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Mexico Is Attracting a Better Class of Factory in Its South
The New York Times ^ | June 29, 2002 | Ginger Thompson

Posted on 06/29/2002 8:42:04 AM PDT by xsysmgr

Sergio Dorantes for The New York Times
Cindy Chan checks lingerie in Merida at the kind of plant that is being replaced by high-tech ones like PCC Airfoils.

MÉRIDA, Mexico — The numbers add up to doom for cheap labor, one of Mexico's most marketable commodities since World War II. In the last two years, some 280,000 jobs have vanished with the closure of more than 350 maquiladoras, the foreign-owned assembly plants that manufacture for export everything from blue jeans to blenders, televisions to toys.

So Mexico has embarked an effort to attract a new kind of maquiladora, one that requires more skilled workers and will, the government hopes, offer more satisfying, stable jobs.

The closing of so many maquiladoras reflects the harsh economics of globalization. Cheap as Mexico's labor is, it is not as cheap as that in Asia or Eastern Europe. They now attract the kind of manufacturing that sprang up here, first along the border with the United States and then farther south, in places like this balmy part of the Yucatán peninsula.


The New York Times
High-tech factories are opening in Merida and elsewhere in Yucatan.

Now, this area displays flickering signs of an industrial evolution in which Mexico's maquiladora industry moves to multimillion-dollar high-tech factories that offer skills, and even decent salaries, to workers.

One such beacon of hope is the plant formally opened here in February by PCC Airfoils, a subsidiary of an Ohio-based company that produces airplane parts for General Electric.

Although workers like Dianela Súarez or Víctor Flores make more than double the $4 minimum daily wage in this region, a sum that counterparts in the United States would earn in less than an hour, they are acquiring technical skills, have risen quickly from factory floor worker to group leader and sound fulfilled.

"I have had many jobs," said Mrs. Suárez, a 35-year-old former secretary with a junior high school education who is studying company manuals for tests to become a licensed quality inspector. "My vision is to have a career."

Mr. Flores, 28, was educated at a technical high school, and worked five years as a refrigeration and air-conditioning technician before joining PCC Airfoils. The government paid more than half the cost to train him for an entry-level position at the factory.

"This is an experience that is different from most maquiladoras," he said. "I am learning things about technology and engineering that I can use all my life. This kind of experience is invaluable."

Government officials are hopeful that high-tech companies will take the place of the factories that rely on low-scale labor.

"We are not interested any more in these types of companies," said Patricio Patrón, governor of the state of Yucatán, where the number of maquiladoras grew from 16 to 131 in just one decade; most are clothing companies like Eddie Bauer and The Gap, which liked the proximity of a port with direct shipping to New Orleans and cheaper wages than on the United States border. "They are part of an era we are trying to overcome. We want to give opportunities to higher level factories — and some are beginning to come."

Nonbelievers say such sentiments are wishful thinking. They note that the number of high-tech factories that have opened is relatively small, and say Mexico's poor education system cannot fill a labor pool large enough for highly skilled jobs. But even skeptics acknowledge that Mexico has few strategic options.

"Mexico's going to have to graduate the way all other countries do," Sidney Weintraub, an economist at the Center for Strategic and International Studies, said in a recent radio interview. "It's inevitable that countries that earn their money through relatively cheap labor, as their situation improves and the labor costs go up, they just have to move up on the technology scale."

Indeed, almost as fast as they came, Yucatán's textile factories have begun to go, battered over the last two years by an economic decline and drop in consumer demand in the United States. Meanwhile, Mexican wages increased, supported by a superstrong peso.

"Our costs have gone up 10 percent a year for the last five years," said Fabio Atti, general manager of an Italian-owned swimsuit factory, Produce Mexico. "If that trend continues, it is going to be difficult for us to stay."

PCC Airfoils is one of two high-tech factories that have opened here in the last year. The other, Seal and Metal Products of Latin America, a subsidiary of Pennsylvania-based Stein Seal, also produces airplane parts for General Electric.

"T-shirt factories do not stimulate economic expansion," said Alberto Barrera, a Mexican who is the general manager of Seal and Metal. "But a maquiladora that invests in technology and in training its workers creates slow but stable growth."

So far, Mr. Barrera said, he has hired fewer than 20 workers. But each goes through months of training. "A textile plant can open and close in a week," he added. "It took half a year just to get this plant up and running."

His sentiments were echoed by Jean Freyre, general manager at PCC Airfoils.

"I'd like to think that in time we are going to offer the kinds of jobs that will keep people from leaving their hometowns and their country to make a decent living," he said, "the kinds of jobs that give people a sense of belonging, and a sense of stability."



