Maquiladora Workers Hit By Mexican Peso Drop
US import prices have risen, but wages of workers aren't keeping up
NOGALES, MEXICO — THE devaluation of the peso has been a decidedly mixed blessing for Mexico's maquiladora industry.
''I think most managers wish it hadn't happened,'' says Ken Lilley, secretary-treasurer of the Sonoran Maquiladora Association and a manager at a United States-owned factory in Nogales. ''It's positive in that companies should have better profit margins. But the negative impact is in dealing with the employees' emotions.''
About 600,000 Mexicans toil in maquiladoras, or foreign-owned assembly plants, making clothes, cars, TVs, medical supplies, and many other products for the US market. Since December, maquila workers have seen their salaries drop, in real terms, from around $35 a week to $25 or less.
But for an industry already beset by the high turnover and sagging morale that low pay engenders, additional savings may not be worth the managerial headaches.
''We're close to the workers, and we definitely feel their pain,'' Mr. Lilley says.
Mexico's economic crisis has hit maquiladora workers especially hard. Most of the country's 2,300 maquiladoras are located along the border, where goods and services are more expensive than in the interior and where people deal in dollars rather than pesos.
''Managers are worried about the day-to-day commitments of their workers,'' Lilley says. ''Electricity has gone up, gas has gone up, and sales taxes have gone up.''
Food prices have risen as well, and items that used to be cheaper in US stores are beyond the reach of most maquila workers. ''We just have to make do with what we have here,'' says one woman.
A manager at a grocery near the industrial park where many of Nogales's maquiladoras are located says business has improved since the devaluation. But, he adds, people are buying less meat, cheese, and other expensive or imported products.
While some maquila workers seem resigned to the situation, others are frustrated. Pedro Hernandez works at a Nogales maquiladora making electronic harnesses for cars.
He says he got a slight wage wage hike Jan. 1, to 190 pesos a week (about $28). But he says it's not enough.
''This is no life, working in maquilas,'' he says. ''I'm going back to school and try to get a better position.''
Most maquiladoras are trying to offset their workers' decreased buying power by cutting the cost of cafeteria lunches and transportation and by offering more performance bonuses, Lilley says.
Some maquilas are also giving away food and clothing. Lilley says another wage increase was due this month. The Mexican government, concerned about inflation, will not allow wages to rise more than 10 percent.
Maquiladoras have long been touted as key sources of jobs and foreign investment for Mexico, and officials are no doubt hoping a new maquila boom will help cushion this latest crisis as well.
But analysts say it's too soon to tell whether this devaluation will spur a wave of new maquiladoras, as did previous peso devaluations in 1982 and 1986. They point out that decisions to move offshore are made over a long period of time, and labor costs are only one of many factors companies consider.
One difference from previous devaluations is that increased automation in maquiladoras, as in other industries, makes labor costs less and less important. When inflation and price increases for utilities and transportation are added in, companies may not see a decline in the cost of doing business in Mexico.
Lilley estimates average overall maquiladora savings as a result of the devaluation to be no more than 10 to 15 percent, although others put them between 25 and 30 percent.
Some economists also believe Mexico's uncertain political situation may scare off potential maquiladora owners.
But Duane Boyett, who heads a Tucson, Ariz.-based company that provides administrative and logistical support for maquiladoras, says none of his customers has been scared off.
Mr. Boyett says the biggest change he's noticed is that most companies now want to locate maquiladoras in central or southern Mexico, where costs are lower and the labor force is more stable than on the border.
One thing is sure, as Boyett points out: ''Working people are taking the main brunt of this.''