Trucks at a distribution center in Santa Teresa, New Mexico, load up goods assembled in Mexico for shipment to the interior of the United States.
EL PASO, Texas (Border Report) – Mexican cities bordering the United States are becoming increasingly dependent on foreign factories.
In cities from Tijuana to Juarez to Nuevo Laredo, maquiladora employment now accounts for one in two formal jobs, and in Mexico one in ten jobs, said Thor Salayandia, the new vice president of the Mexican Chamber of Commerce. That’s 1 million jobs in border cities and 2.7 million jobs overall.
“Fifty percent of the jobs in 12 cities — more than 1 million jobs — are maquiladora jobs,” Salayandia said. “Juarez and the other cities depend on the maquiladoras for better or for worse. What’s the good? They help develop human talent, bring in technology, and give us the opportunity to sell them the materials they need.”
Challenges include looming labor shortages, industrial parks nearing capacity and a failure of more local suppliers to step forward, he said.
But American and Canadian firms want to shift production out of Asia to avoid supply chain disruptions like those caused by the COVID-19 pandemic. And Detroit-based automakers with a presence in Mexico are considering investing in electric vehicle production. That offers even more opportunities for job growth, trade experts said.
Maquiladora Employment in Mexico (Dallas Federal Reserve Bank Chart)
According to Jerry Pacheco, president of the Border Industrial Association based in Santa Teresa, New Mexico, the economic impact of the maquiladoras is also being felt on the US side.
“It’s a symbiotic relationship,” he said. “We have companies here that receive maquiladora products, ship them to Europe, ship them to Asia and Latin America. And for the US, you see trucks going to the coast with finished products, you see trucks going to Chicago, you see trucks going to the Gulf Coast.”
Trade experts have long said that for every four jobs created by maquiladoras in Mexico, one job is created in the United States
Pacheco said that number is now closer to three to one.
“Companies have a presence in the US and a presence in Mexico. They will run their headquarters here, hire workers there. They either hire their managers in Mexico or have managers from the US crossing the border on a daily basis. Thousands of Americans cross this line to work on maquilas as operations managers, quality control specialists, or engineers. There is almost a seamless situation and we benefit from there.”
Industrial parks in Santa Teresa and El Paso are teeming with storage, transportation, packaging and logistics operations for maquiladoras in northern Mexico. Other companies such as plastic moulds, metal stamping and cable manufacturers and steel suppliers also provide services to businesses south of the border.
Trucks waiting to be delivered at Santa Teresa Industrial Park, New Mexico. (photo of border report)
“It’s all shipped to the maquilas in Mexico. The end product comes back and is stored and made available at the Santa Teresa or El Paso distribution centers,” Pacheco said. “I told my staff this morning that if it wasn’t for the maquiladora industry, we wouldn’t be here.”
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Maquiladoras have been around since the late 1960s, when the US and Mexican governments embarked on a program to promote jobs in Mexico and produce inexpensive goods for US consumers. The US-Mexico-Canada Agreement (USMCA) further refined the program, allowing raw materials to be shipped to Mexico, assembled there, and taxed only on the added value of the product, not the product itself.
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