In bid to diversify, Mexico seeks US plants farther inland
The Yucat'an region of southern Mexico is well known for its beaches, lush forests, and ancient Mayan ruins. Each year, hundreds of thousands of United States tourists flock to southern Mexico for vacation. Now, Mexican officials in that region are attempting to lure a different type of American - business people dressed in suits and ties instead of tourists clad in shorts. Government leaders are eager to diversify industry there, and US companies may offer some hope.
In early February, New York-based Maidenform Inc. opened an assembly plant outside of the city of M'erida. Maidenform is the first US company to bring the assembly plants, commonly known as ``maquiladoras,'' to the southern tip of Mexico.
``Big companies with 200 or 300 employees should go south,'' says Harry Hodge, whose Nogales, Ariz., company promotes the maquiladora program. He is referring to the greater availability of labor in the south. ``Smaller companies we can handle'' in the north, Mr. Hodge says.
Until recently, most of the plants - whose in-bond operations allow them to produce goods only for export from Mexico - have remained along the northern border, where access to the US is easier. Mr. Hodge says the Mexican side of the 1,900-mile-long border is already populated with US companies.
At an Acapulco exposition in December, several southern state Mexican officials were eager to learn how to persuade US businessmen to follow Maidenform's lead and set up operations in their cities. Some 30,000 business and government officials attended the exposition, and the talks may be fruitful for southern Mexico.
Other Mexican states are trying to follow northern Mexico's lead, which has improved the employment situation in many cities with these assembly plants.
``They have more than enough labor'' in the south, says Hodge.
Some Mexican economists criticize the maquiladora program for tying Mexico too closely to the US and allowing US influence over Mexican workers. Nevertheless, the Mexican government has pressed ahead with them; it finds the foreign exchange valuable and appears happy to have the jobs the factories bring.
Maquiladora operations throughout the country have grown in size and importance in the two decades since they started. Now nearly 800 US companies, from General Electric to Maidenform, operate plants in Mexico.
Unfinished goods - such as electrical components for cars - are sent from the US to Mexico, where they are assembled by the maquiladoras. The goods are then returned to the US, at which time manufacturers use the material in their products. The goods enter the US duty free except for the ``value added'' in Mexico.
In 1986, the assembly plants pushed tourism out of its position as the second-largest source of foreign currency, with oil retaining the No. 1 spot. Mexican leaders say the maquiladoras serve a vital function, and the assembly plants are expected to help relieve the country's chronic unemployment problem. Maquiladoras have also started decentralizing an economy that has, since the time of Montezuma, been based in the valley of Mexico.
A US International Trade Commission report recently said the Mexican maquiladora program has been beneficial to the US, too. ``The maquiladoras have ... had substantial spillover effects on US border communities,'' the report said. ``An estimated 40 to 60 percent of the wages earned in the maquiladoras are spent in retail outlets in the United States.''
Despite this, the offshore assembly plants are coming under attack in the US from labor unions and members of Congress. Unions say more than 300,000 US jobs have been lost because companies have fled south of the border for cheaper labor and fewer restrictions on health and safety.
Zenith, for example, announced in September its would lay off 250 to 300 color TV workers in Evansville, Ind., and shift production to a factory in Ju'arez, Mexico.
``Needless to say, this was a tremendous blow to the community,'' Rep. Frank McCloskey (D) of Indiana said during a recent congressional hearing.
Fearing that jobs are being lost, unions taunted President Reagan late last year with ads in newspapers complaining that his administration was promoting the maquiladoras with US companies, to the detriment of US workers. Besides newspaper ads, they protested on the steps of the Commerce Department in Washington.
Congress became angered when it discovered the Commerce Department was planning to spend more than $166,000 to cosponsor an exhibition called Expo-Maquila '86 in Acapulco.
A General Accounting Office report, expected to be released in March, says the Commerce Department managed to skirt a Congressional prohibition by interpreting the law narrowly. Instead of using money appropriated in the spending bill, the GAO says the department found money in a special account.
Several congressmen are ready to pounce on the Commerce Department. Rep. Ralph Regula (D) of Ohio, a member of the House Appropriations Committee, was planning to query department officials when they went to Capitol Hill for their fiscal year 1988 funding.
``We can't fight the entire maquiladora program, but we can make sure US tax money isn't going toward promoting it,'' an aide says.