NOGALES, Sonora — After nearly collapsing at the beginning of the century, the maquiladora industry in this Mexican border city is re-emerging with a sophisticated pitch.
The 43-year-old industry is fighting low-wage competition from China by recruiting aerospace, medical and military suppliers to move manufacturing jobs to Nogales, said Thomas W. Skwiat, marketing manager for Nogales, Ariz.-based Collectron International Inc., which helps U.S. and European firms set up maquiladora operations in Mexico.
And concerns about tainted candy, toys and pet food from China are fueling interest in businesses to keep operations close to home, he said.
"China is going to be the springboard for people to look at Mexico," Skwiat said.
Skwiat said manufacturing in a neighboring state means companies can save money in transportation costs and time in getting products into the hands of U.S. consumers. That's particularly important with oil prices approaching a record $120 per barrel.
People are also reading…
"In today's market, more than ever, companies want that quick response," Skwiat said.
Between 2001 and 2003, Nogales, Sonora, lost 12,000 of its 38,000 maquiladora jobs, said Jesus Montoya, executive director of the Maquiladora Association of Sonora.
"Before 2001, we were in paradise," he said. "We didn't start to recuperate until 2005."
Today the industry — Nogales' largest employer — boasts 104 maquiladoras with 34,000 workers.
With 65 percent of its population under the age of 26, Mexico is eagerly greeting companies looking to return or open new manufacturing operations.
Mexico hopes to get more international business and currently has the largest network of free-trade agreements in the world — with 43 countries.
Arrow Electronics Inc. fired up its Nogales maquiladora in September 2006. The 170 full-time employees produce connector assemblies, which are used in commercial airplanes and in military helicopters and tanks, said Ossie Diaz, general manager.
He said clients include the U.S. Defense Department and Boeing.
Arrow, based in Melville, N.Y., bought an existing 66,000-square-foot building and hopes to double its size, he said.
Under Mexican law, companies must provide employees with meals, medical care and a Christmas bonus equivalent to two weeks' pay.
Arrow has a doctor make on-site visits twice a week and provides water for showers — a nice perk in the water-scarce city of about 300,000 residents.
In total, the cost of an employee is about $6,000 per year, Diaz said.
A British company called Edwards has 120 people on the payroll at its maquiladora, including 23 engineers who earn between $15,000 and $38,000 a year.
"It's developing a middle class," said Scott Stewart, plant manager. "That's the real success of the maquiladora industry."
The company refurbishes vacuum pumps used for computer chips. Its largest customer is Intel.
Workers use computers to measure the pressure in the pumps at the 45,000-square-foot plant.
"A wrong calculation and millions of dollars' worth of chips could be lost," Stewart said.
Montoya, of the Maquiladora Association, said these high-tech jobs are the key to Nogales' success.
"We don't need people who only work with their hands, but (also) with their heads," he said. "The days of sewing dresses and handbags have disappeared."
DID YOU KNOW
Maquiladoras are foreign-owned factories in Mexico that assemble products for export, taking advantage of tax breaks and low labor costs. Most of the parent companies are American, and most finished products are shipped back to the United States.
Mexico established the Maquila Program in 1965 in response to the end of the bracero program in the United States.
The demise of the bracero program — which allowed Mexican farm laborers to work in the United States seasonally — resulted in more than 200,000 workers returning to Mexico in need of jobs.