Yankee! Welcome to Mexico!

By Janice Castro

Only 15 years ago, Mexico's Ciudad Juarez was little more than a depressed backwater of El Paso, Texas. Today things are, to put it mildly, different. Factories in booming Juarez (pop. 1.1 million) are assembling everything from computer keyboards to windshield wipers for companies throughout the U.S. Meanwhile, unemployment in El Paso (pop. 547,000), where oil refining and clothing are major industries, has risen from 17,500 in 1980 to nearly 23,000 in March.

Why the dramatic change? The main answer is maquiladoras, a Spanish term for the mostly U.S.-owned light-assembly industry that is flourishing along the Mexican side of the border from Texas to California. Born of a 1965 Mexican development plan, the maquiladoras have become employment mainstays of that country. An estimated 1,400 U.S. firms, including General Motors, General Electric and Honeywell, use the plants to take advantage of a Mexican minimum wage that at current exchange rates is less than 40 cents an hour. Japanese companies like Sony, Sanyo Electric and Hitachi have followed suit, and the resulting boom is transforming border towns like Juarez into bustling industrial centers.

But the factories have stirred a heated controversy in the U.S. over the number of American jobs that may be going to Mexican workers. The maquiladoras, thunders Victor Munoz, president of the AFL-CIO's 12,000-member Central Labor Union in El Paso, are "a scam, a con game. All they're creating is more profits." In February union workers surrounded a maquiladora trade show in El Paso with a caravan of trucks. Last week a team of U.S. analysts began a study of the border region for a House subcommittee that is examining the impact of the factories on the U.S. economy.

Behind the maquiladora phenomenon are complementary Mexican and U.S. economic policies. American firms have long sent materials to Mexico duty free for use in assembly plants, then paid duty only on the value added abroad when the products were returned to the U.S. For nearly two decades, these exchanges fostered steady but unspectacular growth in border cities such as Juarez, Tijuana and Mexicali. But the trend accelerated dramatically in 1982, when the Mexican peso lost 82% of its value against the U.S. dollar. Mexican wages fell to irresistibly low levels for U.S. companies facing tough competition from Asia.

Now at least 850 maquiladoras employ 250,000 Mexicans at assembly work that was formerly done, by and large, by Americans. But U.S. businessmen insist that if the jobs did not go to Mexico, they would probably move across the Pacific. As it is, the U.S. has shared handsomely in the binational prosperity. A 1986 federal report said Mexican maquiladora workers spend about half their wages on the American side of the border. Local businessmen claim the industry is also supporting more than 800,000 jobs in factories, warehouses and other businesses in the U.S.

According to one study, the cross-border factories could employ as many as 3 million workers by the year 2000. The projection assumes, of course, that the U.S. customs duties that have helped to foster the Mexican boom are not changed. If prosperity south of the border is matched by deeper woes to the north, however, that might not continue to be taken for granted.

With reporting by Richard Woodbury/Ciudad Juarez and Gisela Bolte/Washington