Maquilas dodge THE VIOLENCE:
Juárez plants hurt more by recession than drug violence
Posted: 03/07/2010 12:00:00 AM MST
EL PASO — The drug war in Juárez has prompted an estimated 10,000 small businesses to close or move across the border to Texas. But it has not slowed Juárez’s biggest economic engine — the maquiladoras, or manufacturing plants, largely operated by international corporations.
“I’m not saying our industry ignores the problem. That’s not a smart thing to do,” Russell said. “It has an effect on the way we conduct ourselves, but not on the economics of our business.
“Our clients have plants in other parts of the world with political unrest and other challenges. As long as the executives and work force are safe, business takes its own road.”
Xóchitl Díaz, a spokeswoman for Delphi Automotive, one of Juárez’s largest maquila operators with 12 plants and a technical center employing about 15,000 people, said production at the plants had not returned to 2008 levels. That was because of the recession and decreased auto sales, she said, and not because of the violence.
The violence has made “people more careful and smarter about how they come to work,” and it is a constant topic of conversation among the workers, Díaz said. She said it had not hurt production or increased worker absenteeism.
An El Pasoan, who has owned a maquila in Juárez for more than 25 years, said the violence was not hurting his plant. But it has made everyone more cautious, he said.
He did not want his name published for fear that “some petty criminal” may take advantage of the drug war and do something to him or his family, he said.
Others in the industry did not want to be quoted for similar reasons.
The maquila industry is important not only for Juárez. It also brings millions of dollars and thousands of jobs into the El Paso economy, including jobs for several thousand maquila managers and other professionals who live in El Paso and commute to Juárez daily.
El Paso retail sales also get a huge boost from maquiladora workers who travel to El Paso to shop.
Thousands of maquila jobs have been lost. and some maquilas have closed since January 2008, when the violence began to escalate.
But those in the industry said the jobs were lost because of the recession, not the violence, which has claimed more than 4,700 lives since January 2008.
Tom Fullerton, an economics professor at the University of Texas at El Paso, agreed that the recession had caused the maquiladora’s latest slump.
But it’s “unquestionable that the violence makes doing business (in Juárez) more difficult and more costly,” Fullerton said.
Bill Parisen, 42, vice president for an international manufacturer, said his company took the violence in Juárez into account when it started looking for a place to move its California plant this year.
“We did our due diligence. We found the border violence left maquiladoras unaffected in terms of employees needing to move in and out of Juárez,” Parisen said.
Low labor costs, the availability of well-trained workers and good logistics made Juárez the choice for the company over other areas in the region, Parisen said. In February, the company began moving production from a California factory to a plant operated by Tecma.
Parisen, who has been traveling frequently to Juárez in recent weeks, said he has no qualms about going to what has become known as one of the world’s most dangerous cities. He is familiar with the city because he traveled there frequently when he worked for a different company from 2003 to 2006.
“As a U.S. businessman, I know I have to be careful. When we go to restaurants at lunch, we go to a place fairly populated and not off the beaten path. We don’t go there (Juárez) at night,” he said.
“My co-workers had initial concerns, and some of their wives didn’t want them to travel (to Juárez).” But after the executives visited Juárez several times, they’ve become comfortable and even fond of the area, he said.
No flying bullets
Toby Spoon, 52, executive vice president at Tecma, said, “The main thing I want to get across is I don’t feel unsafe. It’s not like a Clint Eastwood movie — dodging bullets. É I still stop to buy a soda at 7-Eleven. I still go to eat at restaurants.”
“I use safe practices every time. I travel mostly in the safe corridors” established for the maquilas, said Spoon, who commutes daily between his El Paso home and Juárez.
Commuting is a concern for maquila professionals. But many maquilas, including Tecma and Delphi, provide contracted buses to take production workers, who live in Juárez, to the plants.
Lucinda Vargas is an economist and director of the Juárez Strategic Plan Association, which in 2004 completed a plan to improve the city’s quality of life by 2015. She said the violence was not driving maquilas out of Juárez, as companies have investments too big to leave. But, she said, she is concerned that the violence is making investments by manufacturing companies more precarious.
“I think corporate executives are trying to size up how significant Juárez should be,” she said. “Sure, it produces the raw, cold numbers of productivity. But will it fit into future strategy (of corporations) because of the risks involved?”
Vargas said her association determined, even before the violence escalated, that the Juárez plan could not be carried out until Mexican government and judicial institutions were reformed so the “rule of law” becomes a guiding principle of governance.
Mike White, senior partner for TeamNafta.com, an El Paso commercial real estate company that does industrial leasing in Juárez, said his firm is having more trouble recruiting companies to Juárez than at any other time in his 17-year career.
“It’s very sad. Until Juárez can prove it’s a stable place, I don’t think we’ll be recruiting many companies.”
Bob Cook, president of the El Paso Regional Economic Development Corp., or REDCo, which recruits companies to El Paso and Juárez, said companies continue to show interest in Juárez despite the violence.
“We’re now working with about 50 companies evaluating Juárez — about 60 percent more than a year ago,” he said.
All the companies are evaluating the violence along with the business benefits of Juárez, Cook said. Most have not made decisions. One company recently decided to locate in El Paso instead because of the violence, he said.
The maquilas — most located in huge, modern industrial parks — have not been immune from the crime surrounding them. Some were hit by ATM bandits in late 2008.
“We removed our ATM machines,” as did other maquilas, and the robberies stopped, Tecma’s Russell said.
A Lear Corp. plant executive, kidnapped from his Juárez neighborhood in January, was rescued by Mexican soldiers. He told a Juárez TV station his captors thought he owned the Lear plant.
Spoon, who oversees personnel issues, said almost all of Tecma’s workers who live in Juárez know someone affected by the violence. But the “work force continues to march on,” he said.
The Mexican chamber of commerce estimates more than 10,000 small businesses, including restaurants, bakeries and other service businesses, have closed in Juárez as extortion attempts and other crimes increased. The economy also probably plays a role in some of the closings.
But the maquilas, most operated by large corporations, also march on.
Russell said if maquilas became targets of the violence, it “would take the whole issue to another level. I think the maquila reaction would be greater than anyone would want.”
Vic Kolenc may be reached at email@example.com; 546-6421.
Juárez had 339 manufacturing plants with more than 170,000 employees at the end of last year, reported INEGI, a Mexican government agency. Most of those are maquilas. That was a loss of more than 44,000 jobs since January 2008, the data show.
The Association of Maquiladoras in Juárez has different numbers. It reported Juárez maquila employment slid from 249,837 workers in January 2008 to 166,454 in June 2009. That was a loss of more than 83,000 jobs during 18 months.
The number of maquilas operating has remained fairly constant in recent years, as some plants close and others open, the data indicate. In January 2008, Juárez had 327 manufacturing plants, INEGI reported.