Thread: Mexico: Apparel manufacturing jobs are in a steep decline

http://www.chron.com/disp/story.mpl/bus ... 64765.html

July 23, 2006, 12:36AM


MEXICO
An unraveling industry
Apparel manufacturing jobs are in a steep decline
By ELIZA BARCLAY
Houston Chronicle Foreign Service

A GUASCALIENTES - She works long hours on her feet in a noisy, windowless factory and makes only $6.80 a day — 45 cents more than most workers there because she embellishes denim jeans with dainty flowers. But Yesenia Garcia, 27, is glad to have a job.

"Sometimes you have work and sometimes you don't. But I like working on design," Garcia said.

Tens of thousands of workers like Garcia in this northern city once affixed "Made in Mexico" tags to millions of pairs of blue jeans bound for retail clothing stores in the shopping malls in the United States.

During the 1990s, this city pegged its future to apparel and textile plants that depended on the export market opened by the North American Free Trade Agreement.

But since 1999 it has seen more than 53 of these maquiladoras shuttered, said Marcela Hernandez, a sociologist who has studied the maquiladora sector in Aguascalientes several for years.

The Mexican economy is growing, as is the total number of workers employed in this country.

But the total number of manufacturing jobs has been falling.

According to figures from the Mexican labor secretariat, the nation has lost 813,000 manufacturing jobs in the six years of President Vicente Fox's administration.

While plants, electronics and auto sectors have held their own, the textile and apparel sectors have been in decline for years.

Manufacturing peaked at more than 4 million jobs in October 2000, the month before Fox took office.

The industries that have suffered the most are textile and apparel, where the number of jobs dropped by an average rate of 4.3 percent per year between 2001 and 2005, according to the economic secretariat.

While the drastic loss in textiles and apparel is often attributed to competition from even lower-wage factories in China, economic development experts in Mexico say the country needs to do more to support export industries — from financing to technological backing.

This state and others are looking to other industrial sectors to fill the job void, as the number of workers in the farm sector is falling and people move to the cities or on to the United States.

But factory owners complain about the lack of support for homegrown businesses.

Teñidos San Juan was once one of the biggest maquiladoras in Aguascalientes with 4,000 employees in 2001. Now it employs 2,000, including Yesenia Garcia.

Alejandro Alvarez Casillas, the president and CEO of the denim maquiladora, says that keeping his business open is not easy.

Neighboring maquiladoras steadily closed during the last several years and headed for Central America or China, seeking lower costs to compete internationally.

"One of our biggest challenges is that we have to finance everything ourselves," he said. "The government doesn't lend anything, and the banks aren't focused on (this) industry because maquilas are a 'risk sector' since so many have disappeared."

Alvarez Casillas also noted that his may be the only Mexican-owned apparel plant left in Aguascalientes.

"The other ones left are American-owned," Alvarez Casillas said. "American companies can get capital from U.S. banks and have access to credit."

Lack of financial support is one of the long list of problems for manufacturers highlighted by Marcela Hernandez, a sociologist who co-authored the book The Maquila in Aguascalientes.


Increasing costs a problem
The professor at the Autonomous Metropolitan University-Iztapalapa in Mexico City said the drop in production and closures of so many maquiladoras are a result of increasing labor and operating costs, little government financial support, lack of technological savvy and the lack of skilled labor.

The apparel sector took a severe hit after the Sept. 11 terrorist attacks in the U.S., which caused an abrupt economic slowdown.

Between 2001 and 2002, the maquiladora sector in Aguascalientes experienced its biggest blow when about 40 percent of the people employed in the local maquila sector lost their jobs, according to the Aguascalientes state economic development office.

Economic growth returned, but not the plants.

This hit the city and the surrounding state hard because such a large percentage of the state's businesses shifted during the 1990s from producing for the Mexican market to export markets.

''In the 1990s there was a big, perhaps ill-advised, push to build up the maquila sector here," said Armando Jimenez San Vicente, the director of Aguascalientes' state economic development office. "We knew it wasn't going to last. But still we didn't do enough with the design and marketing of our products."

More subtly, the loss of manufacturing jobs sent ripples into other sectors in Aguascalientes, namely businesses that supplied the apparel and textile maquiladoras.

Jimemez San Vicente says this sector has recovered, but it has had to adjust to growth in other areas of manufacturing, like automobiles and electronics.


Few are left standing
Indeed, the few maquiladoras left in Aguascalientes say they have survived because they developed "design and development" operations that help clients in the fashion business keep their customers interested.

"We offer the complete package, which means we design the jeans, cut the fabric, sew it and finish off the product," said Alvarez Casillas of Teñidos San Juan.

His clients include Old Navy, the Gap and Anchor Blue; they supply him with fabric and he ships the finished product to the border.

Access to U.S. investment capital has been one of the secrets for Koos Mexico, another jeans maquiladora with 1,200 workers in a small town called Calvillo, 40 minutes outside the capital of Aguascalientes.

Woon Tang, the company's Korean director, says that having a parent company based in Los Angeles has been instrumental in getting the capital necessary to invest in new machinery.

But Koos has not been immune to international competition.

In 2003, Koos lost its contract with the Gap when the company moved most of its orders to China. There are other reasons why operating in Mexico is difficult, Tang says.


A lot of turnover
"Electricity, water and gas costs are very high in Mexico in general," said Tang. "And we have problems with turnover: We employ a lot of young women and many get pregnant or leave to go to the United States, since most of the men from this town are there."

Salvador Rodriguez, who owned a plant in Aguascalientes that manufactured stuffed animals for the U.S. market, said the end to quotas on imports from China was a serious factor that forced him to close.

"I couldn't compete with the Chinese anymore," said Rodriguez. "The fabrics here were much more expensive than China. I tried to import cheaper fabrics from China but that was too difficult."


Government also blamed
But Rodriguez also blames the hard times for the factories on the failure of the government to implement wider reforms.

If Fox had passed more flexible labor laws and found a way to make the publicly owned energy and electricity sectors more competitive, Aguascalientes and other states with lots of maquiladoras might have been able to sustain that base, he added.

"Fox didn't make the structural reforms necessary to maintain the maquila sector," said Rodriguez. "High gas and energy prices have forced many to close, and many employers had serious problems with social security and labor laws."

eliza.barclay@chron.com

Well, join the globalized world! WE have lost many jobs too...and now have to pay taxes for illegal's health care, etc.!