The maquiladora industry is in the throes of "the worst crisis in our history" proclaims the Council of the Maquiladora Export Industry (CIME), speaking for a sector that grew from assembling personal grooming products for a San Diego public relations firm in 1964, to turning out nuclear triggers for the U.S. arsenal of weapons of mass destruction 35 years later.
Indeed, Mexico's maquiladora industry, which assembles about half the nation's manufactured exports, is about to be globalized off the face of the world maquila map.
From January 2001 through June 2002, Mexico lost about 600 of 3,200 maquiladoras, mostly in electronics and ready-made clothing. During that period, 250,000 jobs vanished, equaling 15 percent of the maquila workforce. According to Labor Secretariat calculations, nearly two plants permanently closed every workday during that 18-month stretch, taking with them an average of 532 jobs. In the first four months of 2002, Juarez alone lost 141 jobs a day. Most of the runaways have moved production to China, but others have fled to Central America and low-wage Caribbean countries.
China's aggressive hard sell to the maq owners offers tax-free come-ons, cheap production materials, and free electricity. The competition has Mexican Economic Secretary Luis Derbez frothing. "The incentives being offered by China are a clear case of dumping," he gripes to reporters. He has threatened to bring China up on charges before the World Trade Organization, a ploy that will certainly not prosper since it was China's admission to the WTO that opened the doors to the flight eastward.
But in this race to the bottom line, China's 40 cent-an-hour wage is driving the bargain. In Tijuana, hourly wages run about $1.20 and, believe it or not, this less-than-$200 a month poverty wage is making it next to impossible for Mexico to compete in the cutthroat global economy.
In the past, Mexico's most attractive commodity for transnationals has been abundant cheap labor; but Mexican labor ($4,000 annual income as compared to China's $1,000) is not so cheap anymore: Even Eastern European wages are lower; Honduras and Haiti are lower still.
In Tehuacan Puebla, where 300 U.S. blue-jeans maquiladoras have established themselves during the past decade, long-time brand names are pulling out: Vanity Fare (Wrangler, Lee), a 10-year tenant, skipped to the Dominican Republic last February, and Tropical Sportswear is reportedly divvying up its production between Haiti and Honduras, the two poorest nations in Latin America. But not all those who are abandoning ship are transnational enterprises; the CIME reports that 60 percent of the departees are Mexican-owned.
Wages are not the only downside driving the maqs away. Mexico is mired in a never-ending crime wave and security costs have zoomed exponentially for the transnationals. Foreign maquila execs are frequent targets for the kidnapping "industry," with corporations shelling out huge ransoms to redeem their employees, and multiple highway hijackings of finished goods is epidemic. Recently Guess, which operates 20 maquiladoras in central Mexico, threatened to run for the Dominican Republic after a commando stole a trailer hauling 20,000 pairs of pants from its Full-Pack plant. The heist happened in broad daylight on a Mexico state highway, witnesses testified, that was supervised by state police.
President Vicente Fox, who touts himself as a business president, has pledged to fight against the maq attack. Manufactured exports long ago supplanted petroleum as the motor of the Mexican economy and almost half the nation's manufactured exports ($77 billion to the U.S. alone last year) are assembled in the maquiladoras.
Because it does not look at all good for the maqs to be skipping to cheaper climes, the Fox administration is offering hard-to-turn-down enticements: tariff-free entry of all goods and materials used in the assembly process æ not just those brought in from the U.S. æ and 10-year tax-free status.
Fox is also pushing what he labels "the march of the maquiladoras" to low-wage Indian regions in southern Mexico, as the key employment component of his grandiose Puebla to Panama development plan.
But in this plunge to the bottom, the prospects are not bright for Mexico's Indians. TransTextil, the first maq to set up in the Mayan highlands of Chiapas, manufactures ready-made knitwear for Guess and Nautica at its San Cristobal de las Casas plant, where 300 Chamula women are employed at 60-cents-an-hour - still 20 cents more than China.
The maquiladora industry, grounded in shady deals to drive wages down to an ever-lower bottom line, is a volatile business, with fly-by-nighters shifting their production lines whenever a better break is offered elsewhere. Campeche, a Caribbean state, began recruiting maquiladoras four years ago with offers of free commercial land, and lured an outfit then doing business as Textil Blazer to set up the entity's flagship export assembly plant. One dark night in 2001, Textil Blazer pulled up stakes, leaving 450 workers holding the bag for four million pesos in back wages. Labor authorities eventually traced Textil Blazers not to Haiti or Honduras or some exotic oriental locale but rather just across the state line in Yucatan æ blissfully operating under its latest alias, Bordar y Bordar.
The future of the maquiladora industry's role as a development tool is being re-evaluated by radical labor economists like Huberto Juarez of the University of Puebla. Although Mexico includes maquiladora production as part of its total exports, "these are not really per se Mexican exports" Juarez points out. Vaunted technological transfers that were supposed to be a benefit of the maquiladora boom really never happened in the low-end assembly line industry, and collateral economic opportunities proved to be nil: 98 percent of all production materials are purchased outside of Mexico.
Moreover, maquiladora production is completely dependent on U.S. consumer demand (no maquila-produced goods are sold in Mexico) and are extremely susceptible to economic downturns in El Norte, as has been painfully demonstrated in the last year.
But the maquiladora bust may, in the end, proved to be a blessing, particularly for the blighted 1,800-mile northern border where the exhausted land - a waterless desert - is making it impossible to accommodate at least 600,000 new migrant workers who move in each year. The indiscriminate dumping of industrial garbage compromises the region's fragile ecological balance and has turned the border into a toxic wasteland no longer capable of supporting life. The diminishment of the maquiladora industry would at least allow the landscape to restore itself and breath again.