In a country where unemployment is rife, this city just over the Rio Grande River from El Paso suffers from a labor shortage.
The employment boom is due to an explosion in the number of assembly plants set up here by American companies taking advantage of Mexico's $1.30-an-hour wage rates and low energy costs to make products to send back to the United States. About three-fourths of Juarez' work force of 266,000 are either directly or indirectly supported by more than 180 maquiladora plants in this city, the fourth largest in Mexico. (The name comes from the Spanish word maquila, which is the amount of grain paid to the miller to grind the corn.)
The maquiladora program allows American companies to own plants on this side of the border without Mexican partners, as required elsewhere in the country; to equip them with American machinery, and to bring in supplies from the United States to be worked on here. Both the supplies and equipment stay here "in bond" under Mexico's protectionist import restrictions, and only limited amounts can be sold in the Mexican market.
The plants specialize in labor-intensive assembly processes for products that largely are returned to the United States, and U.S. customs charges duty only on the value that was added by the Mexican operation.
Thus, General Motors sends its wiring harnesses -- the strands of wires that connect a car's electrical system to the battery -- to be assembled by Mexican women in factories here. These assembled strands of wires and plugs are then shipped north to GM factories in Michigan.
The maquiladora plants employ more than 80,000 Mexicans, twice as many as four years ago, with a payroll of more than $160 million. As many as 130,000 other Mexicans work here to support the manufacturing operations, which produced an estimated $10 billion in goods that moved across the river from Juarez to El Paso last year.
The maquiladoras, which are strung along Mexico's 2,000-mile border with the United States, are seen by the government of President Miguel de la Madrid as the salvation for this country's sagging economy, which has been buffeted by high debt and plunging oil prices. Besides jobs, the plants provide an influx of American technology and capital as well as help Mexicans seeking a better life who otherwise would join the stream of illegal immigrants coming to the United States.
The border industries have become Mexico's second-largest source of foreign exchange, far behind oil but surpassing tourism for the first time last year, when they brought $1.8 billion in hard currency into the country.
The Mexicans see the border strip as a potential rival to the high-growth states of Southeast Asia, with U.S. companies locating there to produce goods both for the American market and other countries. In a recent trip to Mexico, Sen. Lloyd Bentsen (D-Tex.) praised a change in attitude toward foreign investment and trade on the part of the Mexican government and applauded this new spirit of cooperation as a benefit to both countries.
"It doesn't make any sense for U.S. companies to be going to Taiwan or to South Korea," he told reporters in his home town of McAllen, a border city where the International Trade Commission held the first of a series of hearings earlier this month on the trade impact on the economies on both sides of the Rio Grande.
"The wage scale on the Mexican side is competitive with that," Bentsen said. "We have an infrastructure here that complements the other side."
That's good for America, he said, because "whatever is done that helps one side, spills over to the other side" of the border, which, north of the Rio Grande, is a strip that lags in development and suffers from some of the highest unemployment rates in the United States.
Among the biggest U.S. beneficiaries is El Paso, one of the fastest-growing cities in Texas, which is located just across the 50-foot-wide river from here. Cecilia M. Lang of the First City National Bank of El Paso estimated that the Mexican plants generated $300 million for the El Paso economy last year and said that amount would triple during the next 15 years. Jonathan W. Rogers, El Paso's mayor, added that the 80,000 manufacturing workers in Juarez directly support 5,000 mostly white-collar jobs in his city.
"With 24,000 people out of work, I am concerned about jobs for El Paso," he said at an ITC hearing.
The major opposition to the maquiladoras comes from organized labor, which sees them as a management tool for exporting jobs overseas.
"By moving across the border to take advantage of low-wage rates, companies left thousands of Americans unemployed," said Antonio Sanchez, manager of the El Paso joint board of the Amalgamated Clothing and Textile Workers Union. "I wonder if that is good for the country and for the economy, or only for the companies who profit from it."
But American supporters of the maquiladora concept counter that the U.S. jobs would have gone offshore anyway, probably to the Far East. "If they come to Mexico instead of the Far East, at least there will be some jobs in the United States. So it's not a total loss," said Al Cisneros, general manager of the port of Brownsville, the Texas city more than 800 miles to the east of El Paso.
For every 10 maquiladora jobs in Mexico, two are created in the United States, said J. Michael Patrick, director of the Center for Entrepreneurship at Pan American University in Edinburg, Tex. He estimated that Texas gains an annual payroll of at least $53.6 million as a result of the plants in Mexico, but other jobs spill far north from the border to plants that manufacture capital equipment and other made-in-America supplies for the maquiladoras.
William L. Mitchell, a U.S. promotor of maquiladoras here, estimated that 108,575 U.S. workers from 5,714 companies in 44 states supported factories located here.
