2012 white paper developed by Crossborder Group for the Tijuana Economic Development Corporation (DEITAC) combining updated research on solar panel manufacturing for the City of Tijuana, a comparison of Tijuana's current photovoltaic manufacturing capacity compared to selected U.S. states, manufacturing costs, and tariff and logistical information to inform potential investors about the current status of solar panel, cleantech, and photovoltaic manufacturing in that city. Developed by Crossborder Group as one in a series of research-based informational documents for our client.

1. photo: Government of Baja California Tijuana-San Diego Region photo by Antonio Mercado
Cleantech Companies
Seeing Green in Nearshore Tijuana
July 2012

2. Tijuana: a Brilliant Place for Cleantech Annualized Solar Module
Manufacturing Capacity
Today’s fast changing and highly competitive cleantech (2011, Mega Watts)
industry requires that companies see green both for the
environment and in their bottom line. One of the best places to Ohio 361
do this in North America is a bright spot only 15-minutes from
Oregon 360
downtown San Diego: Tijuana, Mexico.
Tijuana 325
Tijuana’s nearshore location has become a natural choice for
California 286
some of the biggest names in the solar industry – Kyocera,
Siliken, and Energy Conversion Devices/UniSolar – with over Tennessee 210
1,350 workers in early-2012. As seen at right, in 2011 these
Colorado 138
three manufacturers had an annual photovoltaic module
manufacturing capacity in Tijuana of 325MW – making the 0 100 200 300 400
city a leading North America solar module production site,
only behind the factory capacities in Ohio and Oregon1. US State Data Source: GTM Research
Tijuana and Mexico are, in fact, one of the fastest growing US Imports from Mexico:
regions in the world for solar module exports to the United Solar Modules
(USITC; HTS 8541.4060.20)
States, expanding in 2011 to over US$513 million – third only to
$600
China and Malaysia. Surprising to many, in 2011, Mexico
exported 12 times more solar panels to the United States $500
US$ Millions
than Germany, Spain, France and the United Kingdom
combined, in terms of value.2 $400
$300
In the evolving world of cleantech and green energy, there’s no
alternative better than up-to-date information. This briefing is $200
meant to provide potential investors with a quick, fact-based
introduction to help explain why – in 2012 – Tijuana is not only $100
still the number-one city in Mexico for maquiladora (IMMEX)
manufacturing companies3, but also a natural place to choose $-
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
for finding a brilliant production platform for your business.
“…The [Tijuana] market
allows us to proactively
manage distribution and
supply to our customer base
in the United States; and, on
top of that, the economic
benefits are very substantial –
we found a reduction on the
order of 60%...”
- Scott Sporrer
Vice President and General Manager
Baja California Governor Osuna Millan and Tijuana Mayor Bustamante hear Siliken Renewable Energy
from Alfredo Puche, Siliken CTO and VP, on tour of Siliken’s Tijuana
manufacturing operation (2011, photo courtesy of State of Baja California)
www.TijuanaEDC.org || contact@tijuanaedc.org
Call toll free from the US: 1-855-558-5332 (1-855-55-TJEDC) || ph (011-52) 664-681-8344 | fx (011-52) 664-681-8788

3. Why Mexico and Why Tijuana? The Experts Agree…
As cleantech manufacturing incentives become harder to
find, it’s important to note that nearshore production in KPMG Competitive
Mexico provided one of the lowest-cost country sites Alternatives 2012
among fourteen in KPMG’s 2012 Competitive Alternatives Cost Index for
study. This study evaluated “26 significant business cost Manufacturing
components that are most likely to vary by location”,
finding (as seen at right) that Mexico provides
manufacturers with a 21% cost advantage compared to the China 74.2
U.S., as well as significant cost advantages compared to
other global locations. For instance, this same analysis Mexico 79.0
found that a Mexico location provided nearly the same cost Brazil 93.0
advantage as China, and three-times the cost advantage
UK 94.5
of Brazil, as compared to the U.S. 4
Canada 95.0
While many regions reuse old phrases to promote
France 96.1
themselves as possible locations for globally-expanding,
cleantech companies, Tijuana offers a unique combination US 100.0
of benefits that no other international city can, including: 100.1
Germany
An existing base of companies that make up one of
the largest concentrations of high-tech 0 25 50 75 100 125
manufacturing employment in North America;
A “next-door”, nearshore location to the
U.S. with quick logistical access to the West
Coast, and adjacent to several major
international seaports and airports;
Using sample data derived from
industry representatives and the
A trained, quality-conscious and highly Tijuana EDC, significant savings can be
bilingual workforce – in a low union,
business-friendly environment; gained for both smaller and larger
cleantech manufacturing operations in
Strong intellectual property-rights Tijuana:
protections guaranteed via NAFTA; and
Description Tijuana,
Lower-cost (as seen in the sample at right5), Employees
U.S. Cost
Mexico Cost
just-in-time production capabilities. Number of Employees 140 140
Direct 101 101
Indirect 25 25
“…We see that for clean tech and specifically Administrative 14 14
Hours/Work Week 40 48
for solar, this region is becoming a Mecca… Hours per Year 2,080 2,496
There’s good access to markets, there’s a Labor Cost per Hour
Direct Labor Cost/Hr $ 12.97 $ 2.95
good labor force and there’s a cost advantage Indirect Labor Cost/Hr $ 21.71 $ 12.35
to be working in Tijuana – labor costs are Admin. Labor Cost/Hr $ 24.47 $ 22.65
actually now, especially in China, equal to the Factory Cost
Labor $ 12.97 $ 2.95
labor cost in Tijuana.” Overhead $ 7.90 $ 4.64
General & Administrative $ 3.87 $ 3.70
- David Hester Factory Cost/Hr $ 24.74 $ 11.29
President Total Factory Operating Cost $ 5,196,584 $ 2,846,436
Kyocera Mexicana Potential Annualized Savings $2,350,148
www.TijuanaEDC.org || contact@tijuanaedc.org
Call toll free from the US: 1-855-558-5332 (1-855-55-TJEDC) || ph (011-52) 664-681-8344 | fx (011-52) 664-681-8788

