Maquiladoras provide benefits on both sides of border Special rules allow firms to offer better wages to work force in Mexico

By Kimberly Trone The Desert Sun June 10, 2001

--------------------------------------------------------------------------------

MEXICALI, Mexico -- Alexandro Vega is living the Mexican dream.

At 27, he is a successful engineer at the largest television manufacturing plant in the world.

Inside the 600,000 square-foot Mitsubishi plant, line workers -- mostly women in their early 20s -- earn about $1 an hour transforming imported Asian electronic components into big-screen TVs.

"Mexicali is not beer, mariachi and big hats. There is great potential for business here," said Tayde Rivera of the Industrial Development Commission of Mexicali.

With miles of empty land between them, leaders in the Coachella, Imperial and Mexicali valleys are laying the groundwork to form their own economic triumvirate.

There are 200 maquiladoras with a labor force of roughly 63,000 workers within Mexicali’s 22 industrial parks.

Maquiladoras are corporations operating in Mexico under special rules which allow them to temporarily import duty-free raw materials needed for manufacturing.

In huge factories they churn out electronics, textiles, automotive and tooling parts mostly for global export. Their presence has helped stabilize Mexico’s economy.

"The U.S. side of our tri-valley region would provide either a warehouse stop for supplies going to Mexicali, or a distribution site for finished products coming into the U.S.," said John Stiles, a Coachella Valley businessman.

Each day at the red-block Mitsubishi plant, 1,200 TVs are loaded into unmarked cargo trucks and shipped to the U.S. city of Irvine, where they join an increasing volume of Mexican exports streaming into the global marketplace.

It would cost a typical Mexicali assembly-line worker more than four months in wages to buy one of the state-of-the-art TVs rolling off Mitsubishi’s conveyor belts in a parade of 73-inch screens.

Unique opportunity

Some workers are finding opportunities with the maquiladora they might not have found elsewhere in Mexico.

Vega lived in New York for two years while earning his master’s degree in finance but was raised and educated in Mexicali. The presence of several universities and technical schools have made the city one of Mexico’s primary centers of education.

The University of Baja California has an enrollment of 40,000 mostly engineering and law students. But the average education level of Mexicali’s residents is the seventh grade -- three years above Mexico’s national average.

Vega does not get starry-eyed about life in the United States.

He’s got it all here in one of Mexico’s most industrialized cities. Engineers for the Mexicali maquiladoras average $170 a day.

"I wanted to come back home," Vega said. "My family and all my friends are here. This is a great place."

Program goals

Stopping the exodus of people seeking opportunities in the United States has been a goal of the maquiladora program since it began in the border areas of Mexico and Baja California in 1965.

All of Mexico’s 31 states have at least one maquiladora operating within them, but well over 60 percent are concentrated on Mexico’s northern border.

An unskilled laborer in the north can easily earn twice or three times the wage of a laborer in southern Mexico.

This wage disparity has caused a population crush in all the large northern border cities, including Mexicali.

"The maquiladoras have improved things. Not as many people die trying to cross the border looking for work, but I won’t work for them because they don’t pay enough," said Armando Guerrero, who labors as an onion picker in the United States.

Part of Mexico President Vicente Fox’s new economic plan includes raising the wages of Mexico’s work force.

That could ultimately undermine the region’s economy, said Calexico Mayor Victor Carrillo.

The economy of the U.S. border city of Calexico is heavily fed by its symbiotic relationship with Mexicali.

"You have to look at the profit margin of the maquiladora, whether they are coming from the Pacific Rim, Europe or America," Carrillo said.

Unionization and escalating wages could potentially drive foreign manufacturers to Asia or farther south into Mexico.

"The bottom line will dictate where a company is located," Carrillo said.

Many in Mexicali believe some maquiladoras already plan to leave the region.

Trade zone rules

New rules under the North American Free Trade Agreement call for tariffs on the majority of manufacturing components imported from outside the North American Free Trade Zone.

That rule penalizes components coming from countries such as Asia, which has been a dominant force in Mexico’s maquiladora industry.

As she waited for a bus in the city’s old town district, Eva Urbina said through an interpreter that rumors about the maquiladoras circulate every day in her neighborhood.

"We are worried the plants are closing," said Urbina, 43.

Before her husband got a job in a maquiladora factory, he worked as a laborer in Mexicali’s agriculture fields. Life is improving for her family now, Urbina said.

Extras

The maquiladoras offer workers access to retirement programs and services such as low-cost child care.

"Production costs are increasing," Urbina explained. "We don’t know what is happening. Our lives depend on my husband’s work."

Mexico is feeling the ripple effect of a global market shift said Steve Brummel of la Liga Nacional de Consumidores in Indio.

"Mexicali is getting a share of a new kind of business," Brummel said.

The U.S. economy is focusing on more sophisticated elements of technology. Industries like large-scale data processing centers are moving from the U.S. to south of the border. Mexicali officials are scrambling to provide new types of training to the work force.

Some line assembly manufacturers will likely move to Asia where production costs are less and laborers work for as little as 25 cents an hour. If that happens, the shift will force workers in Mexico to adapt and learn new, more high-tech job skills -- to grow.

"The trend is actually good for the U.S., Mexico and Asia," Brummel said.

-- PHO (owennos@bigfoot.com), June 11, 2001