TOPICS: Business/Economy; Foreign Affairs; Mexico
KEYWORDS:

1 posted on 06/29/2002 8:42:04 AM PDT by xsysmgr
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To: xsysmgr
As a union member (AFL-CIO) and a conservative Republican, this article made me sick. Those jobs could be in the USA, not Mexico or Asia.
2 posted on 06/29/2002 8:45:41 AM PDT by Ciexyz
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To: Ciexyz
I don't think Mexico is going to get too many high tech jobs. They're losing the low-skilled ones to China now because the Chinese will work for 25c an hour and Mexicans expect 50c an hour. Those kind of wages don't let either country have a middle class, it's middle class jobs that build a strong economy and why our own economy is crumbling.
3 posted on 06/29/2002 8:51:03 AM PDT by FITZ
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To: Ciexyz
Betcha Pat's gonna be a little disappointed too. He was pleased as punch when stories about the decline of the maquiladoras started popping up. Oh well.
4 posted on 06/29/2002 9:51:21 AM PDT by dr_who
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To: Ciexyz
Any "conservative Republican" who thinks capitalism is a zero-sum game makes me sick.
5 posted on 06/29/2002 9:54:56 AM PDT by dr_who
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To: xsysmgr
"One such beacon of hope is the plant formally opened here in February by PCC Airfoils, a subsidiary of an Ohio-based company that produces airplane parts for General Electric."

Gang way! I can't wait to fly on a plane with parts made in Mexico.

I'll take my chances with the terrorists, if you get my drift.

--Boris

6 posted on 06/29/2002 12:39:23 PM PDT by boris
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To: dr_who
Any "conservative Republican" who thinks capitalism is a zero-sum game makes me sick.

CONGRATULATIONS!!! You win the stupidest comment of the day.
This type of factory is exactly what Mexico should be trying to get. It gives the people of Mexico a reason to stay home instead of coming here as illegal aliens.

7 posted on 06/29/2002 3:59:52 PM PDT by Valin
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To: FITZ
My wife worked for a company that had a textile plant in Mexico. The average wage was about $2.50 an hour. Mexico offers cheap wages to build the plant then raises them steadily after the plant is there for a while.
8 posted on 06/29/2002 4:05:15 PM PDT by AppyPappy
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To: dr_who
Any "conservative Republican" who thinks capitalism is a zero-sum game makes me sick.

It's not a zero-sum game but Mexico doesn't have Capitalism. They need to change many laws before they get something even close, the Mexican government completely controls that economy --- even the price that you can sell tortillas.

9 posted on 06/30/2002 9:10:16 AM PDT by FITZ
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To: AppyPappy
I wonder where that was because the border area is considered to have higher wages and $9 a day is considered to be quite good, I know of people who say they can't find work that pays more than $25 a week. Even people with college degrees say they're paid about $2 an hour.
10 posted on 06/30/2002 9:12:19 AM PDT by FITZ
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To: FITZ
Oh, would you be talking about tariffs, subsidies, and price controls?
11 posted on 06/30/2002 10:17:10 AM PDT by dr_who
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To: Valin
Indeed jerkoff, Mexico ought to be happy to get this factory. That's kind of obvious. The US to, as a more active economy down south will lead to fewer economic refugees up north. That's one of my motivations for posting the "stupidest comment of the day".
12 posted on 06/30/2002 10:28:42 AM PDT by dr_who
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To: dr_who
More than that ---there are also the ejidos, all the property laws and banking laws that prevent the right kind of capitalism and make it very hard for a middle class.
13 posted on 06/30/2002 10:36:16 AM PDT by FITZ
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To: FITZ
Then I'm against them.
14 posted on 06/30/2002 10:56:27 AM PDT by dr_who
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To: dr_who
...depending of course on your definition of "the right type of capitalism".
15 posted on 06/30/2002 10:58:10 AM PDT by dr_who
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To: dr_who
My definition of the right kind of capitalism is the kind that allows a person to use capital they get from their own labor to build a business and get rich or at least well-off. Or which allows people to have bank accounts and take out loans even if they aren't in a wealthy class ---that allows a middle class. The only reason Mexico doesn't already have a middle class is because of it's laws, it's not the people ---they are very capable of being middle class, it's not the language, it's not the land because it's a rich country in resources.
16 posted on 06/30/2002 11:07:18 AM PDT by FITZ
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To: FITZ
Sounds like the only type of capitalism to me. I.E. laws that extend to the protection of private property but not to what you do with it.
17 posted on 06/30/2002 11:26:31 AM PDT by dr_who
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