Frontera NorteSur September 2000

I. Introduction and Background

Maquiladoras can be described as industrial settings in less-developed nations where cheap, usually unskilled, primarily female labor is used to assemble products from imported, foreign-made goods. This type of plant exists in relation to the US because the Tariff Schedule of the United States ((TSUS) only requires that duty be paid upon the value of the labor added abroad to a product when it is brought back into the US. Thus if material is sent to Mexico to be turned into a television, when the TV is brought back into the US the value of the TV parts are not taxed, only the value of the labor that it took to finish the TV.

Some maquiladoras make finished goods like TV's and VCR's which are then usually sent for sale to industrialized nations. Other maquiladoras complete items like truck seats and car electrical systems and send them back to the US or another country to be used in the assembly of other goods. In the context of the US and Mexico about 83% of all maquiladora jobs and 75% percent of all maquiladoras are in the border states of Baja California, Sonora, Chihuahua, Coahuila, Nuevo León and Tamaulipas. However, the most rapid maquiladora growth is in other regions with lower land costs and/or more available workers.

The chart below shows state by state the number of people employed by border maquilas. The most recent month available from the Mexican statistical service INEGI was May, 2000. The 1990 and 1995 statistics are also from the month of May. It should also be pointed out that the number of maquiladora jobs has doubled over the past five years.

Maquiladora employment:

Year	National Total	Baja California	Sonora	Chihuahua	Coahuila	Tamaulipas	Nuevo Leon	Border States Subtotal
1990 (May)	449,519	88,664	39,265	163,514	31,626	82,012	13,225	418,306
1995 (May)	629,481	127,228	52,451	182,377	54,457	116,809	27,041	560,363
2000 (May)	1,277,727	267,396	102,374	321,481	114,107	182,547	67,438	1,055,343

The following chart shows the number of maquiladoras in the border states. Note that while Chihuahua has less plants than Baja California it has greater maquiladora employment. This is due to the large size of the plants in Chihuahua and especially in Ciudad Juárez where some plants employ over 15,000 people.

Number of maquiladoras:

Year	National Total	Baja California	Sonora	Chihuahua	Coahuila	Tamaulipas	Nuevo Leon	Border States Subtotal
1990 (May)	1,683	628	156	309	135	221	62	1511
1995 (May)	2,075	705	172	316	176	275	81	1725
2000 (May)	3,562	1,199	282	448	279	373	154	2735

II. Cheap Labor

The low cost of labor so close to the US is what fuels maquiladora growth. Following is an example of labor costs for the maquiladora industry. This data is from Méxicali, taken from the July 1999 Twin Plant News. It is for an employee that has been with a maquiladora for six months or less. After a year, workers earn about 18% more although the average worker never makes it that long. A typical plant might experience 100% staff turnover in the course of a year. Some plants have an annual 300% turnover rate.

Labor Cost For Unskilled Workers
Source: Sada y Asociados, S.C.

Weighed average daily wage	61 pesos (approx. US$6.70)
Weighed average weekly wage (48 hours)	472 pesos (approx. US$52.44)
Weighed average annual wage	22,204 pesos (US$2476.00)
Christmas bonus (15 days)	915 pesos
Vacation bonus	91.5 pesos
Social Security	4,186.55 pesos
Children's nursery	232.59 pesos
Housing fund tax	1,162.93 pesos
Payroll state tax	320.44 pesos
Pension fund	1,459.49 pesos
Food coupons (96 pesos a week)	4,992 pesos
Full cost per year	35,564.50 pesos
Full cost per hour per employee	14.82 pesos
Full cost per hour per employee	approximately US$1.64

Measured in 1994 pesos, the average monthly salary for maquiladora workers was 3,251 pesos per month in May, 1993. In May, 2000 that figure is now 3,652 peso per month according to INEGI, or about US$400 a month.

One of the main criticisms of the maquiladora industry is that its wages have stayed so low for so long that it is not a viable path to industrialization or increased living standards. Some people counter that maquiladoras were never meant to be part of Mexico's economic growth, that they were simply a job creation program to provide work on the border, especially after the end of the agricultural workers' Bracero program. However, at least from FNS's perspective of covering the border and national Mexican press on a daily basis, it could be argued that government and industry concentrate much of their planning for future job creation around the growth of maquiladoras and maquiladora parks. In a sense, Mexican economic growth has become maquiladora growth.

