VZCZCXRO7782
PP RUEHCD RUEHGD RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHHO #0009/01 0102324
ZNR UUUUU ZZH
P 102324Z JAN 06
FM AMCONSUL HERMOSILLO
TO RUEHC/SECSTATE WASHDC PRIORITY 1225
INFO RUEHKO/AMEMBASSY TOKYO 0001
RUEHHO/AMCONSUL HERMOSILLO 1581
RUEHME/AMEMBASSY MEXICO PRIORITY 0337
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE

UNCLAS SECTION 01 OF 02 HERMOSILLO 000009 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ENRG EINV EPET MX
SUBJECT: SONORA STATE OFFICIALS SEE 5 PERCENT ECONOMIC GROWTH IN 
2006, HIGH INVESTMENT PROSPECTS 
 
REF: HERMOSILLO 0005 (NOTAL) 
 
HERMOSILLO 00000009  001.2 OF 002 
 
 
¶1.  (U) Summary.  Sonora economic officials are projecting that 
the state's economic growth rate for 2006 will be 5 percent. 
This would match 2005, when the Ford Company's major expansion 
of its automobile assembly operations in Hermosillo gave Sonora 
a major boost.  Plans for a new LNG terminal in Puerto Libertad 
and an extended gas pipeline network throughout the state, the 
officials said, could have a similar impact.   End Summary. 
 
¶2.  (U) On January 9, Consulate personnel (PO, Vice Consul 
Storrow, Assistant Escobosa) were invited to an introductory 
meeting with Ricardo Platt, Sonora State Secretary of Economy, 
Ivan Manuel Alvirez, his chief of staff, and Ignacio Escalante 
Sanders, Director General of the Economic Development Council 
for Sonora (COPRESON).  Discussion focused on Sonora initiatives 
to promote investment, the current state of the state's economy, 
and economic prospects for 2006. 
 
ENCOURAGING INVESTORS IN SONORA 
 
¶3. (U)  Platt, who came to his first government job in August 
2005 from the construction business, mentioned industry 
(including automobiles), new investment, local small business, 
and housing for the Sonora workforce as primary areas his office 
supports. His responsibilities encompass COPRESON and the 
Housing Institute for Sonora (INVES), organizations funded by 
public budgets but largely run by private sector experts.  He 
was especially keen to talk about "Soft Landing," an 
investor-friendly operation within his purview funded by the 
state of Sonora.  Potential investors - most of whom are 
Americans, he said - could use the office space and computers, 
and draw on Soft Landing's staff for information as they 
explored possibilities in the state.  Escalante, who travels 
frequently to Asia to develop business contacts for the state, 
said that Japanese investors especially were showing increasing 
interest in Sonora. 
 
THE FORD COMPANY PRECEDENT 
 
¶4. (U) The Sonora officials described the major economic impact 
in 2005 of the Ford Company's decision to produce several 
automobile models -- the Fusion, Mercury Milan, and (for the 
first time outside the U.S.) a Lincoln (Zephyr) -- in 
Hermosillo.  This mega-project brought in dozens of American 
essential "first and second tier" suppliers.  Tens of thousands 
of jobs were created and some local businesses have flourished 
as service providers.  Platt said that the decision was 
competitive and Hermosillo had won on the basis of Ford's 
earlier experience here with a good work force and a generous 
incentive package fully supported by the Sonora government and 
its pro-business governor, Eduardo Bours Castelo. 
 
LNG TERMINAL MEGA-PROJECT~AND RUMORS OF A NUCLEAR PLANT 
 
¶5. (U) Platt and Escalante were optimistic that Sonoran economic 
growth would continue in 2006 at the 5 percent rate achieved in 
2005, and generate another 30 thousand new jobs.  Asked if there 
were other mega-projects on the horizon, they spoke of a USD 1.2 
billion project to construct a LNG terminal at Puerto Libertad, 
as well as a pipeline network that in 2007 would bring gas as a 
power-generating source to Hermosillo, Navojoa and other cities 
in Sonora for the first time.  U.S. pipeline company El Paso and 
an unnamed energy partner are close to finalizing an agreement 
on it.  Platt said this project addressed the state's strategic 
need for reliable power generation for further development.  He 
claimed that Sonora's government had carefully considered the 
environmental impact and had concluded that the terminal offered 
a balanced approach, one which would even move the state away 
from oil as a power source and the current risk of a major 
polluting incident at Guaymas or other points in the Sea of 
Cortez where oil transport ships stop.  (Note:  In December 
2005, media reports circulated that the National Institute for 
Nuclear Research (ININ) had proposed construction of a nuclear 
plant just south of Hermosillo.  This provoked NGO criticism and 
led Governor Bours to state that he would never contemplate such 
a "crazy" project without public hearings.  The issue faded 
after it became clear that the idea of a nuclear plant in Sonora 
is still very notional.  End note.) 
 
OTHER ECONOMIC DEVELOPMENTS~AND WATER, PRECOS 
 
¶6. (U) Platt also listed 18 industrial park projects underway in 
Sonora, expected strong tourism growth, and the hopes of Guaymas 
officials to rapidly expand port infrastructure and existing 
aerospace manufacturing capacity as positive prospects.  Asked 
whether Hermosillo's water shortages were a potential obstacle 
to further development, Platt said that Sonora was careful to 
recruit investors for businesses that are not heavily dependent 
on water.  He noted that Hermosillo is enforcing restrictions on 
water consumption but said that no company had ever rejected 
 
HERMOSILLO 00000009  002.2 OF 002 
 
 
Hermosillo as a business site on that basis.  While 
acknowledging the need for drug searches, the Sonora officials 
also spoke of the economic threat posed by long delays at the 
army inspection points (PRECOS) - especially at the Benjamin 
Hill PRECOS -- on the highway north to the U.S. border crossing 
at Nogales (reftel).  Platt said that Governor Bours would meet 
January 10 in Mexico with the Secretary of National Defense to 
discuss the matter, and that Sinaloa officials were coordinating 
their complaints with Bours'.  Platt commented that, while 
Mexico City was not always fully responsive to the concerns of 
northern Mexican states, some reasonable solution probably would 
be worked out. 
 
¶7. (U) This report has been cleared with American Consulate 
Nogales. 
CLARKE