The maquiladora program started 20 years ago, but exploded in the past few years with the devaluation of the peso, which further lowered labor costs to American companies operating in Mexico.
Trico Products Corp. just moved a windshield-wiper assembly operation to Matamoras, Mexico, across from Brownsville, because of the wage differential -- $15 an hour in Buffalo, N.Y., versus the $1.30 here.
Johnson & Johnson sews surgical gowns here, but sterilizes them in El Paso. And RCA assembles color television sets in Mexican factories from tubes and chassis shipped from the United States.
"The Mexican-American border is a new Ruhr waiting to be developed," said Cisneros, a prime booster. He cites Mexican labor rates, which he says are lower than those in the "Four Tigers" of Southeast Asia -- South Korea, Hong Kong, Taiwan and Singapore -- and $5.20-an-hour wage rates on the American side of the Rio Grande, which is far lower than the national average of $13.09.
"U.S. companies don't have to go across the Pacific," said Cisneros. "They just have to go across the Rio Grande.
"We feel the border industries program is going to create jobs on both sides of the border. Together we are compatible, we help each other. Alone, we can't stand up," he added.
The border strip between Texas and Mexico, from the twin cities of El Paso and Juarez on the west to Brownsville and Matamores near the Gulf of Mexico on the east, form a distinct economic and social entity, different from the rest of the United States and Mexico. Mexico feeds off the Texas side, with many children crossing legally or illegally to go to school on the U.S. side, as most mayors of Juarez have done.
Mexican women also try to cross over so their children will be born in American hospitals, which has prompted El Paso County Judge Pat O'Rourke to send a $10 million bill to President Reagan for social and hospital services the county supplied last year to Mexican aliens.
Pan American University's Patrick called the U.S. side of the border "undeveloped" compared with the rest of Texas, with an average per capita income that is 40 percent below the rest of the state. "Poor health, low educational achievement and limited job opportunities characterize the region," he said.
The answer, according to border economists and politicians, is more growth for Mexico's maquiiladoras.
That program also fits with the new trade and investment policies of the de la Madrid government, which appear to have shifted to a far more liberal direction. During the past two years, Mexico has gained credibility on Capitol Hill and with the Reagan administration for its new position on trade. It has agreed to join the international organization that regulates trade, the General Agreement on Tariffs and Trade (GATT); started to cut its subsidies; allowed IBM to open a fully owned factory to make computers for sale in Mexico; and settled a nettlesome dispute with American pharmaceutical manufacturers.
Sen. Bentsen, just back from Mexico City, exulted over what he called "a dramatic change in attitude" on the part of the de la Madrid government and businessmen there. "There's a feeling on the part of Mexico that they cannot continue to remain isolated and insulated on trade, and that they can't be as protectionist as they have in the past," he said.
Mario Rodriguez Montero, commercial counselor at the Mexican Embassy in Washington, agrees with Bentsen that sharing industries along the border can help both countries. He sees that area as a "buffer zone" that could help dismantle immigration, cultural and political frictions between the two neighboring nations.
Together, he said, the United States and Mexico can make cheaper and better cars than either Japan or Korea. "Instead of competing," he said, "we can be complementary and face the rest of the world together. Mexico wants to use trade for its economic growth and to pay its debt."
The seeds of that vision can be seen here, in plants located at seven neatly landscaped industrial parks. The plants are competing for able workers, offering higher wages and such fringe benefits as free transportation and better lunches in free employe cafeterias.
"Instead of 40 people lining up for every job, we have to work at it," said Frederick H. Mitchell, vice president of Elamex, a 13-year-old company that operates plants here for American manufacturing companies. "We no longer can take labor for granted. If we don't pay attention to our industrial relations, we lose it and we have turnover. With turnover comes all the bad things, lack of quality, high manufacturing costs, extra training costs."
He said this labor shortage is the biggest change that has come to Juarez in the past three years.
Mitchell said his company seeks untrained workers, which are "the best you can get. We want to hire someone who has never had a job, who is 16 years old and has finished grammar school. They make the best workers because they have no bad habits."
A majority of the workers are women, which is upsetting traditional Mexican society, but more men are now working in the plants.
As the labor costs grow in Juarez, El Paso banker W. Merriman Morton noted "a rapid shift" to capital-intensive manufacturing along the border. Morton, president of Texas Commerce Bank in El Paso, predicted the factories here "will continue to flourish, but they perhaps will not grow as quickly as before.
"Instead, their labor-intensive business will shift their focus to the Mexican interior," with its plentiful pool of underutilized workers.
That appears to suit the Mexican government just fine, and would represent a big success for the maquiladora.