Globalization Hits Home
South of the Border, an Eager Work Force Waits for Jobs
Mexico's garment industry has graduated from ramshackle Maquiladoras to
spanking new, integrated factory complexes.
Related links:
• How Global Trade and NAFTA Hit a Vital Virginia Business
• Hard-Working Mexican-Americans Flock to the Old Dominion
• Don't Blame NAFTA: Virginia Must Retrain
By Leslie Moore
Minutes before test-givers at Ciudad de Confeccion, or Garment
City, quiz Claudia Herrera on manual dexterity and speed, she strains
to complete an application in uneven handwriting. The 21-year-old
mother of two quit school at 11. She wants to leave her job at a
tortilla shop, where she weekly earns 150 pesos (about U.S. $15). Her
goal: win a spot at one of seven new textile factories, including four
owned by U.S. companies, located at a modern industrial park nearly two
hours outside of Mexico City.
If she succeeds, her pay will jump more than three times to 500
pesos (U.S. $50) a week. She'll also get an easier 48-hour workweek and
benefits. Thin-armed and diminutive, Herrera is slow to speak;
answering questions with two word sentences. Across from her, sits
confident Maria Eugenia Garcia Cruz, 18, who calls herself "a hard
worker" on an application. She says she enjoys reading fiction by
Colombian novelist Gabriel Garcia Marquez. If hired, she intends to
stay one year - two years tops, then study to become a doctor or a
teacher. "I looked for jobs at grocery stores and stationery stores,
but this is the best paying around," she says.
These two young women represent some of the fiercest economic
competition ever faced by thousands of apparel and textile workers in
Virginia. They are taking away jobs as U.S. corporations move their
operations out of the Old Dominion and other parts of the U.S. The
reason is simple arithmetic. In Virginia, apparel workers make roughly
$310 a week and textile workers $437 a week. In Mexico, workers will
accept one-tenth the pay.
The flight of U.S. textile and apparel manufacturing capacity to
Mexico, with its low-cost labor, is one of the big downsides to the
North America Free Trade Agreement for U.S. labor. Since NAFTA was
signed in 1993, Mexican textile exports to its northern neighbor have
tripled in the last five years, totaling about $7.9 billion in 1998. In
the same period, Mexican imports of U.S. textiles have doubled,
totaling about $5 billion. While the numbers represent a trade
imbalance for the U.S., the figures, nonetheless, show the development
of an important new relationship. By working together through NAFTA,
Mexico and the U.S. together enjoy cost benefits that help them stave
off apparel and textile imports from low-cost producers such as China
and other Asian countries. Yet the cost in layoffs has been tremendous
for some U.S. industries, notably apparel.
Cheap labor is the reason Mexico's Grupo Zaga struck a joint
venture with Dan River Mills Inc. of Danville to form Danza Textil SA
to manufacture in Mexico mixed polyester-cotton fabric for T-shirts.
Danza will build yarn dyes and weaving factories in the central state
of Hidalgo, investing an initial $125 million in the deal and creating
more than 1,000 jobs, with future plant expansions expected, says
Rafael Zaga, a top company executive whose family owns the Mexican
firm. "We're going to be the biggest provider of this fabric," Zaga
says. The deal allows Dan River to focus on "what it's good at
marketing — and lets us do what we're good at — labor," says Zaga. "The
labor is much cheaper here and so are logistics such as transportation
and administration."
Mexico offers U.S. corporations more than cheap labor. It has a
vertically integrated production chain that starts with petrochemical
plants delivering polymers for fibers and ends up with finished
products such as T-shirts. "It's a complete vision of the textile
business and a strength of the Mexican industry," says Victor Raudry,
an independent textile consultant hired by the NuStart industrial park
where Herrera and Garcia are applying to work.
Indeed, the newest threats to the Virginia economy are not
ramshackle maquiladoras nestled by the banks of the Rio Grande and
built a couple of decades ago. Instead, they are modern, clean,
green-field plants designed to maximize production efficiency and keep
the workforce stable.
