Brownsville and the Lower Rio Grande Valley are a stone’s throw from Matamoros maquiladoras that make $8 billion worth of goods annually and use $6.4 billion worth of components manufactured in other states and other countries.

Proponents of Bi-national Economic Development, or BiNED, say it’s not enough to be content with the meager “pass through” economic impact of component-laden trucks crossing into Mexico to supply the maquiladoras, “maquilas” for short.

Instead, at least some of those components should be made in the Valley, they contend, since it would bring economic prosperity via advanced manufacturing to the Valley and dramatically shorten certain supply chains for the maquilas.

The study is titled “Backward Integration of Manufacturing Supply Chains in the Brownsville-Matamoros Region: An Approach for Creating a Competitive Advanced Manufacturing Cluster.”

The other authors are Miguel Gonzalez, professor of manufacturing engineering at the University of Texas Rio Grande Valley; Mark Kroll, dean of the UTRGV Robert C. Vackar College of Business and Entrepreneurship; Pablo Rhi-Perez, UTRGV professor of marketing and entrepreneurship; and Christopher Wilson, deputy director of the Mexico Institute of the Woodrow Wilson International Center for Scholars.

The study aims to provide a foundation for planning a competitive, bi-national manufacturing cluster to capture some portion of the $6.4 billion in “outside inputs” to the maquilas.

The study’s first phase documented $4.3 billion of those inputs, the biggest customers being the automotive industry followed by the electrical/electronics industry. Roughly 39 percent of the inputs came from countries not party to NAFTA.

The high percentage of external inputs — those components made elsewhere — reveals that the region assembles more than it manufactures, reflecting the fact that the Valley’s perceived historical selling point has always been cheap labor, according to the study.

It found that the inputs that could be manufactured locally require plastic-injection molding or metal-stamping processes, while focus groups and regional industry leaders confirmed that — based on existing capital investment and know-how — those types of products could actually be made here.

“Focus groups also confirmed that local businesses could fill this role, which would strengthen the regional supply chain and significantly reduce shipping costs for the Matamoros operations,” according to the study’s executive summary.

Three big challenges were also revealed. One is that much of the decision making about maquila operations and procurement takes place outside the region, making it hard for local suppliers to build relationships with the controlling companies. The study also found that gaps exist “between the skills, technologies and processes needed to provide this supply.”

“Skills” is a big one in the sense the region lacks a sufficiently trained workforce to attract advanced manufacturing, Kroll said.

“I would have to say that the surprise, if there is a surprise, was the almost unanimous opinion that human capital development was a major inhibitor to our success,” he said.

Kroll said workforce development should be prioritized on both sides of the border, not just the U.S. side.

The second phase of the study drew on focus group feedback about how to grow the region’s manufacturing and to break into the maquila supply chain. It also identifies additional concerns, among them the fact that local manufacturers tend to deal in low volumes and make a variety of products involving short production runs, making it hard for them to match the prices high-volume manufacturers can offer.

A major conclusion of the study is that new firms would have to be created to take advantage of existing opportunities to produce die castings, plastic resin, precision-machined parts and other inputs currently brought in from outside the region. The study recommends that local economic development efforts should focus on building up companies and the workforce to take advantage of those opportunities, while noting the region’s opportunities don’t stop at “backward substitution strategies for existing products.”

Rather, as more manufacturers return operations to North America from overseas, the better the chance to grab a bigger share of advanced manufacturing opportunities still in the process of emerging, according to the report. With Texas as the nation’s largest exporter to Mexico, the Valley region is positioned to have a major voice in any renegotiation of NAFTA and other aspects of the bilateral economic agenda between the United States and Mexico, according to the study.

Marin said the U.S. move toward anti-globalization and the emergence of regional economies only boosts the odds of developing advanced manufacturing. Despite the obstacles identified by the study, momentum is growing as more leaders understand what a robust advanced-manufacturing presence would mean for the region, and that the opportunity is tangible rather than theoretical, he said.

Having a champion in U.S. Rep. Filemon Vela, D- Brownsville, is a plus, an influence that should trickle down to state elected leadership, Marin said. Success will depend on a coordinated, regional approach on the part of all players between Brownsville and McAllen, Matamoros and Reynosa, he said.

In fact, the study’s key recommendation — aside from redefining competitiveness for the region — calls for drafting a single economic-development BiNED plan for the entire region based on establishing advanced manufacturing. No doubt workforce development will likely be a major focus of that plan, along with technology and leadership.

“No one city can do it by itself,” Marin said. “It’s got to be Brownsville to McAllen.”