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Saturday, May 18, 2024

Maquiladoras See an Uptick in Employment


Mexico’s maquiladora plants are growing employment after several years of decline.

Employment at the plants, most of which straddle the U.S.-Mexico border, rose last year for the first time since their heyday in 2000, according to a report from a branch of the Federal Reserve Bank of Dallas.

But the report said that despite the 7.1 percent jump in hiring to 1.1 million workers in the past year, employment still is well short of the 2000 peak. Shifts in manufacturing strategy and fallout from the North American Free Trade Agreement have hammered the area in the last few years.

Still, many companies have remained , and grown.

“We have history there,” said John Trapani, the senior vice president of human resources at Orange-based Sybron Dental Specialties Inc. “The inflation rate in Mexico is comparable to China. And we like the proximity. A lot of us here in the U.S. learned to speak Spanish in high school. Students generally don’t learn to speak Chinese.”

Sybron, which makes dental products, has plants in Mexicali and the Yucatan.

Trapani said he expects employment at the Mexicali plant to increase by about 25 percent to 620 next year, with the Yucatan facility holding steady at about 800 people.

He said that plant vacancy levels along the California border are approaching 2000 levels.

“Our Mexicali people are saying that the vacancy rate along the border has fallen to 4 percent compared to 8 percent about a year ago,” Trapani said. “That’s still below the 2000 figures, when the vacancy rate was between 1 percent and 3 percent, depending on the region. The sector is undergoing a rebound, predominantly from U.S. and Japanese companies.”

The maquiladora factories produce many of the televisions, computer monitors and other electronics sold in the United States. The program was set up by the Mexican government in the 1980s to attract plants to its border areas.

The sector has been hit hard by a shift of manufacturing to Asian countries, particularly to China. Changes stemming from the 1994 North American Free Trade Agreement also hurt the area.

Tariff rules in 2001 required products made at the border plants to have at least 51 percent of their components from Mexico, the United States or Canada. Rather than meet the new requirements, many companies found it cheaper to move production elsewhere , even with added shipping and tariff costs.

Still, big names such as Toyota Motor Corp. and Apple Computer Inc. have plants in the area. Asian, U.S. and European companies are lured by cheap labor and proximity to the world’s largest market.

One is Irvine-based Mitsubishi Digital Electronics America, the U.S. consumer electronics arm of Japan’s Mitsubishi Electric Corp.

Mitsubishi has been growing employment steadily since 2000 from 1,700 workers to about 2,500 today. The company operates a plant in Mexicali that makes big-screen TVs. The Mitsubishi plant is 500,000 square feet and is said to be the largest big-screen factory in the world.

Being next to the United States , where most big-screen TVs are sold , is key, according to company officials. The plant can ship the TVs to the United States by truck in a matter of hours.

Skyworks Solutions Inc., a maker of wireless chips and modules, has a Mexicali facility that it’s been operating for more than three decades.

The facility started in 1969 as a subsidiary of North American Aviation, making small chips for calculators and home video-game systems such as the Atari 2600. North American Aviation later became part of Rockwell International Corp. , now Rockwell Automation Inc.

The Mexico plant then became part of Newport Beach chip maker Conexant Systems Inc. in the 1990s.

It was spun off from Conexant in 2003 and now is based in Woburn, Mass. Skyworks still has some 500 workers in Irvine.

Skyworks’ 330,000-square-foot Mexicali plant has 2,100 workers. It’s the company’s largest plant, and the only one outside the United States.

The chip maker’s plant hasn’t seen much change on the employment front.

“Staffing levels have remained fairly stable the last four or five years,” said Karl Mentzel, the vice president of operations for Skyworks. “But what we’ve seen in output from that plant has dramatically increased.”

Mentzel said the company has no immediate plans to set up facilities in China or other Asian countries.

“There are advantages to us other than labor costs in Mexicali,” he said. “Our primary supplier of wafers is in Newbury Park, and within five hours we can deliver parts to the Mexicali facility. In our environment, which is extremely dynamic and changing, we have to respond quickly to changes in demand or technology.”

The company does all its product design and development in Irvine.

“In three-and-a-half hours people can travel from Irvine to the Mexicali facility to assist that process,” he said.

Chris Cziborr writes for the

Orange County Business Journal.


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