Crapshoot in Juárez Print E-mail
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Written by Mike Buetow   
Sunday, 30 November 2008 19:00
Caveat LectorThe city of Juárez, Mexico, sits to the south and west of the US, sharing a jagged border – otherwise known as the Rio Grande – with the state of Texas. The Juárez Mountains rise to the west, abutting the sprawling home of some 1.3 million residents.

It’s also the home to an estimated 300 maquiladoras, or assembly plants, and that’s where our story really begins.

For those feeling the pinch – or is that squeeze? – of the financial markets, the news Foxconn is investing a reported $185 million in a massive electronics manufacturing campus on the Mexico-US border must come with mixed blessings.

As we reported in July, the new site will eventually house more than 3 million sq. ft. of industrial space in 12 buildings spread across some 440 acres. The Foxconn campus will include cafeterias, a nursery and a mall, and once finished, will dwarf those of other nearby electronics manufacturers. Flextronics’ site in Ciudad Juárez, for example, which opened in 2006, will top out at 1.9 million sq. ft. and will employ roughly 4,000 workers at peak, according to company statements. Swedish white goods manufacturer Electrolux has two factories totaling more than 2 million sq. ft. and employing 4,000 workers.

Other well-known EMS companies and ODMs dot the Juárez landscape. They include Acer, Asus, Bizlink, ECS, Elite, Enlight, EPIC Technologies, Inventec, Keytronic EMS, Mack Technologies, Tatung and Plexus (see this month’s cover story). Some have left, only to return. Elcoteq, for instance, shut down its set-top production site in 2007, purchased from Thomson in 2004, then bought Philips’ flat-screen TV operations this fall. Even Foxconn is already there: In 2005 it opened a 2,000-employee plant on a 43-acre site.

Taiwanese-owned companies employed an estimated 8,000 workers in the area as of last year, the El Paso Times reports. Still, what Foxconn now proposes is on an altogether different scale: 20,000 workers or more at full capacity.

Across the border in Santa Teresa, Jerry Pacheco is executive director of the New Mexico International Business Accelerator, a state administered group that aids local companies looking to expand globally. He says the labor market has loosened because of the softness in the economy. Still, skilled labor is at a premium, he asserts. In today’s market, line workers make close to $3 an hour fully loaded. For more skilled labor, the rate is close to $5.

The Foxconn site sits in San Jerónimo, on the relatively undeveloped western edge of Juárez. For its first phase, Foxconn is expected to hire 9,300 workers, Pacheco says.

And while dorms are the norm at Foxconn “cities” in China, in Mexico the company will have to bus in employees. Yet Pacheco believes the area can absorb Foxconn’s projected needs, as Juárez grows by several thousand people each year. “All the maquilas compete against each other, but Juárez is such a big city,” he says. “There are times when the labor gets tight.” But this isn’t one of them, he adds.

Foxconn plans to have the first phase completed in February and production launched during the first quarter. The current softening hasn’t impacted its plans, Pacheco says. The main products will be laptops, desktops and printers, and the top customers, if this reporter were to guess, would be H-P and Dell.

Violence is always a concern south of the border. The notorious Juárez Cartel is brutal and murderous, and just last month, the bodies of two men were found, executed and decomposing, just outside one of Electrolux’s plants.

While it’s nothing like a Latin America drug cartel, the Foxconn name sends shudders down many competitors’ spines as well. Like a black hole, the company tends to gobble up everything around it. Even in a down economy, the impact will be felt broadly on everything from human capital to sales. And this page has been directly critical of Foxconn’s approach to business and its treatment of workers.

But is there a silver lining? I think so. Foxconn’s investment can – and should – be seen as a concrete affirmation of the potential of the North American market, both as a purchasing power and as a manufacturing center. This bodes well for suppliers, especially given the less-than-pretty forecast for 2009. It bodes well for those concerned with workers’ rights; while Mexico isn’t perfect, it is easier for committed OEMs to keep an eye on their contractors in Juárez than, say, Shenzhen. And it bodes well for the American psyche as proof we can profitably build something more than weapon systems and high-IP medical devices.

It’s something of a crapshoot, but I think this will turn up a winner.

Happy holidays. All our best for a healthy and happy 2009!

 

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