ECON - Mexican factories hit by U.S. economic slowdown

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Foreign-owned plants on Mexican border hit by U.S. economic slowdown By Julie Watson, Associated Press, 8/22/2001 01:39 TIJUANA, Mexico (AP) Owners of foreign-owned factories who once flocked to the Mexican border to take advantage of its cheap labor are laying off tens of thousands of people in the wake of a U.S. slowdown.

After years of strong economic growth and a booming job market spurred by the North American Free Trade Agreement, Mexico's dynamic industrial region is sputtering.

On a scruffy hill dotted with shacks, 50-year-old Jose Luis Cuadras struggles to eke out a living after losing his job sewing U.S. baseball hats at a maquiladora, one of the thousands of assembly plants that have characterized Mexico's border with the United States.

He now works at a stand that sells garage doors discarded by Californians. Carted across the border, the doors are used by impoverished Tijuana residents as walls for their homes. Cuadras now makes about $5 a day, about half of what he earned at the maquiladora. The lanky man moved into a garage-door home after not being able to pay his rent on an apartment.

''You do what you can to get by,'' he said.

The maquiladora industry has lost 100,000 jobs so far this year, mostly along the 2,100-mile northern border, officials say.

Since January, Baja California, home to Tijuana, has lost 23,100 jobs, while Chihuahua state has lost 59,100 jobs, Mexico's Labor Secretary Carlos Abascal said. The two states host the largest number of maquiladoras.

The U.S. downturn ''has had a huge impact,'' said Manuel Gonzalez, assistant director of the northern Mexican border sector for the National Manufacturing Chamber. ''There's been layoffs. Some plants have closed, while others are cutting back on hours and having people work only three or four days. That way they don't lose their skilled workers but can still remain competitive.''

Rolando Gonzalez, president of the Maquila and Export Industry Council, said the electronic, textile and automobile manufacturers have been hit the hardest.

International heavyweights such as General Motors, Phillips Electronics and Sony have had to lay off people at their Mexican plants.

Maquiladora leaders are working with the Mexican government to find ways to soften the blow.

Maquiladoras, also known as ''twin plants,'' were started in the 1960s to take advantage of Mexico's low labor costs. They have grown over the years to become the industrial backbone of the country's northern border, with more than 3,500 plants employing 1.2 million people. Most of the plants are concentrated in Ciudad Juarez, Chihuahua, across from El Paso, Texas, and Tijuana, across from San Diego.

Mexican Border Commissioner Ernesto Ruffo said the maquiladora industry expected to create 150,000 more jobs this year. But exporters, who send more than 80 percent of their goods to United States, have been hit both by the U.S. slowdown and the strong peso.

Not all the news has been bad: The region has attracted new U.S. companies looking to cut costs by locating in Mexico. But not enough have come to offset the layoffs, officials said.

Rolando Gonzalez is optimistic that the industry will recover and even expects to see a 1 percent growth in jobs by the end of the year.

Because of the maquiladoras and its proximity to the United States, the border has been a magnet for impoverished Mexicans. Over the past six years, the region's economic growth has topped the national average, hovering between 5 and 7 percent.

But now many are struggling to find a job. In the steamy city of Matamoros across from Brownsville, Texas, Pedro Rios, 16, has been job hunting for months after being laid off from a maquiladora where he sewed American clothes for $50 a week.

''They told me there just wasn't enough money to pay me anymore,'' said a shy Rios, whose job had helped him support his parents and three siblings. ''Now I just find work wherever I can. Mostly I find day work in construction, but it's hit or miss.''

Down the road in a dusty neighborhood, Miguel Lopez, 23, said it took him two months to land another job after being laid off. A year ago it would have taken only a few days.

Even so, Lopez was weighing his options after being told there would be no more overtime pay.

''I'm thinking of going to the other side,'' said the father of two, referring to the United States on the other side of the border.

''Is it any better over there?''

-- Anonymous, August 22, 2001


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