Financial News

The mix of tenants may seem curious. A new research building for PepsiCo (NYSE: PEP - news) (PEP (Vienna: PEP.VI - news) ) stands next door to future R&D centers for Motorola (MOT), Mexican cement giant Cemex (VCM-2.CR - news) (CX), and a Mexican auto-parts maker. But for Mexico, this hodgepodge is the nation's hope to turn industrial Monterrey into an "international city of knowledge."

Mexico has made huge gains in export manufacturing in the 15 years since the North America Free Trade Agreement was signed with the U.S. and Canada. But it has not kept up with Asian dynamos like China in terms of physical infrastructure and training of skilled workers. Mexico also lacks the up-to-date, efficiently run science parks that are popping up around Chinese cities like Beijing, Dalian, and Shanghai.

The Research & Innovation Technology Park, known locally by its Spanish acronym PIIT, could change that. Spread over 172 acres near Monterrey's airport, the park grew from a 2003 plan by then-President Vicente Fox to catch up to the developed world. The goal: to boost Mexico's per-capita gross domestic product from about $10,000 today to $35,000, the current level of industrialized nations, by 2030. Another target is to rank among the top 25 nations in global competitiveness.

A Place of Knowledge

"We want to move from manufacturing to 'mindfacturing,'" says PIIT Director Reynold Gonzlez. Rather than being known mainly for its maquiladoras -- low-wage factories that export to the U.S. and Canada -- "we want this place to be a maquila of knowledge," he adds.

Monterrey already is Mexico's premier base for manufacturing. Among the city's big-name factory operators are United Technologies (NYSE: UTX - news) ' (UTX (A045880.KQ - news) ) Carrier unit, Ford (F), General Electric (NYSE: GE - news) (GE), Lenovo, and Whirlpool (WHRL3.SA - news) (WHR). Metro Monterrey, which with a population of 4.7 million ranks third in the country, is also headquarters to several of Mexico's biggest conglomerates as well as Mexico's top engineering school, Tecnolgico de Monterrey.

The diversity of labs at PIIT illustrates the breadth of the city's economic ambitions. The park's first $145 million phase, which is around 85% complete, includes research and development facilities by national laboratories and universities for nanomaterials, microelectronics, mechatronics, water-treatment technologies, information technology, and materials for sustainable housing, among others.

Motorola (NYSE: MOT - news) engineers already are moving into PIIT to design telecom devices. In December, construction will begin on PepsiCo's $20 million circular glass structure that will house a "baking innovation center," where among other things 200 staff will develop cookies and crackers for Latin America and the U.S. The roof will have solar panels and gardens.

Pillars of the Mexican Economy

By clustering so many technologies, PIIT's managers hope the campus will help spawn hybrid companies and industries. "We want to create technology-based companies that will be pillars of the Mexican economy of the future," Gonzlez says. Only around 300 people now work in PIIT. But that's expected to reach 3,500 by late 2010.

PIIT also aims to help Mexican tech entrepreneurs. To that end, the park has set aside a building to incubate nanotech startups. Another facility will be run by the IC2 Institute, a University of Texas at Austin program devoted to commercializing technology. Visiting IC2 faculty will teach a masters program in technology transfer. A $3 million venture-capital fund also is being set up. "Mexico lacks a system for commercializing ideas," Gonzlez says. "We are trying to work with top industrialists to get them to become angel investors, but it's not easy because they are used to safer investments."

Even though PIIT still is in its infancy, Gonzlez says, Mexico City, Chihuahua, and other cities are already looking to emulate it. "There are many initiatives to set up knowledge cities," he says. "We are getting visits practically every other week."