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Mexican workers in Texas suffer as plants relocate south of border

By Joel Millman
The Wall Street Journal, March 26, 2002

LAREDO, Texas -- For 30 years, Mexican border workers like Jose Aranda commuted to factory jobs up north, enjoying all the benefits of working in the U.S. without leaving home. Now, with global competition pressuring profit margins, those opportunities are disappearing.

"I'm one of the statistics now," says the 35-year-old native of Mexico, whose $270-a-week job here ends Friday when R.G. Barry Corp. of Pickerington, Ohio, begins shutting down its footwear plant.

The factory, which will close for good in June, is the last one in Laredo operating under the so-called Twin Plant plan that split factory work between two border cities. Its 160 jobs are moving across the Rio Grande to an R.G. Barry plant in Nuevo Laredo so Barry can take advantage of cheaper labor and the elimination of tariffs under the North American Free Trade Agreement. There, the workers replacing Mr. Aranda will earn around $60 a week doing exactly what he used to do.

The job losses at R.G. Barry, the largest manufacturer of bedroom slippers in the U.S., will barely dent the border's booming trade economy, which last year saw more than $50 billion of commerce pass through this busy crossing point. But they are part of an important trend: the shift of U.S. factory jobs from a region where deep pockets of poverty endure. For two generations, those jobs put a rung on prosperity's ladder within reach of Mexican workers by providing U.S. minimum-wage salaries they could earn without emigrating.

While Nafta promised -- and delivered -- thousands of new service jobs to the region, Nafta also cost cities like Laredo, Brownsville, El Paso and McAllen much of its manufacturing. The number of manufacturing jobs located in those Texas border cities peaked at about 80,000 the year after Nafta's launch in 1994. Since then, those four cities have lost thousands of factory jobs. The alternative: janitorial or warehouse jobs that pay less.

"Just in El Paso, we're down 16,000 manufacturing jobs since the early 1990s," says Tom Thomas of the city's chamber of commerce. He estimates that commuters crossing the Rio Grande each day from Ciudad Juarez held half of those jobs.

Mr. Thomas lists toy maker Hasbro Inc., audio equipment manufacturer Harman Consumer Group Inc. and computer maker Acer Inc. among the big employers that closed their El Paso operations after Nafta's passage. Among the other positions lost: thousands of denim-cutting jobs at contractors to companies like Levi Strauss & Co. and VF Corp.'s Wrangler, which once merely assembled jeans in Mexico but made the parts themselves in Texas. El Paso was also where finished pants were laundered and dyed. Now, all that work is done south of the border.

The victims of these cutbacks are the thousands of Mexican workers who for years embodied the border's aspiring middle class, the most ambitious of whom often became U.S. citizens. "Those jobs offered a route to a better life," recalls border economist Lucinda Vargas, who grew up in a Ciudad Juarez neighborhood called Los Nogales.

In the 1970s, Ms. Vargas, then a teenage commuter student at the local campus of the University of Texas, held a bookkeeping job at Valley Fashions, an El Paso pants manufacturer. She later passed that job on to her sister, and her sister passed the job on to another girl from the neighborhood. Today, all three women are professionals; Ms. Vargas eventually became chief economist at the El Paso branch of the Federal Reserve Bank in Dallas.

For many industries, the Nafta treaty set a timetable by which tariffs designed to protect jobs in the U.S. were gradually phased out. Parts for blue jeans lost their duty protection two years ago. Protective duties for suitcases disappeared in 2001. Duties on footwear parts, once as high as 15% of their wholesale price, disappeared in January -- the reason R.G. Barry opted to close its Laredo plant, as well as another in San Angelo, and move its entire production to Mexico.

"It gives us some breathing space," says Manuel Rodriguez, the Laredo plant manager, explaining that competition from Asia is driving down the price of slippers everywhere. Mr. Rodriguez says only a handful of his workers will be crossing with him to Mexico, with promotions to supervisor when the new plant opens.

Mr. Aranda, a father of three, isn't one of the lucky ones. Losing his job, which some seasons paid as much as $400 a week with productivity bonuses, is a challenge, he says, but not a catastrophe. He will qualify for weekly Texas unemployment benefits as high as $150, and he may be eligible for retraining under a federal program aimed at helping workers hurt by Nafta-related cutbacks. If so, he intends to earn a license as a long-haul trucker.

Even if he could, he wouldn't take his old job at Barry's Nuevo Laredo plant, he says. A naturalized U.S. citizen since 1998, Mr. Aranda notes that he would be an undocumented "illegal" if he went back to work in Mexico. That, he says, "would be a step backwards."