III. Current Maquiladora Issues & News

Higher wages and better working conditions demanded by employees

Workers in maquiladoras along the border are beginning to demand better safety and health conditions and higher wages. Also, as some workers believe that the big, PRI-related CTM unions have failed to adequately represent their interests, the workers are trying to set up independent unions. This is currently taking place in the Río Bravo, Tamaulipas Duro S.A. plant (see the FNS September, 2000 feature article on this subject) and at the Han Young plant in Baja California. In some of these cases, workers that want nothing more than to form their own unions are facing job loss, harassment of themselves and their families and beatings. The big, government-related unions obviously fear a loss of power and it is significant that in Tamaulipas after the Duro problems began the SITPME union there announced that it has negotiated wage increases of at least 20% in all of its new contracts. Obviously then worker pressure for higher wages is being heeded.

It should also be noted that in mid-August PRI legislators linked to workers announced that they would demand the end of salary ceilings so that unions could freely negotiate with businesses (El Diario, Aug. 14, 2000). The lifting of these pay limits could help all unions throughout the nation although the issue seems to be on hold, perhaps until Fox gets into office.

Chihuahua City and Ciudad Juárez Debate Programs to Import Workers

Because unemployment is so low in the state of Chihuahua, particularly in Chihuahua City and Cd. Juárez, employers are having a difficult time attracting workers. However, rather than raising wages to pull more people into the labor force as one would expect the neo-liberal Príistas and Panistas to recommend, government and industry are considering the creation of big-government programs that would bring workers in from rural areas.

While the idea was shot down quickly by all elements of Cd. Juárez government and industry (which incidentally were both bothered this summer by rioting from maltreated builders brought in from Veracruz and Chiapas to work on a city hospital), Chihuahua City appears to still be studying the idea.

Cd. Juárez also discarded the idea because any more immigration would only further overload an already strained city budget and a completely over-taxed infrastructure.

Maquiladoras in Prisons

While there have been no new reports on this since early July and FNS has not been able to find out more about a maquiladoras- in-the-prisons program for Chihuahua, there was discussion of a foreign company building a maquiladora in the CERESO (prison) near Cd. Juárez (El Norte, July 7, 2000). The projects has two goals. One is to provide income for prisoners that they can use for themselves or send to their families. Hopefully the workers will also learn new job skills and good work habits. The other goal is to provide a captive labor pool for foreign companies in need of workers. While potentially good in theory the program could get ugly quickly. Guards and prison officials could easily exploit the workers for personal gain and human-rights and labor-rights questions could also arise.

An article in Matamoros' El Bravo on August 4, 2000, described why national and international investors there were not interested in having maquiladoras in the Tamaulipas' CERESOS. Rather than being worried about possible abuses of prisoners' rights the companies felt that a prison environment would not offer enough stability. The article said that despite the fact that the prisons have a qualified work force investors were afraid of riots and prisoners' needs to go in and out of work to visit with family members or lawyers. They were also worried about prisoners leaving the work place at inappropriate times and about losing workers when their sentences were done.

It's almost hard to imagine that a prison would not be a structured enough environment but this seems to be a real industry fear. The fact that prisons also have what is seen as a "qualified work force" says something of the type of work that poorly educated workers do in the maquiladoras.

Maquiladoras and Education

The Chihuahua State Education Plan for 2000-2001 indicates that Chihuahua's border with the US includes the counties where the least number of students complete their education. This is particularly true of Cd. Juárez, the study reports. Perhaps due to the transitory nature of the city 18.26% of primary school students leave school every year. Perhaps even more worrying is the fact that of the 69,561 students that enter the state secundary education system only 25,366 finish their education, a graduation rate of only 36.47%. According to the education plan it is primarily economic necesity that forces students to leave school. Of those students that leave school most of those between the ages of 15 and 17 go to work in the maquiladoras. To help counter this loss the maquiladora industry last year established adult centers of education in the plants. Supported by the Instituto Chihuahuense de Educación para los Adultos (ICHEA) the centers are designed to help increase s workers' education levels.