4. Access to Suppliers, Customers
and Free Trade Preferences
Mentioning Tijuana’s location next to one
of cleantech’s biggest global markets is
more than just recycling a common phrase
for many nearshore locations – it actually
goes to the root of Tijuana’s competitive
opportunities. Three major seaports and
four major airports like LAX, SNA, SAN,
and TIJ are close by – not to mention
being next to end markets means lower
inventories, and cost-saving logistical
benefits by trucking finished product into
the U.S. market in as little as a few
hours. Whether your products need to go
to Southern California or New England,
trucking from Tijuana takes within one- to
five-days – keeping costs low, and reducing your firm’s carbon footprint at the same time).
30%+ tariffs or high duties a concern for U.S. or European solar markets? Take advantage of
Tijuana’s zero-percent tariffs for qualified products manufactured or assembled in Tijuana: our
cleantech companies get preferred access to suppliers and customers via free trade agreements
with the United States, Canada, the European Union, Japan, and many of Latin America’s
most important markets among them.
Tijuana: A Bright Spot In
North America’s Solar Zone Tijuana doesn’t just offer one of North
America’s best low-cost manufacturing
locations for cleantech products – it’s
also at the very center of some of the
highest average annual solar radiation
in North America, and within 700 miles
of nearly 22,800MW of utility-scale
solar projects under development…6
www.TijuanaEDC.org || contact@tijuanaedc.org
Call toll free from the US: 1-855-558-5332 (1-855-55-TJEDC) || ph (011-52) 664-681-8344 | fx (011-52) 664-681-8788

5. Tijuana’s Cleantech Manufacturers: World Class Quality
2012 industrial surveys show that not only do nearly 90% of Tijuana’s major technology
manufacturers with 250+ employees operate under ISO 9000/9001 or other quality standards – at
least 18 major companies are also ISO 14000 certified – underscoring both the world class quality
of manufacturing in Tijuana, but also the growth of industrial environmental culture, as well.
Some of these Tijuana cleantech leaders include:
A Binational Region With a Bright Future in Solar and Cleantech
It’s important to mention the more than 35,000 students enrolled in Tijuana’s universities
(many in engineering studies). It’s also important to emphasize that three of Tijuana’s
universities – UABC, UTT, and ITT – already offer
degrees or technical programs specifically for
cleantech, including environmental technology Tijuana’s eco-vision goes beyond
engineering, renewable energy and solar technologies. solar…come visit Northwest Mexico’s
But this document wouldn’t be complete without also only Gold LEED-certified building –
mentioning Tijuana’s partnership with San Diego, designed by Tijuana architects…and
California, just across the border and part of the home to the Tijuana EDC.
greater Cali-Baja Mega Region.
Being in this unique binational region means that
cleantech companies not only benefit from what Tijuana
has to offer, but also what one of the largest cleantech
clusters (and centers of innovation) in the United
States offers, too: San Diego, and its tens of thousands
of university graduates (UCSD, SDSU, USD, and more); a
diverse eco-system of research institutes; management
talent; and a broad range of entrepreneurial businesses
active in green energy and environmental businesses.
Indeed, the future does look bright – in Tijuana.
For more information about this Analysis, or about investing in the City of Tijuana,
contact the Tijuana Economic Development Corporation at 1-855-55-TJEDC from
the US or Canada – or email us at contact@tijuanaedc.org
1
Based on Tijuana company data, and State-level solar module manufacturing capacity data provided by GTM Research
2
US import data for HTS 8541.4060.20 solar panels from U.S. International Trade Commission website (http://dataweb.usitc.gov/),
accessed June 2012
3
INEGI firm data for Industria manufacturera, maquiladora y de servicios de exportación (IMMEX) industry, accessed June 201 2
(http://ow.ly/buiEb)
4
“Competitive Alternatives: KPMG’s Guide to International Business Location – 2012 Edition”, p. 7
(http://www.competitivealternatives.com/).
5
Cost estimate based on average 2009 US and Tijuana manufacturing industry wages; source: the Tijuana EDC.
6
Solar Energy Industries Association, “Utility‐Scale Solar Projects in the United States Operating, Under Construction, or Under
Development” (http://www.seia.org/cs/Research/Major_Solar_Projects_List), May 9, 2012
www.TijuanaEDC.org || contact@tijuanaedc.org
Call toll free from the US: 1-855-558-5332 (1-855-55-TJEDC) || ph (011-52) 664-681-8344 | fx (011-52) 664-681-8788