Leaving Laredo

Ten years ago, U.S. manufacturers flocked to the Mexican border. Now they're headed out -- in search of even lower wages a continent away.

Martha Ojeda grew up less than a mile south of the Rio Grande, in a house with no water or electricity, but with a view of the bright lights of Nuevo Laredo -- what she calls the "lost city" of brothels, bars, and American-owned factories. There was little choice for young women like her, second-generation maquiladora workers: At age 16, she joined her mother for full-time shifts at an electronics plant. At 20, she took the bus three hours each way on weekends to attend law school. Now, at 47, she works even longer days, as director of the San Antonio, Texas-based Coalition for Justice in the Maquiladoras. She has battled plant owners and Mexico's state-controlled unions. And lately, she has found herself facing an even larger foe: all of Asia.

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These days, Ojeda's cell phone crackles as workers call with reports of corporations abandoning Mexico to relocate in countries including Vietnam, Cambodia, and, increasingly, China. The 1994 North American Free Trade Agreement (NAFTA) helped launch a manufacturing boom in Mexico's border region that brought more than 750,000 new jobs and more than 1,600 plants. But in the past two years, more than 500 of those plants have closed, taking with them nearly a quarter million jobs, according to Mexico's official statistics agency. No one has kept track of how many of these plants shut down as a result of the U.S. recession and how many migrated to Asia -- or, in some cases, south to Central America -- but experts say a growing number of manufacturers are fleeing Mexico in search of lower wages. Mexican workers have clawed their way up to an average of $4,416 per year, plus profit-sharing, bonuses, and health care plans; in China, manufacturing workers earn an average of $1,182 per year. And so, as the 10th anniversary of NAFTA approaches, Mexico -- which transformed its economy by underpricing U.S. wages -- is finding itself in the same predicament as its northern neighbor. "This is not a new concept, that companies move from higher to lower wage to increase their profitability," notes Steve Beckman, assistant director of governmental affairs at the United Auto Workers. "It's the way the companies play this game."

On a recent trip back to Nuevo Laredo, Ojeda's first stop was the modest block structure that is both home to Fela Contreras and headquarters for a workers' rights group she has organized. One bare bulb lights the kitchen; a fluorescent circle illuminates the living room. Contreras, 50, had worked at a Sony Corp. plant for 13 years when she was laid off in 1998. Now she sells tacos and crafts at the neighborhood flea market. "You work all your life and leave your childhood there," she says, "and then they say, 'Goodbye, you are junk, you are old.'" She has files full of newspaper clips, each announcing another local plant laying off workers or moving away. A Sony spokesman says the company has laid off some 1,300 of its workers in Nuevo Laredo in recent years as production has shifted to Asia. "It's a corporate strategy," he explains. "Worldwide, Sony has relocated to China." Although the Nuevo Laredo plants have performed well, he says, their products -- audiocassettes and videotapes -- are declining in sales volume.

The maquiladora exodus is evident all over Nuevo Laredo. Abandoned warehouses are stenciled with "Space Available" signs. Factories in the industrial parks on the city's periphery are empty; their logos have been ripped off, leaving behind the ghosts of company names. In the first four months of this year, an average of 42 people were arrested each month in connection with robberies at commercial properties, a 35 percent increase over 2002. There are more vendors and hawkers along the main Avenida Guerrero, and more windshield washers crowding the intersections. And even as the jobs migrate away, Nuevo Laredo's population is continuing to grow. Migrants from throughout Mexico used to come to town for the maquiladora boom. Now they come simply to try to cross into the United States.

Thirty-four-year-old Braulio Pavón reports for windshield duty every night at 7 p.m., rag in hand, on one of the city's main drags. Two years ago, he was laid off from his second maquiladora job, and he now works in a tire shop; at night he washes windshields to support his three children. Sometimes he cadges $10 in tips; other nights, not a peso. Police often demand a cut of 100 pesos, or $10. "You're pushing me to be a robber," he tells them.

All over Nuevo Laredo's concrete-block neighborhoods, displaced maquiladora workers tell similar stories. Rosa now sells used clothing at the weekend flea markets. Luisa cleans houses for well-to-do Americans across the river in Laredo, Texas. Francisca sells Tupperware.

"I would be enchanted if I could work at another maquiladora -- it gives you a health program," says Fela Contreras' sister, Rosa, who had worked at Sony for 18 years when she accepted a buyout to avoid being laid off. The maquiladoras "helped me support my family," she says. "But the price was my hands." She flexes her right hand, stiff from carpal tunnel syndrome, the result of 10 years of moving pallets of videotapes.

Those who still have jobs complain about fear and pressure to accept pay cuts. One woman in her 40s, who asked that her name be withheld, works from 4:30 p.m. to 1 a.m. in Springfield Wire Inc.'s refrigerator-parts plant. She remembers that two years ago, managers began telling workers who demanded safety improvements, "You need to thank God you have jobs, because these machines are going to be moved to China."

Bill Bradford, president of the Springfield, Massachusetts-based manufacturer, says the company is "committed to a viable presence in Mexico." But, he adds, Springfield now also has a plant in China, "so we can remain competitive on a global basis. Certain products just can't be made profitably in Mexico any longer."

Nuevo Laredo officials are also clearly worried about the maquiladora migration. Francisco Ruiz, the city's deputy director of economic development, says that in 2000 alone, seven maquiladoras packed up and left, throwing nearly 2,000 employees out of jobs. No one knows exactly where those jobs went, he says; but this summer, local officials from across Mexico attended a forum in Mexico City to discuss the maquiladora migration. "There were three conclusions," he reports. "Mexico has become a victim of its own success. We impose too many taxes on foreign investments. And we have too much paperwork -- to incorporate in Mexico requires 70 different application forms. That's a lot."

Labor and industry analysts alike are watching the exodus, but offer few predictions. "It's not as if thousands of factories are all going to pick up and go in the next five years, and people will be left with nothing," says Lance Compa, the former director of labor law and economic research for the NAFTA Commission for Labor Cooperation. "They have a lot of good reasons to stay put." Mexico still offers the advantages of tariff-free trade, proximity to the United States, a familiar environment, and a multitude of package manufacturers who can import or produce parts, assemble them, then quickly deliver a finished computer or air conditioner.

Lynda Yanz, coordinator of the Maquila Solidarity Network in Canada, sees the next two years as critical in assessing the fallout of Mexican plant closings, particularly in the garment industry, which next year faces the expiration of a 30-year-old international agreement limiting exports from developing nations. "Vietnam and Cambodia are big players, and we don't yet know how that will shake out," says Yanz. "There's a lot up for grabs at the beginning of 2005, and a lot of questions about which countries will be winners or losers.

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