Friday, October 20, 2006

Decline in Mexican textile jobs changes face of maquiladoras

"NAFTA no longer provides Mexican textiles and apparel much benefit," said the Dallas federal reserve bank last month in this interesting essay.

Competition with China for the US textile market has slashed jobs in Mexico's maquiladora industry, reports the fed, but growth in other sectors partially compensates for the difference.

Competititon with China and other US trade agreements besides NAFTA deflated post-NAFTA growth in Mexican textile jobs, says the fed. Other economic sectors, though, have replaced many of those jobs, dramatically changing the face of the maquiladora industry in the last few years:

The strongest sector has been chemicals, up 67.8 percent since January 2003, followed by services at 45.1 percent, electronics at 25.4 percent, machinery at 21 percent, furniture at 17 percent and transportation at 14.9 percent. By contrast, textiles and apparel declined 15.6 percent over the same time span.

The maquiladora sectors’ varying fortunes have geographic implications. The industry is growing in Mexican border cities that cater to mainstream U.S. manufacturers. Since January 2003, for example, maquiladora employment is up 40.9 percent in Reynosa and 25.8 percent in Ciudad Juárez. Elsewhere, border cities’ maquiladora industries have been held back by various impediments, such as infrastructure difficiencies. Matamoros’ job gains were 2.8 percent. Employment fell by 30.8 percent in Piedras Negras and 13.6 percent in Ciudad Acuña.

Those are large job growth figures for Reynosa and Juarez on either end of the Texas-Mexico border, with maquiladora jobs declining in the central section along the Rio Grande.

I learned when Kathy and I were in Mexico this summer that many maquiladora workers arrive at the border and only work in the plants there long enough to earn enough money to pay coyotes to help them cross the river. So illegal immigration has fueled low-labor costs on the border, meaning the success of the maquiladora plants can simultaneously be blamed, in part, for the failure to control immigration at the border.

On Grits for Breakfast not long ago, I quoted a spokesman for the Texas Border Coalition arguing that "the border region can no longer compete with the Pacific Rim on cheap labor, its historic competitive advantage. The border's emerging advantage compared to Asia, he said, lies in "logistics," i.e., the ability to transform the area into a transportation hub."

These employment figures seem to dispute that. Cheap labor might not benefit Mexico's textile industry as much as it once did, but the Dallas feds' stats tell me the maquiladoras will still thrive on cheap Mexican labor, and on America's failed immigration policies, for a quite a while to come.

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