Garment City is a shining example. By many standards, it is a
major leap in working conditions for ordinary Mexicans. Not only are
most plants only three years old with modern production lines, workers
get state health coverage, federal holidays and vacations as well as
training and soon some may have free rides to work. In May, the park
opened a sparkling daycare center for children aged 45 days to 4 years
old. All together, the park employs 2,497 people in the central state
of Morelos in a town named after Emiliano Zapata, the famous Mexican
revolutionary who fought for the poor. Investors in Textile City
include Confecciones Burlmex, a subsidiary of North Carolina-based
Burlington Industries Inc.; Unger Fabrik Nustart;Canadian-owned Phantom
de Mexico; Moda Maya, a subsidiary of U.S.-based Winopa International
Ltd.; and Mexican-owned firms Industrias Festival and Compania
Industrial de Moda S.A. and Avi de Mexico, owned by a California firm.
There's a reason for the perks. Despite their willingness to
work cheaply, Mexican workers at Garment City tend to have a high
turnover rate. Foreign companies who have invested in Garment City want
to hang on to their labor force. "That's our biggest headache — labor,"
says Ernesto Mejia Segovia, general manager of Avi de Mexico, an
apparel factory in Garment City. "It's almost like taking a person from
zero to having to tell them everything. They think they can return in a
week if they resign today." Managers believe that perks work. Monthly
employee turnover at Avi, which makes bathing suits for U.S. buyers,
hovers at around 3 percent, Mejia says. Burlmex's turnover is higher,
with an estimated 10 percent of employees leaving monthly. "Various
factors give us a high turnover, not just the salary," says Antonio
Carrillo, Burlmex's human resources manager, while standing on the
plant floor as staccato cumbia music pipes out of speakers, helping to
quicken the work pace.
Meanwhile, U.S. investors continue expanding in Mexico. This
fall, Guilford Mills and Cone Mills Corp., both based in Greensboro,
N.C., will finish the first phase of an industrial textile park in the
Gulf of Mexico state of Tamaulipas. Backed with government funding, the
two, competing textile companies agreed in 1999 to form an association
to finance the industrial park. The park will be located near Mexico's
largest petrochemical hub.
Nor is the competitive pressure on U.S. textile and apparel
firms limited to Mexico. The U.S. Caribbean Basin Initiative, which
will NAFTA-tize the region, will open up a swath of countries with
labor as cheap or cheaper than in Mexico. Zaga says the proximity of
Mexico's textile industry to the U.S. will continue to attract U.S. and
other investors. "The Caribbean may offer a cheap work force, but they
can't offer a complete package," Zaga says.
But others are less certain that Mexico's textile sector will
continue to enjoy growth levels of recent years once countries such as
the Dominican Republic are privy to a market similar to NAFTA. "That's
something I'm not sure about," says Ricardo Ortega of BurlMex. "We
can't get any lower on wages," Ortega says. "We'll just have to compete
on logistics."
There may be other tests ahead as well. On July 2, an opposition
party won the presidential election, breaking a 71-year-long
stranglehold on the nation held by the Institutional Revolutionary
Party (PRI).President-elect, Vicente Fox, is aligned with the
center-right and pro-business National Action Party, but won over
millions in the working classes in part by promises of better-paying
jobs.
Analysts say the PRI's defeat could generate labor tensions in a
country where everything from shoeshine workers to textile workers are
roped into the PRI-aligned union Confederation of Mexican Workers
(CTM). Mexico's biggest union, the CTM, has long been viewed as supine,
placing PRI interests above the interests of rank and file workers. As
the PRI unravels, observers say once bedrock institutions like the CTM
could also crumble.
That could bear important consequences at Garment City and other
factory floors where workers are now represented by the CTM, paying 2
percent of their weekly salaries in union dues. "We'll have to see how
things change, if things improve for the well-being of the workers,"
says Gonzalez. Meanwhile, U.S. textile and apparel companies from
Virginia and beyond will continue to take advantage of globalization
and free trade pacts and seek out cheap labor.