Guilford Mills and Cone Mills released more information about their planned collaboration on a Mexican industrial park earlier this week.

The new park, which is to be built in several stages, will be located on over 500 acres of land in Altamira, near Tampico, a northeast coast port city in the state of Tamaulipas. Fresh water lagoons in the area will provide manufacturers with water at a cost equal to about a fifth of what they would pay in the US.

Mexico is a leading provider of sewn garments for the US, exporting $9bn worth of finished garments to the US annually.

Workers wages in Tampico average $10-20 per day, compared with $10-12 an hour for US textile workers. Industry leaders are quick to point out that Asia's wages for similar workers are substantially lower, but it is likely that shipping speed and costs will help to make up the difference and keep Mexican operations profitable.

In a company press release, Charles Hayes, chairman and CEO of Guilford, said the Guilford/Cone joint venture is a milestone in the textile industry, marking the first instance in which two textile companies have joined forces in Mexico to realize the benefits of sharing the infrastructure costs associated with an industrial park while maintaining independent manufacturing operations.

He added that the project also reflects Guilford's commitment to take full advantage of a fundamental shift in the textile industry, as more garment producers move to, and expand in, Mexico due to the benefits of NAFTA. "Being located closer to our cut-and-sew customers will provide us with a competitive advantage. The future of the textile industry will belong to companies who seize opportunities offered by today's challenging business environment."

Officials from both Guilford and Cone were joined by Mexican President Ernesto Zedillo in Tamaulipas in late April 1999 as the government pledged its commitment to the project in the form of nearly $400m in tax abatements, roads and rights of way, water resources, telecommunications, municipal services, electricity, natural gas, waste water treatment and work force training.

According to an article in Monday's Wall Street Journal, Cone expects to sell about $65m of denim fabric a year from its Altamire plant to jeans makers in Torreon and Tehuacan, two Mexican cities where nearly half the jeans sold in the US annually are manufactured. Cone cut 800 US jobs in 1998 and 1999, closing two North Carolina plants.

John Bakane, president and CEO of Cone Mills said: "We expect this industrial park to revolutionise the way textiles and apparel are manufactured in the future. With the benefits of NAFTA, cut-and-sew operations of our customers are continuing to move back to this hemisphere. This concept allows us to more closely integrate with garment manufacturing without competing with our customers."

Guilford Mills is one of the largest warp knitters in the world and is a leader in technological advances in textiles.It has a diversified customer base in the apparel, home furnishings, automotive and industrial markets. Cone Mills Corporation is one of the world's largest producers of denim fabrics in North America.