13 November 2006

That giant sucking sound gets louder

A decade after railing against NAFTA and infamously speaking of a "giant sucking sound" - jobs being pulled south to Mexico - the company founded by former presidential candidate Ross Perot bolted for Guadalajara, where, according to the company, Perot Systems Corporation will employ 270 engineers.

It's an obvious win for Guadalajara, dubbed the Silicone Valley of Mexico - and referred to as such far too often by the foreign press. The local technology sector slumped badly earlier in the decade as foreign competitors put the boots to Guadalajara - and much of Mexico for that matter. But things are bouncing back; HP, IBM, Flextronics and Solectron all have significant operations in the area. A friend in the industry said many companies find it more convenient to have operations closer to the U.S. - something that compensated for the lack of cost advantages in Asia. Competitiveness is an issue though as tax incentives make keeping an inventory of supplies costly and there's not a 24-hour port of entry at the Guadalajara airport.

Lower wages in Mexico was cited as a reason for the Guadalajara expansion. Many university-educated Mexicans speak English, but there's also a glut of professionals, which, in part, drives down wages.

In an interesting twist, Perot will rent space in the local World Trade Center, which has been sparsely occupied since its completion. Despite the abundance of space, new offices keep being constructed and rents stay stubbornly high.

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