Goodbye America, Goodbye Mexico

Living in a foreign country, I have little opportunity to read a newspaper from the U.S. anymore, and I miss that. Usually a day after they are printed, some newspapers including USA Today, The New York Times, Dallas Morning News, L.A. Times and San Francisco Chronicle are available at a few stores. But they can cost up to $4.00 for a weekday edition, and close to $10 for a weekend edition … all for news that is 24-48 hours old. So, online reading has become my “newspaper” of choice these days.

However, occasionally, someone from the U.S. will come down to visit somewhere here in Mexico and sometimes they will bring the local newspaper that they picked up at the airport from wherever their flight originated. They don’t know the newspaper, which they forgot the throw in the garbage can or leave on the plane, is like gold down here. The first lucky recipient will read it, pass it on to another ex-pat, who passes it on to someone else. And eventually, usually a week after it was printed, the old tattered stale piece of news is finally tossed. It’s just another one of those obscure tidbits of life here. Which brings me to this story.

Last Friday, some owners here (who live most of the year in Iowa) had friends arrive from Des Moines, and they brought the Des Moines Register with them. Today, the three day old paper was gratefully passed on to me. I read it pretty much cover to cover. I have never been there but Des Moines seems like a pretty presentable city.

While most of the news from last Friday’s Register had passed its “use by” date, there was one article that was news to me, and it caught my attention. It was about the final day at the Electrolux factory in Webster City, IA. After 72 years of making washers and dryers, the plant shut down on Thursday. 850 people were out of work. Click HERE for a link to the story.

Electrolux is not getting out of the business of making washers and dryers. In fact, it’s quite the opposite. Electrolux is terminating the jobs of 850 people in Iowa and is opening a brand new factory … in Ciudad Juarez, Mexico. It’s the same Ciudad Juarez that is now considered the most dangerous city in the world.

When I was still working, I went to Ciudad Juarez to do a couple of stories. It was back in the early 2000’s and Juarez was a bustling (and crime ridden) city. Despite its many drawbacks, it had several outstanding assets that were too good to be true for U.S. companies who cared more about profits than they did about people. First, it was on the border, just over the Rio Grande from El Paso. Second, NAFTA had just made commerce between the U.S. and Mexico much easier. And third, U.S. companies soon discovered that the employees in the U.S. who were making $15 an hour plus benefits could be replaced by Mexicans who jumped at jobs paying $15 a day, even though they provided few if any benefits. As a result, RCA, Philips, General Motors, General Electric, Krupp’s, and many more companies, abandoned US factories and workers, fled over the border, and set up shop in Mexico.

The cost of producing TVs and toasters and tiddlywinks suddenly dropped, and profits on those products, shipped back to the U.S. soared. CEOs were elated, shareholders were ecstatic, and the Mexican workers were happy to have jobs. In fact, they were so happy, there was an exodus from smaller towns across Mexico to Ciudad Juarez where the factories couldn’t hire enough workers (at $15 a day). The only losers, the American work force left in the unemployment lines.

What surprised me a bit about the story I read in the Register regarding Electrolux moving to Juarez was that from what I understand, the rush to Juarez is pretty much over. Turned off by crime, many companies are reluctant to move to Juarez. And many of those that were already there, have done to their Mexican workers what they did to their former U.S. workers. They have shuttered their plants and are relocating … not back to the U.S. but to China. Like it was in U.S. cities where manufacturing was the backbone of the local economy, the impact has been devastating in Juarez. Thousands of Mexicans who fled poverty elsewhere in the country with the promise of “good paying” jobs from U.S. companies in Juarez have been abandoned. Even when we were there nearly a decade ago, the luster of Juarez was starting to wear off as acre after acre of once bustling factories and distribution centers were empty. America’s loss, became Mexico’s loss … and China’s gain.

There are still obvious advantages to locating in Juarez for major corporations. Shipping costs to the U.S. are low, and the employment costs are cheap. And the companies argue that had they not tapped into a lower cost production model, they would not be able to compete in a global market where China continues to undercut many competitors. It would be nice to be able to say that you are proud to buy products made in the U.S. But increasingly, the challenge is to find one.