Border Business: Some Maquiladoras Thrive In Global Economic Downturn

October 06, 2011

Border Business

Mexico's maquilladora (manufacturing) industry has weathered the global economic downturn and is expanding. In a multimedia series, we explore the reasons why.

Photo by Hernán Rozemberg
Dennis Charlton, president of Neese de México, works on the plant floor in Piedras Negras.
Photo by Hernán Rozemberg
Diana Sosa helps make a flame-retardant protective suit at the Neese de México factory in Piedras Negras, Mexico.

Piedras Negras, Mexico

Piedras Negras, Mexico is across the border from Eagle Pass, Texas.
PIEDRAS NEGRAS, Mexico — Dennis Charlton walks the floor of Neese de México his maquiladora, or manufacturing plant, in this border city across from Eagle Pass, Texas.

As he walks the plant floor, he explains how his workers produce flame-retardant protective suits bound for the United States, primarily for oil rig workers off the Texas coast.

Charlton knows the plant’s continued existence after 21 years is a near miracle.

“Well the garment business is really gone — it went to China,” he said. “The reason we’re here is we make a specialty product and we have the short turnaround time and we do small-volume things that our customers can’t get from China.”

Perhaps it’s no surprise that it’s in Piedras Negras of all places that he’s been able to stick it out. This border city of 300,000 people has managed to stay away from drug war violence.

Maintaining social stability is a luxury for Mexican border cities these days. So foreign investors don’t think twice about setting up shop here.

“We are a very safe city. We have problems like every city. But not a big problem in security,” said Jorge Carranza, Piedras Negras economic development director.

“The people can go to work every day, can go to school with no problems, can go to public attractions during the night,” Carranza said. “People live a normal life in Piedras Negras.”

Though competition from Asia lingers and their success will always go up and down according to the ebb and flow of the U.S. economy, maquilas here are holding steady.

Karina Rodríguez, the director of the Piedras Negras Maquiladora Association, said two maquilas closed in 2008 due to the U.S. recession. But since then, three new ones have opened. Currently, the city’s 33 maquilas employ 19,000 workers — half the city’s registered workforce.

“We’re seeing that the number of workers and the economy is growing,” Rodríguez said. “We’re seeing an (increase) since January until September of 2,000 employees.”

Rodríguez predicts steady growth next year. Many of those new jobs will likely go to maquilas focused on the U.S. automotive sector, which is rebounding.

Sales figures released this week show GM sales up 20 percent from this time last year. Chrysler reported a 27 percent increase.

Adrian Ardelean’s company reflects this trend. The U.S. recession had its impact on Elektrokontakt, a French-owned operation that assembles electrical wiring solely for the U.S. market.

“We had to cut jobs,” said Ardelean, a native of Romania who serves as operations manager in charge of the Piedras Negras plant and another one nearby in Nava.

“But here we had very good relations with our associates and with the unions and we found a middle solution to compensate the missing of orders,” Ardelean said. “And at the end, everybody restart working.”

So whether it’s the up-and-coming auto sector or the old-school garment industry, what these maquilas have in common is that they’re here and they have no plans to pack up. For Charlton at Neese de México, even if his product now serves only a niche market, there’s nothing like being right across the border.

“We still feel that we need to be as close to our market as possible,” Charlton said.

Then he added: “And if we have a good customer that he might be two or three thousand of the basic (suits) — even though it might be from China — and he might just want 100 specialized (suits) made here, we want to be able to service our customer."