Monday, January 24, 2011

Juárez Economy Rebounds

From the AP:
The recovery of the about 350 maquiladoras is the single bright spot in a city where drug violence has killed 7,000 people in three years. The maquiladoras may also be a sign that the economy in the region is finally turning the corner, after gross domestic product for Mexico shrank by almost 7 percent in 2009, the worst contraction in decades.

"There's some real competing realities in Juarez at the moment," said Bob Cook, president of the Regional Economic Commission in El Paso, Juarez's cross-border sister city. "The violence has not targeted our industry, and the cartels ... have not destroyed all the advantages of doing business there."

Unemployment for Juarez is high, at 7 percent compared to Mexico's national average of 5.4 percent. But plants that furloughed employees in 2008 and 2009 are now offering overtime as well as jobs.

The Juarez maquiladoras added about 26,000 new jobs from July 2009 until August 2010, when they employed more than 192,000 people. But there's still ground to make up - three years ago, the sector employed about 250,000 out of Juarez' population of 1.3 million.
Cook said that since 2008, 106 new permits for maquiladoras were granted in Juarez. An additional 15 companies have notified the commission of plans to locate or expand in the city, which would create up to 11,400 more jobs.
This squares with what I heard when visiting the town in June. The violence was as bad as ever, but there was a cautious optimism due to the hiring binges in the maquiladora district. Even the nightclubs were starting to open back up.

It also strikes me as simply amazing that the maquilas employed 250,000 people in Juárez, or 20 percent of the city's total population. At one-fifth of the total population, that probably amounts to somewhere between half and one-third of the town's labor force. I'm not sure what the government could have done to avoid such a scenario without inhibiting the overall growth of the city, but having such a huge chunk of the work force tied to a single industry whose fortunes are so closely linked to the business cycle is a recipe for an unstable environment.

No comments: