegetables from Mexico in bulk and re-packages them into smaller containers to send on to American retailers and wholesalers for final sale. In this way, the company "adds value" to the cargo before it continues on to destinations throughout the United States.

San Antonio has always naturally appealed to companies wanting to be closer to their operations on the border. Commonly known as maquiladoras, these facilities manufacture or assemble products in Mexico with the products being shipped later to plants or warehouses in San Antonio for distribution.

An example of such an operation is Bausch & Lomb, which opened a sunglass assembly and distribution facility in San Antonio in 1989 that now employs more than 500. The local plant takes advantage of San Antonio's proximity to Mexico and operates a maquiladora in Nuevo Laredo, Tamaulipas, Mexico, from which parts are brought to San Antonio for assembly, inspection and distribution. Since the company's arrival five years ago, it has added several manufacturing operations to the San Antonio facility that previously were conducted offshore.

The Holt Companies also see a strong potential for infrastructure development in Mexico. One of its subsidiaries, Holt Company of Texas, a heavy equipment sales and service company, has been trading with Mexico since the company was founded 60 years ago. This Caterpillar (CAT) dealership has maintained strong relationships with CAT dealers in the Mexican states that border Texas, and supplies parts and used Caterpillar equipment to Mexican customers from its stores in South Texas.

Other companies such as M&Q Plastics, GW Plastics and Bates Container have moved to San Antonio in the recent past, with the city's proximity to Mexican manufacturing facilities serving as a primary attraction. San Antonio firms are looking at the Mexican market for retail and consumer goods opportunities, as well as chances to meet the demand for industry support services. For example, Labatt Food Service, a San Antonio-based food-distribution company, recently began a venture in Mexico City with a warehouse that serves 50 hotels and restaurants.

Free Trade Alliance

Since the signing of NAFTA and the selection of San Antonio as the site for NADBank, the city has taken other steps to ensure its role as an international trade leader. One of these steps involved the formation of the Free Trade Alliance San Antonio, bringing together a broad coalition of community organizations that have historically played an important role in San Antonio's economic development. This organization will coordinate the city's efforts in the international trade arena.

With the mission of making the city the center of trade for the Americas, Free Trade Alliance San Antonio will assist in the promotion of San Antonio goods and services to the Mexican, Canadian and other foreign markets, and in the education of businesses wishing to become more involved in international trade.

"One of our city's strengths is the ability of the business community, city leadership and other leaders and organizations to come together to attain such an asset as NADBank," Mayor Wolff said. "The Free Trade Alliance will be one more tool to bring together all segments of the community to build lasting relationships with Mexico and the Americas, and to distinguish San Antonio from Texas' other major cities as the leader in promoting free trade."