The Life and Death of a Border Town

In the town of Nuevo Laredo, Mexico, close to the U.S. border, two
streets intersect: one is called Progreso (Progress) and the other is
Fabrica (Factory). They are aptly named streets because they are
thoroughfares that only house manufacturing plants called maquiladoras -
giant mall sized buildings ringed with fences and with guardhouses
posted out front. There are no houses or shops here - indeed, the
sidewalks on Progreso and Fabrica are empty, and the only noise that can
be heard during a workday are the trucks that drop off supplies and pick
up finished goods.

Some of the factories belong to well-known companies like Caterpillar or
Sony, others to less well-known companies like Delphi. Early every
morning at the beginning of the workday, special buses arrive from
specific neighborhoods carrying workers, while others arrive in their
own vehicles. They are smartly dressed young women and men whose jobs
range from assembling videotapes to refurbishing defective machines. The
factories are huge, employ thousands of workers and do brisk business.
It is hard to imagine that they could ever pack up and leave, but it is
a distinct possibility in the chaotic world of border economics.

The number of maquiladoras began increasing in Nuevo Laredo and other
border towns after the North American Free Trade Agreement, or NAFTA was
signed in 1994. At the time there was much ado about NAFTA, and "free
trade" entered the popular lexicon, with its proponents claiming it
would bring prosperity to the impoverished population of Mexico, and its
detractors predicting doom for U.S. workers and their Mexican counterparts.

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What, then, is the reality of "free trade" more than a dozen years
later? Did thousands of jobs come to Mexico, as promised by the NAFTA
boosters? Or was it a disaster for Mexicans, driving them deeper into
poverty and dependence? The answer, as usual, is more complex than can
be explained on the nightly news, and is best told in the plain words of
the people who experienced it first hand.

Jeans Held Hostage By Angry Workers!

Morelos is a clean, quiet, small Mexican town in the state of Coahuila,
just across the Texas border, a day's drive and a world away from the
bustle of Nuevo Laredo, where a U.S. company named Sights Systems Denim
set up a maquiladora a few years ago.

Sights is a 20 year-old family owned business from Henderson, Kentucky,
that specializes in "grunge" clothing - taking new jeans and making them
look old and used, which are then sold at a premium. The company shipped already-manufactured jeans to Morelos, where they were stone-washed,
ripped, torn and shredded at the plant, then loaded onto trucks to be
hauled away again and sold in the U.S. to companies like Levi Strauss.

E.J. Bernacki from Levi Strauss told CorpWatch that this practice is
fairly common, but completely depends on the style of the jeans.
"Sometimes they can be cut in one factory, sewn in another, and finished
in a third," he says, "other times it's all done in one plant." He said
Levi's uses around 35 different factories in Mexico, all of which are
contract facilities.

Former Sights worker Rodrigo Castro lives on the southern side of
Morelos. His house is small and sits on a corner lot, with an earth yard
cluttered with childrens' bikes and parked cars out front. I rap on the
door and a small man in pajama pants and a T-shirt answers.

He takes me into his living room, which looks more like an office - with
walls covered by bookshelves and a desk with a computer humming in the
corner. Indeed Castro is an organizer who lived in Minneapolis for 18
years working as a store manager. A couple of years ago, he returned to
his hometown where he took a job with Sights. "I took the job at the
Sights plant because it was fun," Castro tells me. "I enjoyed the work
because I was in charge. And I have to say I liked it because they
treated the workers with some respect."

In September 2006, Sights factory management informed workers that the
plant would be closed for three days over the Mexican Independence Day

On Saturday, Castro went into the plant to look at some invoices. "I
noticed something was not right. The manager kept calling me and
impatiently asking if I was finished yet, whereas it seemed he wouldn't
care on a long weekend. When I was finished, at about 3 p.m., the
security guard almost pushed me out the door," he said.

Castro also heard from other townspeople that strange trailer-trucks had
been spotted in the plant's parking lot, not the usual company trucks.
The next day the local people noticed even more activity inside the

"One lady went in to check what was happening and she was stopped by the
security guards," said Castro. "We called the manager, Shane Smithart,
and asked him what was going on. He assured us nothing was changing."

No one believed Smithart, and word spread like wildfire throughout town.
"The radio stations announced it, people went to the plaza and yelled
through loudspeakers, come to the plant! In minutes the front of the
plant was crowded with people. 800 employees, all out front, " Castro

"At that point we figured out that six trucks had already left, but
there were still five inside. We blocked those from leaving, and called
the electric company and told them to shut off the power to the plant
and they did."

