Maquiladoras add jobs, ramp up production

January 08, 2010 7:17 PM

REYNOSA — Mexico’s maquiladoras added thousands of jobs and boosted production in late summer 2009 after a nearly two-year free fall that left thousands unemployed and shuttered dozens of factories, according to statistics from the Mexican government.

Few said that the statistics released in December by Mexico’s Instituto Nacional de Estadistica y Geografia (INEGI) alone signal recovery, but coupled with the surprising recent acceleration in U.S. manufacturing, the gains in Mexico are bolstering confidence the world’s economy might be on the mend. Analyst said that over the past year, factories were able to sell off inventory after shutting down. Now, with production levels more in line with demand, industry observers said it’s likely Mexico’s factories have reached the bottom.

"They’re heading in the right direction," said Dan McGrew, president of the Reynosa Maquiladoras and Manufacturers Association. "Nobody wants to jump up and shout victory."

In July 2009, manufactures in Mexico added more than 15,000 jobs. The following month, they added more than 23,000, bringing total employment to more than 1.6 million. Still, after two years of slowing production lines, layoffs and a decline in work hours, the total number of jobs is well below the 1.9 million mark from July 2007, according to INEGI.

Mexico’s factories have been assailed by a global downturn in manufacturing that reached a crescendo in fall 2008. With Mexico’s economic health tied to global trade, the country’s economy was expected to contract by 6 percent in 2009, according to the Federal Reserve Bank of Dallas. The downturn in American auto sales hit Reynosa’s many auto suppliers particularly hard, contributing to a 5.3 percent decline in employment in Tamaulipas as orders for auto parts dried up.

By late spring and through the summer 2009, parts inventories had fallen more in line with demand and production restarted at many of those plants, said Keith Patridge, president and chief executive officer of the McAllen Economic Development Corp.

While often-criticized, the Cash for Clunkers program this past summer stimulated demand for some auto suppliers and U.S. automakers saw a small rise in sales, Patridge said.

Employment statistics for regional cities are incomplete and difficult to compare as INEGI redid how it compiles economic data. Other statistics, including employment among manufacturers that do not export their products, indicate that employment levels have risen for some in Tamaulipas, according to INEGI. Recovery among manufacturers in Mexico, however, will not be swift, an economist with Compass Bank said late last month.

"Industrial production in Latin America and Europe is still declining, in smaller rates," Nathaniel Carp, an economist with the Spanish-based banking giant Banco Bilbao Vizcaya Argenta SA, which flies the Compass Bank banner in the Valley. "Recovery in global trade will be much slower than in previous recovery periods."