Monthly Article

The Quandary of Maquiladora Labor

By Jerry Pacheco

Ten years ago when Mexico’s maquiladora (twin plant) industry was experiencing 20 percent annual growth, the flow of labor that worked in the manufacturing plants became an issue. To fill the huge labor demand, Mexicans from interior states such as Guerrero and Veracruz migrated to cities such as Juarez to seek employment within the maquiladora industry. At one point, Juarez’s population was growing by more than 50,000 people per year.

This influx of humanity to Mexico’s border region caused many issues. On one level, available, affordable housing was consumed rapidly. Schools and social services were strained, and officials struggled to attend to the new municipal residents. Sprawl occurred in places such as south Juarez where housing, some inhabitable and some slapped together with cardboard and pallets, was quickly erected.

On another level, the reaction of the arrival of the interior Mexicans to the border was a little more sinister. In many conversations of that time period, I heard negative comments about these people, based on their culture and education. In many circles, even in industry, it seemed like they were being tolerated only for their ability to provide labor. I imagine that the same situation existed in U.S. cities such as Detroit and Pittsburgh with the influx of people of race and people from the countryside during their industrial heydays.

The economic recession, which started in 2008, coupled with the spate of drug violence that Juarez experienced during the same time period, not only cut off the flow of interior immigrants to the border, but also drove thousands out of Juarez back to their hometowns. The maquiladora industry still continued to churn out products for world markets, but at a much slower rate.

For the past several years, the maquiladora industry has begun growing again, bolstered by the economic recovery in the U.S. and Mexico’s quest to attract foreign direct investment. Some analysts are predicting that Juarez could have more than 300,000 workers in the maquiladora industry by the end of the year. The State of Chihuahua leads all Mexican states in exports, based on the massive scale of its maquiladora industry.

Now, the issue isn’t how many people are coming from the interior, but will enough people come from the interior to fill all of the jobs that the maquiladora industry is creating.

During the past ten years, the automotive and aviation industries have boomed in Mexico, making it a global powerhouse in the export of automobiles and airplane components. Companies such as Kia, Nissan, Volkswagen and BMW are investing billions to establish or expand plants in interior states such as Guanajuato, Puebla and San Luis Potosi. Thousands of workers are needed to staff these plants, workers that in the past may have moved to the border for jobs in cities such as Juarez. The concern among people in the northern maquiladora industry is whether there will be sufficient labor to support growth. If plants are locating farther south into Mexico where larger population bases exist, fewer workers will feel the need to leave home in order to seek jobs at the border.

The other factor is whether wages in the maquiladoras are high enough to keep attracting a steady flow of quality labor. This is a dicey subject – on one hand, part of the attraction of manufacturing in a location such as Juarez is economically-priced labor, as compared to that in more developed countries. On the other hand, if quality labor is to be secured, labor rates in the maquiladoras have to be attractive enough to entice people to want to work in the plants, rather than explore opportunities in the private and informal sectors. Maquiladoras almost always pay more than the Mexican minimum wage, which is around 70 pesos per day (less than US$5.00). However, many people can earn more than they would earn in a production plant by setting up their own business or hustling products on the street in what is termed the informal sector.

While it is true that Mexico is no longer a low-cost labor production base, especially as compared with other developing countries in places such as Asia and Central America, it still is an attractive country for advanced manufacturing. Its advantages lie in skilled labor (the maquiladora industry is 50 years old), close proximity to the huge U.S. market, an open arms approach to foreign direct investment, and competitive labor rates.

In order for industrial cities such as Juarez to continue growing, the challenge of attracting additional labor and establishing wages that will ensure this flow will need to be solved.