Business Week International Spotlight on Mexico
STICKING UP FOR A SIBLING CITY...ACROSS A CHASM AS BIG AS TEXAS (int'l edition)
In the pre-dawn desert chill, wheezing buses deposit workers outside the sheds that house Ciudad Jurez' assembly industry. These maquiladoras operate in a limbo that is neither Mexico nor the U.S. They employ nearly a third of Ciudad Jurez' workforce yet paid no taxes on their earnings in Mexico until this year. They are Mexico's second-largest foreign exchange earner and buy almost nothing from the country's other factories. But they join two cities separated by the border between the First and Third Worlds.
As Mexico's economy unravels and its political class devours itself, many in the U.S. from heartland businesses to Washington are reconsidering their partnership with their southern neighbor. But there are no doubts in El Paso, Tex., which promotes the maquiladoras across the border to entice new business. "We're using city dollars to market Jurez," says Roberto E. Franco, director of El Paso's Economic Development Dept. "But whatever comes to this region will benefit El Paso."
His effort is paying off. Unlike other Texas border cities, which rely on Mexican shoppers, El Paso has created a manufacturing base, incorporating textiles, tool-and-die plants, and plastic-injection molding. This base is helping it to struggle through the peso devaluation, which has banished Mexican shoppers from the downtown storefronts selling cheap clothes, shoes, and trinkets.
The downtown has survived changing fortunes before. The U.S. Border Patrol's two-year-old Operation Hold the Line stanched illegal immigration but also stopped many Mexicans who crossed the border to shop or visit relatives. The Border Patrol forced them to apply for a special pass that border residents use to cross the bridge. The operation's clumsy start, down to its original combative name, Operation Blockade, created ill will. For many Juarenses, the other side of the border is no promised land, merely the home of Payless ShoeSource. Meanwhile, Hold the Line has simply moved illegal crossings to the city's barren outskirts.
Lucinda Vargas, an economist who studies the border from El Paso for the Federal Reserve Bank of Dallas, is a product of the two cities. She grew up in Ciudad Jurez but completed her education in the U.S. Switching between Spanish and English over coffee at her father's restaurant in Ciudad Jurez, she says El Paso was reluctant to accept its ties with Mexico until the North American Free Trade Agreement was negotiated: "NAFTA was a wake-up call for U.S. residents. Mexico is right at your doorstep. What are you going to do about it?" The trade deal has prompted new contacts among executives, professional associations, and even social programs on both sides of the border. Chambers of Commerce from Santa Fe, N.M., to Chihuahua, 375 kilometers south of Ciudad Jurez, build trade shows around the theme of the Colonial Spanish Camino Real. A Mexican nonprofit group known as Femap expanded its seven-year-old project of community banks for women in Ciudad Jurez to El Paso last year.
The sense that the cities' economic destinies are intertwined is countered by the disparity in their incomes. Nowhere is that clearer than in the view of Ciudad Jurez slums from Interstate 10 on the Texas side. Drawn by the 1980s maquiladora boom and the lure of the U.S., migrants poured into Ciudad Jurez, turning the city into a sprawl of dusty barrios and ramshackle shopping strips.
"There's more cooperation between the private sectors" in the two cities, says Miguel Angel Caldern Rodrguez, the director of Ciudad Jurez' manufacturing chamber of commerce. "But we still don't see any results." He methodically ticks off the bleak statistics that illustrate the city's poverty: There's a shortfall of 40,000 houses, two-thirds of the roads are unpaved, and nearly three-quarters of the workers earn less than five dollars a day. In Ciudad Jurez, businesspeople often grumble about Mexico City's neglect. For now, the future lies elsewhere--across the Rio Grande.EDITED BY JOHN E. PLUENNEKE By Elisabeth Malkin in Ciudad Jurez