Maquiladora industry suffers; layoffs continue

JUAREZ -- The maquiladora industry is experiencing its worst downturn in 35 years, prompting business leaders to call for a plan to rescue the city's largest employer.

About 42,000 maquila workers have lost their jobs because assembly plants have shut down, scaled back or left the city over the past two years, said Bernardo Escudero, president of the Association of Maquiladoras in Juárez. The contraction started when the U.S. recession began, he said.

"The industry in Juárez used to employ more than 220,000 people. Today, we have 160,000 people working at the plants," he said. "We've had new plants that opened, but we really are looking at a significant net loss or decline."

Victor Frausto, 20, said he was lucky because his job at Scientific Atlanta wasn't eliminated this time. But he's been laid off before.

"The job is really good," he said. "My wife works at the plant, and I have other relatives who work at the maquilas. It used to be that you could stop at any maquila's door and get a job. But that's not true anymore. We have all this uncertainty."

El Paso will feel the effects because many assembly plants in Juárez have warehousing operations and suppliers here. Sixteen maquiladora-related companies, including two transporters, have operations in El Paso's Foreign Trade Zone. Others are scattered in industrial parks on the East Side, Lower Valley and West Side. Private customs brokerage firms that handle the export and import paperwork also do business with the plants.

The assembly jobs also enable thousands of maquiladora workers to qualify for the U.S. laser visa, which they use to shop in El Paso.

"If this continues, it could affect not just Downtown, but the rest of El Paso," said Alonso Flores, operations manager for the El Paso Central Business Association. "It's important to maintain a strong maquiladora industry, because it keeps people employed and helps El Paso's economy."

During the past week, maquiladora association officials and other business leaders met with politicians and government officials to talk about what kinds of incentives the Mexican government can offer the plants to get them to stay.

"We are experiencing the effects of a drawn-out market contraction in the United States, which is our principal customer for the consumer goods that workers assemble here," Escudero said.

Escudero said other contributors to the crisis include a slowdown in the U.S. auto industry, the push to seek cheaper labor in other places such as China and Mexico's interior, Mexican federal red tape and a complex tax structure tied to NAFTA, and Mexico's Puebla-Panama Plan to stimulate the economy in the southern part of the country.

Over the past two weeks, three maquiladoras announced cutbacks -- Royal Philips Electronics, Scientific Atlanta and Alcoa Fujikura Ltd. Philips plans to move its computer monitor production operation from Juárez to its existing plants in China, said Burt Diamondstein, a vice president for the company in El Paso.

"We will try to transfer 300 of the 900 workers at the plant we are closing to our other operations in Juárez," he said.

Scientific Atlanta, which makes products for the cable television industry, laid off 1,300 workers two weeks ago, and Alcoa Fujikura (Arneses de Juárez), which makes wire harnesses for the automotive industry, announced it will cut 400 positions.

"They told the workers that Philips was shutting down the Number 9 plant because labor is cheaper in China," said Maria Castruita, who has a relative at the plant in the Aztecas Industrial Park. "I have another relative who works at Plasticos Gigantes, which is next door to Philips and supplies Philips. He was told that the plant could close later in the year."

Employees said the weekly pay was 500 pesos, or about $50, for a 45-hour week, plus weekly bonuses of $10 to $16. That works out to about $216 to $286 a month. According to the Inter Press Service, the legal monthly minimum wage in China is $55.

Barrios said, "The displacements stem from the fierce competition for cheaper labor worldwide, in response to the needs of large corporations that today can move their operations easily to any part of the world. It's what we call globalization."

Though most Juárez workers who are laid off receive severance pay packages that help tide them over for one to two months, others are filing legal complaints against companies that shut down suddenly without giving workers their last paychecks.

"We have many single mothers who work in these plants, and they and their children will suffer the brunt of this downturn," said Higenio Barrios, a former maquiladora worker who now educates workers on their rights under Mexican labor law at Centro de Estudios y Taller Laboral, the Labor Research and Training Center, in Juárez.

"We are seeing an increase in crime in some neighborhoods where large numbers of people are unemployed, and it's not far-fetched to say that some people will be tempted to work for the drug trade just to feed their families," Barrios said.

