CIUDAD JUAREZ, Mexico — Despite a weak U.S. economy and a drug war that has turned this city into Mexico's deadliest, the maquiladoras are on the rebound.
These assembly-for-export plants, which crank out everything from brake pads to plasma TVs for U.S. companies, are opening new facilities, expanding existing ones and hiring more employees. Some firms looking for lower costs have even begun shifting production from China back to Juarez.
The recovery of approximately 350 maquiladoras is the single bright spot in a city where drug violence has killed 7,000 people in three years. The maquiladoras may also be a sign that the economy in the region is finally turning the corner, after gross domestic product for Mexico as a whole shrank by almost 7 percent in 2009, the worst contraction in decades.
"There's some real competing realities in Juarez at the moment," said Bob Cook, president of the Regional Economic Commission in El Paso, Texas, Juarez's cross-border sister city. "The violence has not targeted our industry, and the cartels ... have not destroyed all the advantages of doing business there."
Unemployment for Juarez is high, at 7 percent compared to Mexico's national average of 5.4 percent. But plants that furloughed employees in 2008 and 2009 are now offering overtime as well as jobs.
The Juarez maquiladoras added about 26,000 new jobs from July 2009 until August 2010, when they employed more than 192,000 people. But there's still ground to make up: Three years ago, the sector employed about 250,000 of Juarez's 1.3 million people.
Cook said that since 2008, 106 new permits for maquiladoras were granted in Juarez. An additional 15 companies have notified the commission of plans to locate or expand in the city, which would create up to 11,400 additional jobs.
It's difficult to compare Juarez to other border cities because, starting in 2006, the Mexican government began simply listing maquiladora jobs nationwide under "manufacturing."
There has also been anecdotal evidence of a recovery in the Baja California city of Tijuana, Mexico's other major maquiladora hub, located across the border from San Diego, California, said Dale Robinson, president of the Western Maquiladora Trade Association. He could not provide figures.
Carlos Pascual, the U.S. ambassador to Mexico, said a record 12 maquiladoras returned from China last year to locations along the border, often states with heavy drug violence such as Baja California, the northeastern state of Tamaulipas and Chihuahua, home to Juarez. It is unclear how many plants have headed to China over the same period.
Nationwide, the maquiladora sector has shed hundreds of thousands of jobs since peaking at 1.3 million employees in October 2000, but Mexico is now catching up fast with China. U.S. imports from Mexico exceeded $168 billion through November, expanding by 35 percent over the past year, according to the U.S. International Trade Commission. Imports from China, meanwhile, were up nearly 24 percent to about almost $264 billion through November.
With credit less available globally, some companies can no longer afford to wait for profits, delayed by lengthy shipping times as goods travel from Asia to the U.S. It may work out to be less expensive to use Juarez, Tijuana, and other Mexican locales that are just a stone's throw away from American soil.
Pascual said Mexico also is increasingly attractive compared to China because of the devaluation of the peso and the strengthening of China's currency. The disparities in wage rates are shrinking as well: China's labor costs have increased as the government works to adhere to environmental regulations, especially after criticism during the 2008 Beijing Olympics.
"The difference was about $1.50 to 40 cents (per hour) in 1996 and $3.50 to $3 now. Mexico is still more expensive, but not that much," Pascual said in an interview.
Juarez has been Mexico's leader in maquiladoras for decades. Other companies increasing their presence here include:
u2014Swedish appliance manufacturer Electrolux, which is closing two Iowa plants, laying off 850 workers and shifting nearly all its production to Juarez — where it already employs around 6,000 people.
u2014Delphi Automotive LLP, a parts supplier for General Motors, which has 12 Juarez plants and a technical center employing more than 12,000 people. Production is still a long way from the days when Delphi had 20,000 workers in Juarez, but the company added about 700 new jobs through late 2010.
u2014Taiwan-based Wistron Corp. is also expanding in Juarez. The company produces components for Blackberry, made by Canada's Research In Motion Ltd., which declined to comment.
The maquiladora industry ran into the drug violence in Juarez on Oct. 28, when gunmen opened fire on a trio of buses carrying nightshift maquiladora workers to communities outside the city. Four people were killed.
Investigators suggested the attack was tied to a dispute involving the bus company. No arrests have been made — not unusual in a city where almost no murders are solved.
Since the shooting, employees say vans of armed guards have provided security escorts. Converted U.S. school buses, painted green and white and marked "Transporte de Personal," rumble everywhere in Juarez, bringing workers to and from maquiladora shifts that run around the clock.
Some maquiladora workers have pooled their money and bought jalopies driven south from the U.S. and sold without registration, forming makeshift carpools to avoid company buses. But not everyone can afford that. (AP)