Mexico’s manufacturing revival [2]
By Sean Goforth
Maquiladora factories symbolize Mexico’s economic integration with the United States. While lower wages in China lured away many clothing, toy and TV outfits, today a manufacturing revival is evident in Mexico. Factories are humming at full tilt; some are expanding operations. This news carries two surprises.
First, Mexican manufacturing is rebounding ahead of growth and consumer spending in America. While the Mexican economy grew 5.5% last year and is expected to grow 4.5% this year, jobs in Mexico’s manufacturing sector increased 8.2% to 1.8 million as of January, according to a recent article in the New York Times. Much of this job growth is owed to the recovery of Mexico’s auto sector (car production and parts manufacturing) and electronics assembly. Ford and GM have nicely recovered from the doldrums, the latter from bankruptcy. Foxconn, a Taiwanese firm best known for making the iPhone, currently operates four factories in Mexico. It is rumored to be eying acquisitions that would make it the largest manufacturing conglomerate in Mexico.
Second, Mexico’s manufacturers are not wilting from the drug violence in northern parts of the country. The factories are secure, but there is at least one incident of factory workers falling victim to the drug war: last year in Cuidad Juárez a group of narcos, apparently looking for a rival, fired on a bus carrying factory workers. Four were killed. Undaunted, factory managers are doubling down, hiring more workers and making plans for additional floor space.
Certainly the resurgence of the 21st century maquiladora doesn’t mean all is peachy. Beyond the violence, growing the payroll has renewed an age-old objection to manufacturing in emerging markets. Cirila Quintero, a sociologist at El Colegio de la Frontera Norte, told the Times, “The maquiladoras may be growing again, but there is still not much of an effort to address the social needs of the workers and their families outside the plants.” She went on: “What investment has been made in schools and social centers has been minimal. The governments say they don’t have money and the plants say they are there to create jobs and help industry.” Still, Rosalia Carrasco, a 41-year-old factory worker, has a job with benefits: “I am hoping to improve myself and get ahead, like anybody else.”
To be sure, Mexico’s economy is moored to America’s. Yet the trends that animate global manufacturing bode well for Mexico.