Do Not Be Fooled By the 'Maquiladora Economy' Phillippe Diederich - VOXXI
go to original July 18, 2012

We’ve all heard the horror stories of assembly line production factories in countries like Mexico, Nicaragua, Vietnam, China and others. We’ve heard about the maquiladoras that employ children to make GAP clothes or Nike shoes. We’ve heard of the long days with no breaks. We’ve heard of the lack of safety and of workers who handled dangerous chemicals and now suffer illnesses such as Leukemia and other cancers. We’ve heard about the pollution these manufacturing plants wreak on the environment.

We’ve also heard that these factories, with duty-free and tariff-free statuses, are bringing jobs to places where there were previously no jobs. The propaganda claims maquiladoras are making life better for everyone. They are a win-win situation. As a matter of fact, the manufacturing for export industry has become the second largest industry in Mexico after petroleum.

Maquiladora is a Mexican word. It’s the nickname that was given to the manufacturing plants along the US-Mexico border, which sprouted up after the Brasero program ended in the sixties and the Mexican government began the Border Industrialization Program. It comes from the word, maquila, the quota millers charged for milling other people’s grain. Today, there are thousands of maquiladoras in just about every country in Latin America and Asia.

Countries with favorable conditions for maquiladoras must have all of the above: high poverty, high national debt, corrupt governments (dictatorships friendly to the U.S are a favorite) weak union organizations and financial incentives so foreign businesses can import their raw materials and export their finished product without having to pay fees to the host country. Maquiladoras, or assembly plants must be within a duty-free zone, and items must be tax and tariff free.

Yep, if your country’s got that, you can bet your sweet pesos the maquilas will come knocking, if they’re not already there. But if wages rise, unions organize, or the government changes its tax-free policy for maquilas, watch out! You could lose your maquilas to a more convenient country, one that is poorer and has even worse wages than yours.

That’s exactly what happened in Guatemala when workers got fed up with a Korean manufacturing plant. The Koreans shut down operations there, and are moving their maquiladora to Haiti where poorer more desperate people are willing to put up with their miserable wages and working conditions. And guess what, in this particular case the land is a gift courtesy of the willing Haitian government. The new port and buildings for the new manufacturing giant comes courtesy of the U.S. government. Which really means you, the tax payer. The poor people of the world thank you.

The problem with maquiladoras is that they create stagnant economies. Workers who assemble items for export cannot improve their lot because wage increases and upward mobility are virtually non-existent. In the world of maquilas, it’s as if the Soviets had won the cold war, only it’s capitalist corporations that are the culprits of such Dickensian misery.

But there’s an even greater problem with ‘Maquiladora Economics.’ Maquilas only benefit the corporations the their rich stockholders. The poor who manage to find work at a maquila are only taking one step out of one type of poverty and into another. It is an inert economy for those who work there. And all this is done so that we in the U.S.A. can satisfy our hunger for cheap name-brand shoes, multiple TVs in a single house, and fourteen-dollar shorts from Old Navy and Walmart, or even 300-dollar tennis shoes at Sacks.

Meanwhile, the workers at the Maquila cannot afford to go to the GAP in Mexico City and buy a t-shirt. But as these conditions and methods of manufacturing go full speed ahead, it’s also the U.S. middle class that is being crushed. The fact is the U.S. middle class cannot afford goods manufactured within our own economy. And the gap is getting wider.

Lets say the cost of an average shirt in the U.S., where minimum wage is $8.00 an hour (depending on the state) is $24.00. Three hours work will buy that shirt. But in order for the shirt to cost $24.00 it has to be manufactured in a maquiladora in another country where the workers’ wage is $8.00 a day. So the same shirt at the same price would cost the maquiladora worker three days salary. But we must consider that the shirt, if it was manufactured for The GAP or Old Navy or some other U.S. brand available in Mexico, would a cost more in Mexico than in the U.S.

Just check out the GAP website. Change your shipping destination and currency, and then do the math. When I compared the cost of a shirt in the U.S against Mexico, the price in Mexico was 20% higher for the same shirt.

Ever wonder why a Patagonia T-shirt cost $35 and a Walmart T-shirt cost $7. You could say it’s the brand, but check the label; the Walmart T-shirt is made in China in a ‘maquiladora’ and the Patagonia shirt is made in the U.S.A. The fact is, the real price of a T-shirt in the U.S. is and should be $35.00, except that if we were to accept this as a society we would realize our buying dollars don’t stretch as far as the illusion maquiladora products make.

Maquiladoras are a convenient and money-making enterprise for corporations. The poverty and abuse inflicted on the workers is not worth it. And neither is the false sense that a middle class family in the U.S. has strong purchasing power.

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