Mexican Automotive Maquiladoras Hit Hard By Slowing U.S. Economy

Autoparts Report, Nov 3, 2001

Mexico's maquiladora, or assembly, industry is reeling from an economic double blow that has caused the sector to shrink for the first time in more than a decade, industry experts said. Hit by a slowing U.S. economy and then pummeled by stagnant sales after the Sept. 11 attacks in the United States, employment in the foreign-owned manufacturing plants is seen falling 19 percent, or 250,000 jobs, from last year's peak of 1.3 million, said Tom Fullerton, an economic professor ho tracks the industry at the University of Texas-El Paso.

"Total employment had already declined and it is not expected that conditions will improve in the aftermath of the attacks," Fullerton said.

Mexican economic forecasters at CIMEX-WEFA, a think-tank that follows the economies of 90 countries, said the Sept. 11 aerial assaults in the U.S. intensified a slide that had already begun. "We forecast a clear deceleration at the end of 2001. With these events on top of it, there will be a deeper decline," said Abel Beltran-Del-Rio, president of CIMEX-WEFA.

Under the maquiladora program, foreign companies have been able to export supplies into Mexico duty-free since 1965. Mexican workers then assemble the parts into larger components or finished products that are returned for final assembly to a plant, usually located in the United States.

Three of Mexico's largest maquiladora operators -- whose plants span Mexico's northern border from the Pacific Ocean to the Gulf of Mexico -- are reporting declines in production and employment due to tough times in the U.S., Fullerton said.

Delphi Automotive Systems Corp., which manufactures mobile electronics and automotive systems and supplies for major automobile makers at 54 Mexican plants, has slashed its workforce to 70,000 from the October 2000 total of 81,000.

Ford Motor Co. has trimmed 250 employees from the 8,950 it had last year and Thomson Multimedia has also cut positions from plants in Ciudad Juarez, Mexicali, Mexico City and Torreon, said spokesmen for the companies.