Act IV: Going Global -- Going to Mexico NARRATOR: MEET NEIL WHITELEY-ROSS, VICE PRESIDENT OF THE SAN
DIEGO ECONOMIC DEVELOPMENT CORPORATION. interviewer: “What’s the goal of this conferenceRoss: “More than anything else, to expose San Diego companies to Mexico.” NARRATOR: ROSS IS A LEADING STRATEGIST AND PITCH MAN FOR THE CITY OF THE FUTURE. Whiteley-Ross: “It’s a great opportunity for San Diego. It’s the first
time I’ve ever heard of anybody something like this.” NARRATOR: EVERY YEAR, ROSS RUNS A GIANT TRADE SHOW CALLED MEXPORT, WHERE HE INTRODUCES AMERICAN COMPANIES TO MEXICO.
Whiteley-Ross at podium: “As you know, we’ve been growing leaps and bounds the last few years with our trade with Mexico...” NARRATOR: THIS IS
PART TWO OF SAN DIEGO’S ECONOMIC STRATEGY: TO AGGRESSIVELY SELL THE ADVANTAGES OF CHEAP MEXICAN LABOR TO COMPANIES ALL ACROSS AMERICA AND TO THEIR GLOBAL COMPETITORS. IN 1994, AFTER THE PASSAGE OF NAFTA, MAYOR SUSAN
GOLDING LED A TRADE MISSION TO THE FAR EAST, TELLING THE EAST ASIANS THAT, UNDER NAFTA, THEY COULD ENTER THE AMERICAN MARKET THROUGH THE BACK DOOR: PRODUCE IN MEXICO, SELL IN AMERICA.SAN DIEGO NOW WORKS HAND-IN-GLOVE
WITH MEXICAN OFFICIALS FROM TIJUANA JUST ACROSS THE BORDER. USING MEXICO AS A LURE, SAN DIEGO’S IDEA IS TO LET MEXICO HAVE THE LOW-END PRODUCTION JOBS AND KEEP MANAGEMENT, ENGINEERING AND HIGH-END MANUFACTURING JOBS FOR
SAN DIEGO. SMITH: What do you offer companies in places like Chicago or Pittsburgh or Detroit? WHITELEY-ROSS: You can save eighty percent on your labor cost in manufacturing by
using the maquila industry and yet still have a great quality of life for your management team in San Diego. NARRATOR: THIS PITCH IS GENERATING BIG RESULTS. HUNDREDS OF MILLIONS
OF INVESTMENT DOLLARS ARE POURING INTO MEXICO. BIG-NAME MANUFACTURERS HAVE MOVED THERE IN DROVES. THERE ARE MORE THAN SIX HUNDRED FACTORIES, CALLED MAQUILADORAS, JUST ACROSS THE BORDER IN TIJUANA EMPLOYING SOME ONE
HUNDRED FORTY THOUSAND WORKERS. AND EVERYWHERE, “WORKERS WANTED” SIGNS HANG FROM FACTORY GATESONE COMPANY THAT RESPONDED TO SAN DIEGO’S SALES PITCH IS MULAY PLASTICS. MULAY USED TO MAKE CASINGS FOR TELEVISION SETS IN
A FACTORY NEAR CHICAGO. BUT IN 1996, PARTLY AS A RESULT OF ROSS’S PERSUASION, THEY MOVED THEIR MIDWEST OPERATION TO TIJUANA. AND, SURPRISE: ALL THE JOBS WENT TO MEXICO, NONE TO SAN DIEGO. SMITH: You find Mexicans
can do the whole thing from bottom to top? JACK SHEDD: From top to bottom, exactly, exactly. We’ve got a - we’ve - we’ve found a ver- what we think is probably one of the best
teams - uh - uh - in the maquilas. SMITH: Now you’re talking about managers. You got engineers down there? Quality control?
SHEDD: Soup to nuts - the entire group. SMITH: And the Mexicans do the whole thing? SHEDD: They do everything. SMITH: And you used to be doing that stuff - uh - where? Somewhere around Chicago? SHEDD: Exactly. NARRATOR: SO IT TURNS OUT
THAT SAN DIEGO HAS BEEN FAR MORE SUCCESSFUL IN LURING JOBS TO MEXICO THAN IN ADDING HIGH-END JOBS FOR THE U.S. SIDE OF THE BORDER.SMITH: So -- show me -- what is this here?
