Mexico City -- up on Tijuana's Otay Mesa, the crown jewel of the Mexican maquiladora industry and one of the beacons of the globalized world economy, whole production lines are being transferred back to Asia, and there are "For rent" signs on Maquila Row.Further east on the border, in Ciudad Juárez, Mexico's second maquiladora hub, 5,000 workers were laid off during the first two weeks of July as a dozen assembly plants cancelled shifts or shut their doors for good. One U.S.-owned assembly plant, Scientific Atlanta, fired 1,300 workers and moved production across the ocean to China.
The maquiladora industry is in the throes of the worst crisis in its history, signals the Council of the Maquiladora Export Industry (CIME). In fact, the sector, which assembles about half the nation's manufactured exports, is about to be globalized right off the world maquila map.
From January 2001 through June 2002, Mexico lost nearly 600 maquiladoras out of an active roster of 3,200 export assembly plants, mostly in electronics and ready-made clothing.
During that period, 250,000 jobs vanished, 15 per cent of the maquila workforce. According to Mexican Labour Secretariat calculations, 1.9 plants closed down for good every workday during that 18-month stretch, taking an average of 532 jobs each with them. During the first four months of 2002, Juárez alone lost 141 jobs a day. Most of the runaways have moved production to China, but others have fled to Central America and the low-wage Caribbean.
China's aggressive hard sell to the maq owners offers tax-free come-ons, cheap production materials and free electricity. For China as for Mexico, the U.S. market is the number-one outlet, and the competition has Mexican Economic Secretary Luis Derbez frothing. "The incentives being offered by China are a clear case of dumping,' he gripes to reporters, threatening to bring China up on charges before the World Trade Organization, a move that will certainly prove fruitless, since it was China's admission to the WTO that opened the doors to the flight east.
But in this race to the bottom line, it is China's 40-cents-U.S. hourly wage that's driving the bargain. In Tijuana, hourly wages run about $1.20 and, believe it or not, this less-than-$200-a- month poverty wage is making it next to impossible for Mexico to compete in the cutthroat global economy.
In Tehuacan, Puebla, where 300 U.S. blue jeans maquiladoras have established themselves during the past decade, long-time brand names are pulling out. Vanity Fair (Wranglers, Lee), a 10-year tenant, skipped to the Dominican Republic last February, and Tropical Sportswear is reportedly divvying up its production between Haiti and Honduras, the two poorest nations in Latin America.
But not all those who are abandoning ship are transnational enterprises -- the CIME reports that 60 per cent of the departees are Mexican-owned.
Wages aren't the only factor driving the maqs away. Mexico is mired in a never-ending crime wave, and security costs have zoomed exponentially for transnationals. Foreign maquila execs are frequent targets of the kidnapping "industry," and corporations must shell out huge ransoms to redeem their employees. Highway hijackings of finished goods are epidemic.
The administration of Vicente Fox, who touts himself as a business president, has pledged to fight back against the maq attack. Manufactured exports long ago supplanted petroleum as the motor of the Mexican economy, and almost half the nation's manufactured exports ($77 billion to the U.S. alone last year) are assembled in the maquiladoras.
Because it looks bad for the maqs to be skipping to cheaper climes, the Fox administration is offering hard-to-turn-down enticements: tariff-free entry of all goods and materials used in the assembly process, not just those brought in from the U.S., and 10-year tax-free status. Fox is also pushing what he labels "the march of the maquiladoras' to low-wage Indian regions in southern Mexico.
But the prospects for Mexico's Indians are not bright. TransTextil, the first maq to set up in the Mayan highlands of Chiapas, manufactures ready-made knitwear for Guess and Nautica at its San Cristóbal de las Casas plant, where 300 Chamula women are employed at an hourly wage of 60 cents U.S. -- still 20 cents more than China. San Cristóbal is at the end of a dangerous mountain highway, so far away from the market where TransTextil needs to take its goods that the maquiladora might as well be in China.
Moreover, maquiladora production is 100 per cent dependent on U.S. consumer demand (no maquila-produced goods are sold in Mexico) and very susceptible to economic downturns in El Norte, as has been painfully demonstrated in the last year.
But the maquiladora bust may, in the end, prove a blessing in disguise, particularly for the blighted 3,000- kilometre northern border, where the exhausted carrying capacity of the land -- a waterless desert -- is making it impossible to accommodate at least 600,000 new migrant workers who move in each year.
The indiscriminate dumping of industrial garbage compromises the region's fragile ecological balance and has turned the border into a toxic wasteland no longer capable of supporting life. The diminishment of the maquiladora industry would at least allow the landscape to recover and breathe again.