Wednesday, April 23, 2008

U.S. economic slowdown likely to bring Mexican workers north

By Franco Ordonez, McClatchy Newspapers Fri Apr 18, 5:43 PM ET

TEZIUTLAN, Mexico — As the U.S. economy heads south, Mexicans may have to head north.

That's the fear of many workers here, where the slowdown in the United States already has cut production at manufacturing plants whose output is largely sold in the United States .

"If it's bad there, it will be worse here," said Bartolo Juarez , 35, who makes jeans for Levis and Guess at a Teziutlan factory and already has discussed moving to the United States if his job here vanishes. His 12-year-old daughter, Gabriela, has broken down in tears more than once after hearing her parents talk about her father leaving for the States, her mother said.

"It's a sacrifice. I don't want to go, but I know I can get a good-paying job in San Antonio ," even in troubled economic times, Juarez said. It's always easier to find work in the United States than in Mexico , he added, and for five times more money.

Economists say that U.S. recessions historically are tougher on Mexico than they are on the United States , and that while U.S. officials say that border security measures, such as building a wall along the Mexican border, have reduced illegal immigration in recent months, they won't hold back the flood of workers that's likely if Mexican factories close.

The majority of the 72,000 people who live in this rainy town tucked up in the cloud forests of the Sierra Norte mountains in central Mexico work in more than 30 factories that specialize in assembling pants for distribution in the United States .

Rodrigo Martinez , the coordinator of the National Job Service in Teziutlan , estimates that 10 percent of the community already has gone to the United States in search of work after losing jobs here or deciding to find better pay there.

As demand for Mexican-made pants declines in the United States , he expects more workers to go.

"This community is almost 100 percent maquiladora," he said, using the Spanish word for factories that assemble goods for U.S. consumption. "Closing some of those shops would affect us greatly."

Manufacturing is by far Mexico's most vulnerable sector during a U.S. downturn, economists say. More than 80 percent of Mexican exports are destined to go north. A drop in U.S. demand would cut into Mexican production levels and employment.

As the old adage goes, "When Uncle Sam sneezes, Mexico catches a cold."

Jaime Ros , an economics professor at the Kellogg Institute for International Studies at Notre Dame , said the Mexican manufacturing industry already was experiencing a pinch from the U.S. economic downturn. Those who lose their jobs will "certainly add to the supply of immigrants" heading north, he said.

Ros, who formerly taught at Mexico City's Center of Investigation and Economic Studies , is skeptical that U.S. border-security measures will have a significant impact when so many desperate immigrants see the U.S. as their only option for work.

While the crash of the U.S. housing market has reduced demand for immigrant workers in construction, immigrants are likely to find jobs at hotels, restaurants and other services that won't be as affected by a U.S. recession.

The U.S. learned how closely Mexico's fate is tied to its economy in 2001. At the time, Mexico's maquiladora industry was at its peak, with more than 3,000 companies employing about 1.2 million workers. Then the U.S. went into a recession after the dot-com crash. Hundreds of maquiladora plants closed as a result from 2001 to 2004 and more than 200,000 people lost their jobs.

Maquiladora workers who lose their jobs are more likely than other Mexicans to move north, said Kathy Kopinak , a senior fellow at the Center for Comparative Immigration Studies at University of California San Diego .

Because many maquiladoras have been set up in border towns, Kopinak said, workers have family members and friends on both sides of the border who can assist in labor migration.

Mexico hasn't fallen into a recession, but several economists say that's the direction the country is going if the U.S. recession is deeper than expected.

Mexico's economy grew 3.3 percent last year. Wachovia Corp. forecasts this year's growth to slow to 2.5 percent. Others are less optimistic: The Economist Intelligence Unit forecast that Mexico's growth would be just 1.9 percent this year.

"The risk is that if we have a deeper, darker, longer recession than what we are expecting, then Mexico is going to catch a pretty bad cold and it could pull Mexico into a recession itself," said Jay Bryson , a global economist at Wachovia Corp. in Charlotte .

Mexican officials say their economy is more resilient now than in it was in 2001. They say that a pickup in automobile exports to Europe and Asia will help offset decreased demand from the United States . Central bank Governor Guillermo Ortiz said last month that Mexican exports to countries other than the U.S were growing by 30 percent a year.

President Felipe Calderon has announced several initiatives intended to weather a U.S. economic slowdown.

Last month, he announced a $5.6 billion stimulus package of tax breaks, discounts and bank loans. Last week, he called for sweeping changes in Pemex , Mexico's ailing oil company and the country's largest source of foreign exchange.

Calderon's initiatives may never be approved, however. Opposition legislators have seized control of Mexico's Congress , some spending the night in sleeping bags, to protest the bill, which they claim is an effort to privatize the state oil company.

Over drinks after their shift at an auto parts company that feeds the giant Volkswagen plant in Puebla, Mexico , Antonio Paredes , 24, and Jaime Galicia Alonso , 23, were discussing the likelihood of an economic downturn.

Paredes said he'd already talked to his wife about accompanying him to the United States . He's also talked with a co-worker about getting in touch with his son in Chicago , where Paredes is considering moving.

Galicia said he'd do whatever he could to stay in Mexico , but he acknowledged that it will be tough. Many people from his village already have left for the United States .

"If you lose your job and you can find another job, you stay in Mexico ," Galicia said. "Otherwise you're almost obligated to go to the United States ."

http://news.yahoo.com/s/mcclatchy/20080418/wl_mcclatchy/2914089

2 comments:

Faye said...

Such good news from Mexico's manufacturing section. Last December, we were greeted with news from Mexico's agricultural section. Seems NAFTA had a tariff on U.S. produce that would be lifted in January resulting in Mexican farmers being unable to compete so they were planning on heading north. We're in the growing season. We should be seeing the effects of that soon.

Ed said...

Build the fence!