WHITELEY-ROSS: Matsushita -- they have a hundred and fifty engineers doing their television - uh - research and development. And then their manufacturing is just across the border in this little area called the
Industrial City. So they’re literally five miles from door to door between their R and D. SMITH: What have they got down here, four or five thousand? WHITELEY-ROSS: They’ve got six thousand people in Tijuana, doing component parts and manufacturing of television sets. SMITH: There’s a hundred fifty here, six
thousand down there. WHITELEY-ROSS: That’s correct. NARRATOR: IN THE LAST FOUR YEARS, BY SAN DIEGO’S OWN ESTIMATE, ITS AGGRESSIVE SALES
CAMPAIGN HAS LANDED THIRTY THOUSAND NEW JOBS FOR TIJUANA AND ABOUT SIX TO EIGHT THOUSAND SPILL-OVER JOBS FOR SAN DIEGO.SMITH: Is that a good deal for San Diego? GOLDING: It -
it’s a good deal because - uh - the Mexican side of the border has certain things we don’t have such as a very low labor cost. We have a high level of productivity. We have tremendous knowledge in our workers here, so
whether it’s research and development, design, those kinds of things -- and management -- those are the jobs that we tend to produce here, and those other jobs that have to do with production and manufacturing are
usually produced on the Mexican side. SMITH: Do you have any worry that maybe in working so closely with them, you’re generating your own future competitor? GOLDING: No, not - not at all because the kinds of jobs they have there, frankly, to a large extent this country has already lost. And, if we didn’t have them in Mexico, they’d be in Asia. And at least, when
they’re in Mexico, we get the corollary jobs in research, management, administration. NARRATOR: BUT WHAT’S MISSING IN MAYOR GOLDING’S PICTURE, CRITICS SAY, ARE JOBS FOR THE
AMERICAN MIDDLE, WHICH TOOK THE BRUNT OF THE ECONOMIC DOWNTURN FIVE YEARS AGO. PETER ZSCHIESCHE: When the aerospace industry was going down in the early ’90s, when we have
thousands of people leaving these large factories in San Diego, rather than market these people with these skills and this experience, the city fathers were marketing the emerging bio-tech and the low wage jobs into
Tijuana. They had a choice, and their choice was to wish these people well in the new free market of San Diego. NARRATOR: AND, WHILE SAN DIEGO FOCUSES ON UPPER-TIER JOBS, CRITICS
SAY THE MEXICANS HAVE BEEN STEADILY BUILDING UP THEIR SKILLS, HELPING THEM WIN MORE AND MORE MIDDLE CLASS JOBS FROM AMERICANS.NARRATOR: I WENT TO TIJUANA TO SEE FOR MYSELF. THIS VERBATIM PLANT MAKES STORAGE DEVICES
FOR COMPUTERS. ITS FIVE HUNDRED JOBS USED TO BE DONE BY AMERICANS IN SAN DIEGO. JOHN RILEY RUNS FOUR MAQUILADORA PLANTS AND HEADS THE LOCAL MAQUILADORA ASSOCIATION. SMITH: And is this fairly typical of - of
operations here in the maquilas? JOHN RILEY: Yeah, I think that what you’re seeing going on here is kind of typical of the new work coming on in. We’re doing products now that
we didn’t even dream about in the ’60s, that didn’t even exist - uh - for the computers, for the microprocessors, for the medical electronics that’s out there today. SMITH: So,
whatever they want to make here, the labor force will be here at whatever level industry needs. RILEY: I’m sure of that. These people are being more educated than they have been
in the past, and they’re a very good workforce.HARLEY SHAIKEN: Some of the highest skilled, most advanced manufacturing processes are located in Mexico in general and the maquiladora industry in particular. The
maquiladoras workers, in terms of their productivity and quality, rival -- sometimes exceed -- Japanese or U.S. workers.... SMITH: Is this a high tech product? JAMES UCKER: Very. SMITH: Very high-tech product. TUCKER: Very much so.
SMITH: And where are you making that product? TUCKER: We are making this in our Tijuana facility.
SMITH: And previously you made these where? TUCKER: In the United States. SMITH: In the United States. Some in San Diego. TUCKER: Some in San Diego. SMITH: Are all your employees -- almost all your employees Mexican? Are they American or what?