Juárez police officials said they realize crime could increase as unemployment grows, "but we are prepared for this," police spokesman Ramon Chaparro said.

The cutbacks in the maquiladoras began as a trickle about two years ago, right after the manufacturing industry had reached its zenith with record high employment.

"Our business community is very concerned," said Maria A. Venzor, analyst for the Mexican National Chamber of Commerce, or CANACO, in Juárez. "High-level meetings are taking place to discuss strategies for attracting and keeping the maquiladoras. Other meetings will take place with (Mexican) federal legislators and perhaps the president."

"This is an historic high for us considering that we had 0.7 percent unemployment in 2000, or less than 1 percent, before we started seeing the effects of the U.S. recession."

Each direct maquiladora job represents an additional 1.5 indirect jobs, she added. "It's what you call the ripple effect."

"When you add up the other smaller layoffs here and there at other plants, we're looking at about 5,000 lost jobs within the past four weeks," Venzor said.

Juárez chamber officials said they're not sure where all the displaced workers went.

"Some of them joined the informal economy to survive, which means they started selling food products like tacos and burritos from their homes, or purchased a variety of products for resale in their neighborhoods," Venzor said.

Barrios said others who can't find work at another maquiladora or in something else have left Juárez. Some have returned to hometowns in the interior of Mexico.

In the wake of the 1994 peso crisis, which cut the peso's value against the dollar by two-thirds, many U.S. and other foreign corporations expanded or opened new plants in Juárez. As recently as 1999, some maquiladoras sent people to distant Mexican states including Oaxaca and Veracruz to recruit employees. About 30,000 people from Veracruz alone moved to Juárez.

The recruiters "would stay a few days at a time" in other Mexican cities, Barrios said. "They would run newspaper ads, interview people the next day, board the new hires on buses, and bring them to Juárez. Once they got here, they stayed in warehouses for up to 14 days, until they could get their own place."

and the race to the bottom continues

Yeah; if those greedy Mexicans want to be paid $1.10 and hour, we'll just give the jobs to the Chinese, who are willing to do it for 27 cents.
And if the Chinese want to be our slaves, who am I to try and stop them. Less power to them, I say.

At least when it was Mexico that was getting all our jobs, they could say we needed to strengthen our next-door neighbor, that our future depends on a Mexico that has a good economy ----but now what do they say for the reason the jobs must go to China?

The globalists and our hidden aristocracy are essentially telling U.S. workers, among others, let them eat cake. Their day will come.

I call it greed and like the greed and corruption exposed at the highest levels now has hurt them, so will this greed come back to haunt them.

Where will the cheap labor end?...Africa, with starving children and flies crawliing in and out of their mouth's as they slave for the "Kenney boy's" of the world?

Or will it come full circle right back here after we've been brought to our knees?

The globalists and our hidden aristocracy are essentially telling U.S. workers, among others, let them eat cake. Their day will come.

Hopefully but ours may come first. With the maquilas closing in Mexico, there will be even more people flooding over the borders because they have a not-so-hidden aristocracy telling them the same thing, there are no jobs here for millions more and it'll be the American taxpayer who'll have to pay for welfare services for them. Taxes just keep going up but wages are dropping. I don't think our aristocracy is smart enough to realize that people paid so little in wages as they intend to pay the Chinese can't afford to buy much.

I was involved in a project in Mexico; we were expanding a plant for a US company that was downsizing its US operations.

After the first phase of the expansion, the project was canceled, as the company decided to move its manufacturing to China instead.

I visited the US plant that was suffering the brunt of the cutbacks; about half their workforce was being sent out the door.

They had a huge banner that read "Our employees are our most important asset."

The sad thing is that many people were recruited from and left fairly stable villages to move to the northern desert for these jobs. With the jobs moving to China, they have no where to go but the US now. If not allowed to move over to the US, there are hundreds of thousands of desperate people right outside our border who have nothing left to lose.

I live on the border and the fear is starting to show. This city went into economic disaster when the rest of the US thought it was doing very well. NAFTA costs the people here thousands of jobs but at least certain merchandisers were doing fairly well in selling to Mexicans working in the maquilas. The problems won't be limited to the border region of the US.

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