In Laredo, Texas, the local economy’s connection to the vagaries of trade around the world could hardly be more obvious.
It is a border town where the Mexican flag is rarely far from sight, and the border checkpoints connecting Laredo to its Mexican neighbor, Nueva Laredo, are the foundation of the town’s prosperity.
Laredo is the largest inland port in the US, with 9,000 trucks a day shuttling goods between countries thanks to the North American Free Trade Agreement (NAFTA).
In times of global economic turmoil, the connection is both a blessing and a concern. The 9,000 trucks are down from 12,000 trucks a day, and the occupancy rate at the warehouses that hold imports from Mexico is down slightly.
Moreover, China is making a play to take part of the Mexico’s share of the manufacturing market. As in many places across the US, these are uncertain times.
How ‘Immigration Nation’ copes
Yet Laredo also shows how “Immigration Nation” communities with large numbers of Hispanics are in some ways better positioned to ride out the recession than other Patchwork Nation community types.
“There aren’t many places in the US that have the kind of growing workforce like we have,” says Roger Creery, executive director of the Laredo Development Foundation, an organization that works to attract companies to the town.
“You look very attractive to industries that are trying to determine what their business model is going to look like with what’s happening in the world,” he says. “They’re young, energetic, 97 percent Hispanic, have strong family values, strong family culture, are entrepreneurial.”
The belt-tightening that occurred across most of the US this recession made a dent here. A decade ago, Laredo was one of the fastest growing cities by a Census Bureau ranking. Now that growth has slowed.
But in the scheme of things, it “hasn’t been as cataclysmic here as it has been in other areas,” Mr. Creery says.
Border as boon
According to NAFTA, Mexican truckers are restricted from driving further than 20 miles into the US and this creates a demand for warehouse space. Truckers unload their goods into yards and warehouses along the border and US drivers come to bring them further into the interior to American distributors and consumers.
The proximity to the border also creates a larger consumer base for the stores in Laredo. With two Walmarts, two Best Buys, and a Target, some of the largest chain stores in the US are here, and their prices are lower than in Mexico.
The Walmart will be crowded in the middle of the night, people here say, and Mexican shoppers will take the tags off clothes and leave boxes in the parking lot in order to avoid import taxes when they cross back over the border.
The US-Mexico border on the Rio Grande River wraps around the west and south of this town. The border is fluid; there are four international bridges for cars and pedestrians and one railway bridge. Across the river is Nuevo Laredo, and the ties between the two cities are more than economic.
“In Texas there is an openness, a back and forth that goes culturally and economically. It goes between families and companies and businesses and individuals on both sides of the border,” said Xochitl Mora Garcia, a spokeswoman for the City of Laredo.
A large factor that will determine if Laredo continues to thrive is China, says Mark Dotzour, a real estate economist at Texas A&M University.
“There’s a contest going on between Mexico and China to be a low cost producer to American markets. Growth has been a bit slower simply because China’s influence,” Mr. Dotzour said.
For Creery, he is watching for a revival in the automotive industry that he believes will benefit the region’s manufacturing and supplier networks.