TUCKER: With the exception of two, they’re all Mexican nationals. SMITH: Uh-huh.SMITH: Miss Barbachano, I - I was immediately intrigued by this list of your job openings - uh
- a hun- a couple of plant managers a hundred at ten thousand dollars each; director of manufacturing seventy-two thousand dollars; engineering managers, produc-- who’s going to get these jobs in the end? I mean,
Americans? Mexicans? Who? BERENICE BARBACHANO: I think we’re going to be increasing drastically ten to fifteen percent each year more Mexicans versus American people. Why?
Because we’re preparing these people better. And they’re ready to assume those positions. NARRATOR: MEXICO’S GAIN IS NOT NECESSARILY AMERICA’S LOSS, ACCORDING TO NEIL
WHITELEY-ROSS AND HIS CO-HORTS. EVEN AS MEXICO INCREASES ITS SHARE OF GOOD MANUFACTURING JOBS, THEY SEE AN UPSIDE FOR THE U.S. WHITELEY-ROSS: Our view is, if we can make Tijuana
stronger, then their per capita income will increase. Their consumption in San Diego will increase. Our tax base will increase. They will need more products, they will buy more San Diego. And over time, we’ll blur that
border. NARRATOR: BUT REALITY SEEMS AT ODDS WITH THIS THEORY. DESPITE HUGE FOREIGN INVESTMENTS POURING INTO TIJUANA, THE LIVING STANDARDS OF THE MEXICAN MAQUILADORA WORKFORCE
HAVE NOT RISEN. IN THOSE HIGH TECH FACTORIES, AVERAGE WORKERS GET PAID ABOUT A DOLLAR AND A QUARTER AN HOUR -- EVEN LOWER, IN REAL TERMS, THAN TEN YEARS AGO.SONY’S NEW STATE-OF-THE-ART MANUFACTURING FACILITY, FOR
EXAMPLE, SITS LIKE A FEUDAL CASTLE ABOVE THE IMPOVERISHED NEIGHBORHOODS WHERE ITS WORKERS LIVE. VISITING ONE OF THOSE NEIGHBORHOODS, I MET TERESA OLIVARES, MOTHOR OF TWO MAQUILADORA WORKERS. SHE SHOWED ME AROUND HER
HOUSE. ONE OF HER DAUGHTERS MAKES FOUR HUNDRED SIXTY-FIVE PESOS A WEEK, THE OTHER TWO HUNDRED FIFTY-FIVE PESOS -- LESS THAN ONE HUNDRED DOLLARS A WEEK BETWEEN THEM. SMITH: Is that enough for a family, I mean, to make
- uh - maybe seven-hundred pesos a week? TERESA OLIVARES (via translator): It’s not that much. We don’t have enough to eat. SMITH: Some
people in America say that if the maquiladoras are here, that Mexicans will make much more money and they will come shop in San Diego. Do you shop in San Diego? OLIVARES (via
translator): No, it’s not enough for here, so it’s not enough for San Diego.HARLEY SHAIKEN: It would take a maquiladora worker more than half a day’s wages simply to take the trolley to downtown San Diego round trip,
let alone buy anything. SMITH: How can that be? How can it be? You’ve got all this economic input, all this investment, all these new jobs. Why aren’t wages going up? I don’t get
it. SHAIKEN: You have unions that are government-dominated or nonexistent. You have employers that work together to set wages levels. The irony is, with all the talk about free
trade, we have highly-controlled labor markets when it comes to wage-setting. SMITH: What’s interesting is we’re looking at what we used to call a Third World economy -- a few
people at the top making a lot of money, and a whole lot of people at the bottom not making very much money. Are we in the process in America of becoming a Third World country?
SHAIKEN: The hope was that U.S. wages would pull up on Mexican wages. But, if Mexican wages are anchored to the bottom, just the opposite takes places.When wages remain low in Tijuana, it exerts a chilling effect on
wages in Milwaukee and Detroit, in Stockton, California, and elsewhere. NARRATOR: SO, WHATEVER ITS INTENT, SAN DIEGO’S MEXICAN STRATEGY, LIKE ITS CITY OF THE FUTURE, MAINLY
BENEFITS THE UPPER TIER.SMITH: The question we keep coming back to is there’s no question the folks at the top are gonna do fine -- the stockholders, the engineers, the managers, the R&D people, the Irwin Jacobs
of this world at Qualcomm. The real question is what’s going to happen to the American middle, and it just looks like it’s getting kind of hollowed out and forgotten because everything is drifting south to the low-wage
- uh - economy in Mexico. WHITELEY-ROSS: Next. (nervous laugh) I don’t know how to respond to that. [Back to top] |
