Open for Business
So much for the economic impact of headline-making violence. Despite being on track to exceed 3,000 homicides this year, Juárez has seen its manufacturing sector flourish, regaining since July 2009 a quarter of the jobs lost during the height of the recession. More than $42 billion in trade value moved through the ports that the city shares with El Paso last year, and that number should be higher in 2010. And the amount of of tractor-trailer traffic hauling goods through the region was 22 percent greater in the first six months of this year than it was in the same period last year.
In 2009, more than $42 billion in trade value moved through the ports that Juárez shares with El Paso, representing 15 percent of the total trade between the United States and Mexico. That number is estimated to be even higher in 2010.
Since June 2009, more than 24,000 manufacturing jobs have been added in Juárez, and the amount of tractor-trailer traffic hauling goods through the region increased by 22 percent from January to June of 2010 versus the first six months of last year.
At the same time, there were more than 2,600 grisly murders in Juárez in 2009, a byproduct of the raging battle between the rival Sinaloa and Juárez drugs cartels, and the city is on pace to exceed 3,000 murders in 2010.
So much for the deadening economic impact of headline-making violence. The psychological impact, however, is something different.
While the killings and threats of extortion have forced thousands of retail businesses in Juárez to close and tens of thousands of residents to flee their homes for the safety of Texas, border business experts say the vibrancy of the city’s manufacturing industry is due to what is and has always been the bottom line: money. Not even an unshakable fear instilled in most of the 1.3 million Juarenses can curb the success of the maquiladorasÖ, where assembly line workers earn, on average, between $1.60 to $2 hourly.
“Juárez is open for business,” says Toby Spoon, the executive vice president of El Paso-based TECMA, an outsourcing company that will celebrate 25 years of operations next year. A shelter operation that provides factory space, employees and legal expertise to businesses with a manufacturing presence in Mexico, TECMA had one of its best years in 2009, Spoon says. The company signed up five new clients and netted an estimated $45 million in profits.
“I have discovered maybe an unsavory part of human nature: If we can make money and it's not too bad, then we are going to go for it,” Spoon says.
Yet it is not business as usual in Juárez. The jobs added the prior year and a half are only a quarter of what was initially lost during the height of the recession, says Bob Cook, the president the El Paso Regional Economic Development Corporation, or REDCo. But Cook echoes his fellow business leaders in arguing that drug-related violence poses no real threat to the transaction of commerce.
The job loss “is in the manufacturing and distribution side,” Cook says. “You absolutely see a complete tie in with the economy and not with the violence.”
One-hundred percent of REDCo’s clients are concerned about the violence, Cook says, and all are conducting “due-diligence” — yet 15 companies, he says, have notified REDCo of their intent to expand or move their operations to Juárez since 2008. Only one potential newcomer opted out of setting up shop in the area, and two have chosen El Paso instead. The trend, he hopes, will help restore the region to pre-recession levels, when more than 50,000 jobs in El Paso, either in retail or manufacturing, were the result of Juárez’s manufacturing industry.
Firms in the U.S. realized they had very thin inventories, “and so producers began to arrive to Mexico’s maquila plants very fast, and the well turned around very strongly,” says Roberto Coronado, an economist in the El Paso branch of the Federal Reserve Bank of Dallas. “That happened in the summer of last year. The maquilas grew very strong in the first few months and what we’re seeing is that they’re still growing but at a much slower pace.” As of August of this year, there were 338 maquiladoras in Juárez, up from 336 in December 2009.
The violence has had some effect on the way business leaders conduct their daily affairs. Spoon says he tries not to take the same route to TECMA’s Juárez factories from one day to the next. Traveling in an armored vehicle or with an entourage, he says, would be too flashy and would only draw the attention of people who might wish him ill, so instead, he simply does not share his schedule with anyone — even his colleagues. If someone called Spoon’s Juárez office and asked what time he will arrive for work, he says, the receptionist would be telling the truth if she said she did not know.
“The more fuzzy you can make the details, the better,” he says.
The government-mandated aguinaldo — the lump-sum savings deducted from maquila workers’ paychecks and then distributed during the holiday season — has also been affected. Spoon says there were discussions about disbursing it quarterly after criminals were rumored to have threatened factory supervisors into handing over the savings or face retribution.
“It used to be given on a certain day — now we don’t announce it,” he says of the savings, which equal about 15 days of wages.
Despite the precautions, TECMA’s employees have suffered the consequences of the chaos in Juárez. Some of their relatives have died, while others have been extorted. Cook and his colleagues at REDCo have at the ready a 49-slide presentation, called “Conducting Business in the Current Security Environment in Ciudad Juárez,” that highlights the retail gains, commercial movement, real estate occupancy, migration issues and other residuals, as well as the territories for which the cartels in Mexico are vying — and killing each other.
“It’s not our job to convince a company that it’s safe to operate there,” Cook says. “Our job is to make sure that if a company is evaluating the potential of locating in the city of Juárez, they have all the information they need to make an informed decision.”
Inside the gates of the maquilas, the precautions, the analysis and the concerns are hidden from the majority of the Juarenses in the factories — if not forever, then at least for the duration of their shifts, says Blanca Estela Prieto, a supervisor at Portage Electronic Products.
“We live in a different world here,” she says. “The violence exists outside for us. I feel the fear when I leave, but inside, no.”
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