US-owned plants in Mexico produce cheap goods -- and controversy
Juarez, Mexico — Wearing a blue smock over casual clothes, Patricia stands before her work bench in a brightly lit, clean American assembly plant in this border city. Her hands move quickly, efficiently -- and cheaply.
She stretches out several US-made electrical cords on her bench and wraps black tape around them in several places. Then she forms a loop with the cords and tosses the loop into a nearby bin.
It is a task she repeats for her American boss again and again, eight hours a day, six days a week, 51 weeks a year -- for $1.35 an hour plus benefits worth about 75 cents an hour.
Some 600 such foreign-owned assembly plants, mostly American, now operate in Mexico, primarily along the US-Mexican border -- and their numbers are increasing. The finished products are sent out of Mexico for sale, often back to the United States.
But the assembly plants or maquiladoras are controversial.
US business executives here say these plants spur American jobs by using US parts and cutting assembly costs, thereby making the American goods more competitive in a world market. And, they say, the plants reduce the flow of undocumented workers to the US by providing some 130,000 Mexicans with jobs.
US labor union critics refer to the operations here as ''runaway'' plants that take jobs from Americans. And because two-thirds of the employees in the assembly plants are women, there is little effect on the number of undocumented workers entering the US since most who enter are men, says Ellwyn R. Stoddard, professor of sociology and anthropology at the nearby University of Texas at El Paso.
The assembly plants have the support of the Mexican government, which waives duties on the US-imported parts as long as the finished products are not sold in Mexico. And unlike the law which requires majority Mexican capital and ownership in large industrial production involving foreign investment, such as in Mexico City or Monterrey, the assembly plants can be 100 percent foreign-owned.
But a private Mexican study criticizes the plants in terms that might be applied to ''sweatshops'' in the United States: low pay, poor working conditions , and little chance for advancement. And the high rate of employing women causes disruption in Mexican family life, concludes the study by the Center of Economic and Social Studies of the Third World, in Mexico City.
But a US State Department expert on Mexico points out that the plants work only because Mexican government regulations allow them to work. Among other things, the Mexican government sets the minimum wage which the US companies pay.
The US companies here have opposed unionization, though several are now unionized.
It was once widely thought that the assembly plants attracted many people to the border. A study by a team at the University of Arizona shows only 4 percent of the employees in the plants came to Juarez because of the plants. But the plants add to the rising level of income in border cities which in turn draw more people to the border, says Professor Stoddard. Greater financial incentives should be made by the government of Mexico to lure US assembly plants further inside the country, suggests Wayne Cornelius, of the University of California at San Diego.
Employment in the foreign-run assembly plants has grown from about 20,000 in 1970 to today's level of about 130,000, says Lt. Col. William L. Mitchell (US Army, ret.), marketing manager for Bermudez industrial park here, the largest concentration of the plants in Mexico.
One plant manager said the quality of production matched what had been the level of performance among their employees in the US but that the rate of production was somewhat slower. Without use of the low-paid Mexican labor, he said, some of the operations being done in Mexico would be done in the US with automation - a more expensive investment.
''These people (Mexicans) seem to be a dedicated bunch,'' said the manager of the other plant. He said the same work costing the company $2 here used to cost about $12 in the US for union wages and benefits. Among US companies operating assembly plants here are General Electric, General Motors, Ford, RCA, and Sylvania.
Mr. Mitchell said if Mexican wages continue to increase, US companies now here will move to countries with lower wages to stay competitive with goods from Japan and other nations that use low-cost assembly plants in developing nations.
The US operations here not only provide Mexican employment but an economic boost to El Paso, just across the border, since many employees spend part of their salaries there and many of the US executives live there, says Mr. Mitchell.