Castro smiles at the memory, leans back in his chair, and lights a
cigarette. "Boy, when you get people all together like that and moving,
you can do anything."

Soon the mayor arrived, and the workers organized a delegation to go
inside the plant and negotiate. At the same time, the people who worked
in the import-export office had figured out that the trucks that had
departed were in Piedras Negras. The mayor called the governor and he
ordered the trucks back to Morelos.

"We assured them we would not harm the trucks or the drivers. I tell you
we were moving," says Castro.

"We had trucks filled with 250,000 pairs of jeans. That is worth more
than a million dollars, as some of these jeans sell for $300 new. We
wanted 11 million pesos, which was the amount of everyone's termination
pay based on their seniority. Sights Denim Systems was under pressure
from Single Source, which is who they contracted under, and they in turn
were under pressure from Levi's to whom they were contracted. Single
Source was looking at millions of dollars in losses, and so they
contacted us with an offer. It was too little and we refused."

He pauses again to explain. "You see, in Mexico there are strong labor
laws. A foreign company signs a contract when it sets up here which
guarantees the employees something if they leave, three months pay,
arranged depending upon seniority. Now Sights wanted to leave to the
Dominican Republic without paying us our due."

Eventually Sights gave into the workers' demands and paid them. But they
also shut down the factory, putting 800 workers out of jobs.

"What hurt me most was that it was a good company. We treated them well.
I just never expected them to do that, to leave like they did," says Castro.

"I talked with the owner of Sights Denim Systems, Bart Sights, and I
told him, "You didn't have to leave like this." You know what he said?
He told me, "These plants never last."

Sights Denim Systems did not respond to multiple CorpWatch requests for

Detroit In The Desert

The town of Ramos Arizpe, which is also in the Mexican state of
Coahuila, lies hundreds of miles to the south of Morelos. Some call it
the Detroit of Mexico, after an influx of car manufacturers that set up
shop in the last decade.

The General Motors plant is outside of town and is the size of a small
town itself. There's a huge blue industrial building with a giant GM
logo. Surrounding the main buildings are acres and acres of newly minted
automobiles sitting in fenced off lots. In between the giant outdoor
car-storage facilities are more, smaller factories that make things like
steering wheels and trunk doors.

It is a sight to behold, and I can't help but chuckle as I watch trains
arriving nearby, ready to transport the cars north to the U.S. market,
thinking of my cousin Luisa and her husband selling cars brought down
from Texas. New cars sent north, used and slightly-used ones sent back
south, sold to the people who just made them. U.S. workers are angry at
their jobs disappearing to foreign shores, while Mexicans buy their old
vehicles illegally in the very country they were manufactured. That is
the bizarre logic of the market at work.

The heavy automobile industry arrived here in the 1970's. Some plants
have closed, others have opened, and the town grew. To most people I
talk to, they believe the car factories will stay. To them it seems like
the auto industry will have to remain close to its biggest customer, the
U.S.A. But I am not so sure: Japanese car companies did brisk business
in the 1970's, and they had no plants in the Americas then. The ability
to move products around the world at with ease has made production more
flexible than ever. Companies like Toyota try and situate production as
close as they can to their markets, but still maintain a high degree of
flexibility to take advantage of cheap labor or even expensive but
experienced labor. For example, the Lexus, the most popular luxury car
in the U.S., is still made in Japan.

Elias Sanchez Jimenez lives in the town of Ramos Arizpe. He is 73 years
old and has lived in Ramos most of his life. I ask him about how the
town has changed.

"Well," he says,"It was really fifteen or sixteen years ago that it
really started to change. Originally, you know there was only a match
factory and a brick factory here. Then the auto plant came, and then all
the other plants, and the town really grew. The biggest thing I miss is
the water. The factories and all the new people use much more water. You
used to be able to draw it out of the ground, from wells, but now we
have to buy it."

Like most of the folks I've talked to here, Elias approves of the
factories, despite the changes they have brought. "My son has a good
job, he works for Delphi. They treat him well and he is happy. The car
plants bring jobs, and without that, the young people would have no work."

I ask Elias where I might find people who work in the plants, and he
points me to a couple of cantinas along the main road where workers go
after hours. The first one I enter has a bar decorated with stickers
from U.S. states like Idaho, Nevada and Wyoming.

Most of the men at the bar wear large plastic ID tags hanging from their
belts, identifying them as employees of a company called Magna, that in
turn houses other companies. They themselves spend their days making the
interiors - the inside roofs - of GMC Yukons and Chevy Tahoe Sport
Utility Vehicles.

