Annunciation House Newsletter - Winter 2005

Update on the maquiladora industry in Ciudad Juarez

By Simon Chandler

In the Christmas 2003 Annunciation House newsletter, we published an article titled ‘The Migration of the Maquiladora Industry’. This article was written shortly after the 2001 economic downturn in the United States, which had an enormous impact on the economy of Ciudad Juarez and other Mexican border cities. By 2003 in Juarez, 45% of the 350 maquiladoras had closed down, and between 60 and 80,000 workers had been laid off, around one third of the 250,000 employed. Some of the maquiladoras had relocated to China, and there was a widespread fear that this was the beginning of the end of the industry that was established in northern Mexico in 1965.

The maquiladora program was established in 1965 during the administration of President Gustavo Diaz Ordaz as a way to help stimulate development and employment in northern Mexico. It was a program that allowed US and other corporations to relocate their plants and factories to Mexico where they would be allowed to import components, assemble them, and then re-export them to the US market. The corporations would benefit from the more affordable Mexican labor costs, and Mexico would benefit from increased employment. The original objectives of the maquiladora program were relatively modest, limited to northern Mexico, but by the 1990s the program had been so successful that it employed 1.2 million workers, and was responsible for 75% of Mexico’s manufacturing sector.

Since the ‘crisis’ of 2001 there has been recuperation in the maquiladora sector in Juarez, although it is still not at the peak levels that were reached prior to the recession. Employment is currently about 220,000, and the number of plants is around 310. Some of the factories that went to China have returned to Mexico. But for the most part, what has happened is that low-tech, older maquiladoras have left the city looking for lower labor costs, and been replaced by higher tech plants that continue to arrive from the US and some other countries. It is questionable whether employment will reach the pre-2001 levels soon, since many of the newer plants are less labor intensive that the ones that have left the city.

Ciudad Juarez, now with over 40 years experience as an industrial city, has reached a point where it is an attractive environment for many companies with its trained workforce. Most of the educational institutions are geared towards providing engineers, technicians, and other types of skills required for the maquiladora industry. In the early years of the maquiladora industry, most of the skilled workers, technicians and managers were from the United States or other countries, but today probably 60% are Mexican. The Delphi Corporation has a prestigious technology and research facility in Juarez, and recently established a R & D facility in one of the universities.

In the past few years, a number of large maquiladora parks have been established in the south and southeast part of Juarez and new factories have located there. One of these plants belongs to Electrolux, the world’s largest manufacturer of domestic electronics opened up a plant in southern Juarez. This factory relocated to Juarez from Greenville, Michigan. It will eventually employ 3,000 workers who will produce more than one million washing machines each year. The establishment of the Electrolux plant in Juarez has had a large impact on the economy of the city for a number of reasons. It has raised the profile of Juarez as a city that is attractive for investment. There has also been a surge in salaries for skilled workers, ranging from bilingual secretaries to engineers as Electrolux scours the city looking for suitable employees. Finally, there has been a large indirect impact on the economy, since Electrolux will require around 300 companies to supply components for the production process. This really represents a new model of maquiladora since 60% of the input will come from local industry, compared to only 2% for the maquiladora industry as a whole.

Once the maquiladora industry got established in Juarez, it led to a constant flow of migrants to the city that reached its peak in the late 1990s. By then, factories were recruiting workers as far south as Verecruz, Oaxaca, and Chiapas. This flow caused an enormous strain on the city, as infrastructure such as schools, housing, and hospitals struggled to cope with the absorption of this population. After the 2001 recession, many of the recent migrants returned to their place of origin, but in the last few months, there have been newspaper articles mentioning that the maquiladoras are once again getting short staffed, and starting to look for workers in the interior of Mexico.

In terms of labor, one of the changes in the past few years is that in many cases workers are no longer hired directly by the factory, but through employment agencies. For the employer, this allows for a much more flexible labor market that can rapidly respond to changes in demand for their products. For the workers however, it means much less job security, far fewer benefits, and lower wages, for a population that is earning less in dollar terms than it was more than 20 years ago.

In summary, it can be seen that despite the crisis of 2001, the maquiladoras continue to be a dynamic and important sector of the Mexican and Juarez economies. In some ways, the industry is developing according to the theory of neo-liberal economics, where lower tech manufacturing is replaced by higher tech, and the skill level of the workforce increases. However, for those of us concerned with social justice, the questions raised about just wages, labor conditions, and our role as consumers of the products of the maquiladoras continue to go unanswered. As the global economy changes and develops we must also continue to move forward and adapt our critique as we search for ways to make our planet a more just and equitable place for all.