Others work for WinMex, a company that just makes the electric motors
and hand-cranks that raise car-windows. Still others make electric
harnesses, power drive systems, transmissions. Some ship parts to the
U.S. while others are assembled into finished vehicles in Mexico itself.

The workers say the companies treat them well, and they are glad to have
the jobs but they are aware that the industry is fragile. German
Narvaez, who works for WHO, says: "When the U.S. sneezes, we in Mexico
get a cold. Like after 9-11, it was terrible. They cut lines of cars,
and everyone felt it. On other models, orders stopped for one or two
months, and people were cut to half time-work. We were all scared we'd
lose our jobs permanently."

I tell them I am writing for a U.S. website and ask if they have
anything to say to its readers. One man's comment was simple: "Please
keep buying cars so that we we'll have more jobs here!"

Ramos seemed to be a world away from the experience of the people of
Morelos and I wondered if the same could come to pass for Ramos Arizpe.
Can auto plants as like GM pack up and leave just as the denim company did?

NAFTA: Success or Failure?

The U.S. government's Trade Representative's office extols the benefits
of NAFTA, claiming on its website that Mexico exported $143 billion to
its NAFTA partners in 2001, an increase of 232 percent from 1993... "twice
as fast as export growth to the rest of the world."

A report issued by Global Insight, a Boston-based trade economic
research consultancy, estimates that the number of maquiladoras on the
border increased from 2,267 to over 3,400 in the first five years after
NAFTA started, while employment at these factories almost doubled, from
681,000 to 1.31 million by 2004. But over the next five years, the
overall trend has reversed, falling to 2,800 factories with 1.13 million
workers by late 2004. Economic investment has also drifted downwards
after peaking in 1999.

Others point out that one has to look beyond employment and export
statistics. Economist John J. Audley, a former trade policy coordinator
at the U.S. Environmental Protection Agency, who now works at the
Carnegie Endowment for International Peace since 2003, says: "NAFTA has
been neither the disaster its opponents predicted nor the savior hailed
by its supporters.... damage to the environment is greater than the
economic gains from the growth of trade and of the economy as a whole."
He also points out that while manufacturing jobs have increased, the
economy has not generated enough jobs to match demand, and thus migrants
continue to head north to the U.S.

Doug Henwood, editor of the New York-based Left Business Observer, notes
that border employment actually began before NAFTA. "In one sense it
began in 1982 when the debt crisis hit Mexico," he says. "This put the
country in a very vulnerable position, and the Reagan administration
decided to exploit it. Things like "Debt Restructuring Agreements" and
"Multi-Year Rescheduling Agreements" were basically forced on Mexico
during the 1980's to pay off its international debts easier, but they
were really just ways to require that Mexico's economy be turned into an
export engine for the U.S. market."

The problem, says Henwood, is that the U.S. has set up similar programs
all over Latin America, resulting in many countries competing for the
U.S. market. Thus the initial burst of investment and production in
Mexico that followed NAFTA has slowed. Eventually entire factories have
packed up and left, like Sights Denim, which moved to the Dominican
Republic. Other textile manufacturers have moved even further away, to
countries like China and Vietnam.

Wave Theory

In physics, wave structures are pictured as repeatedly undulating and
changing form, while the material of which the wave is made, such as
water, air or oil, remain the same.

The wave form model and the maquiladoras resemble each other. Even if
the waves stay the same, they shape the cliffs and shores they collide
with, grinding rock slowly into sandy beaches. Likewise Mexico's social
geography is changing with the waves of industrialization that are
impacting the country.

Contemporary success stories like Ramos Arizpe exist in the peaks of the
waves of industrialization, while the failures like Morelos make up the
valleys. Since NAFTA was signed, waves of industry have rolled across
Mexico, particularly in the north of the country, creating boomtowns
like Ramos Arizpe over night and then just as quickly the businesses
vanish as in Morelos Coahuila. Little village pueblos have become small
cities and fields of dry grass become sprawling colonias (settlements)
in a few short years.

While waves come and go, they leave the workers high and dry when they
break on the shore. Waste is dumped into rivers, land is developed,
lives are changed, and everything is rendered more fragile,
unpredictable, and ever more precarious.

To the Mexican workers leaving their jobs at the end of another day on
the corner of Progreso and Fabrica Avenues in Nuevo Laredo, all of this
comes as no surprise: they know that there are no guarantees and no
promises of work the next day, other than those made by the factories to
the market, which, like the proverbial wild goose in autumn, may take
off as soon as they hear of cheaper labor somewhere else, anywhere else,
on the planet.

This article was made possible by a generous grant from the Hurd Foundation.

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