McALLEN, RGV – While maquila plants in Reynosa have rebounded well from the 2008-2009 recession and now have record-high employment numbers industry leaders are still concerned about the long term.
They wonder where the next generation of workers are going to come from. In the past they could recruit very easily from the interior of Mexico. But now maquila plants are springing up in the interior also, thus ratchetting up competition for workers. They are also having to deal with a change in sales tax policy in Mexico that eliminated an advantage firms based along the border enjoyed.
Keith Patridge, president and CEO of the McAllen Economic Development Corporation, spoke about how things are picking up for the maquiladora industry in Reynosa.
“The companies are growing like crazy. I just got a note from INDEX yesterday that 40 companies are hiring in Reynosa. They want 3,000 operators and 300 tech engineers and supervisors. We are talking about some major, major growth taking place in Reynosa. We are happy to see that. It speaks highly of our management team and our companies. We do everything we can to support them.”
Patridge made his comments about the current state of the maquila industry in Reynosa at a recent McAllen EDC meeting. McAllen EDC helps major manufacturing firms, such as auto parts suppliers, set up maquila operations in Reynosa. INDEX is the trade association for firms with maquilas in Mexico.
Mike Myers is general manager of Metal Industries, Inc., which operates a maquila in Parque Industrial del Norte in Reynosa. He is also a board member of INDEX Reynosa. Myers confirmed that employment is at an all-time high for maquilas in Reynosa. However, he said he is concerned about where the workers will come from five, ten, and 15 years into the future.
Citing government-produced numbers which, he said, are five months old, Myers said Reynosa has almost the same number of maquila factories as it did before the recession of 2008 and 2009. Back then, he said, there were 146 factories in Reynosa and now there are 148. However, he said that today there are far more workers working in those factories. “In 2008 and 2009 there were 84,000 jobs and today there are more than 100,000 people working for us, more than ever. Even in our heyday we never had what we have now. So, our factories now have basically reloaded.”
Then came the ‘but.’ Myers said: “If we ever get any growth we are going to have some issues.” He explained his concerns. “We need about 3,000 more operators and about 400 technicians. We are working with the city, the schools, and the state. We are holding job fairs, working with the colleges and the technical schools. Our old game plan of going into the interior of Mexico, going into the jungle and the fields and bringing people up does not work anymore because there are maquilas down there now. There are maquilas over the whole country now. Also, the last round of fiscal changes meant that the playing field is even now. So, for a long term approach, we are going to have to come up with new tactics to fill our factories.”
Myers said INDEX Reynosa is working with Emilio Cadena, the national president of INDEX, to address the issue. “We have spoken to Emilio. He is from Monterrey. We are lobbying for an INDEX president to be from the border. We are feeling that some of our power in INDEX has gone into the interior. The cost of living is more expensive on the border. It is something that we have got to reckon with.”
In an interview with the Rio Grande Guardian later, Myers spoke about the tax advantage that was stripped from the northern border region of Mexico.
“They have removed our advantage. In the years past the border paid less sales tax, we paid 11 percent and the rest of the country was 16 percent. That was removed in the last fiscal changes. So, now we are on a level playing field. We have got to think about the future. Now that everything is level where are we going to get the next wave of workers? If we have to compete with each other for workers, that is going to drive the price up. It is good for the worker but it will make us less competitive.”
Asked what the answer is, Myers said: “We have spoken to our national association about re-implementing that border advantage. It costs more to live here. Let us reduce the old tax rate back. Let’s have the old tax rate back so we can attract more workers here. We have to get our border legislators to say we want that tax rate back.”
MEDC’s Patridge said his organization is looking at strategies to support companies operating maquilas in Reynosa.
“I think it gives an opportunity for our engineering graduates from UTRGV or the future Texas A&M, or the technician graduates from STC or TSTC, to literally have a job in Reynosa but live here. They can do that very easily. They have been doing it for years. It is just that there has been a discrepancy in wage rates. However, because Mexico wages are increasing it will become more attractive,” Patridge told the Rio Grande Guardian.
STC is South Texas College. It has a technology campus in south McAllen. TSTC is Texas State Technical College in Harlingen.
“This is not unique to Reynosa. In Monterrey, about three or four months ago, they did a similar type of survey to the one in Reynosa and what they found was that they had 3,000 technician/managerial positions they could not fill. This is the way of the world,” Patridge said. “We are working with STC to see how we can offer STC programs in Reynosa and Reynosa programs in McAllen so that we really start using cross-border training programs and get the maquilas to start looking at hiring techs from McAllen to go work in Reynosa.”
Patridge pointed out that STC is the only community college in the U.S. to have the manufacturing industry renowned FESTO-certified workforce training program. “STC has the only European-standard automation and robotics program in the United States. What we want to do is be able to offer that to our plants in Reynosa.”
Patridge said he took a number of his board members to Reynosa recently to see maquila plants in operation. He said the delegation saw one operator working next to a robot that was picking the parts and handing them to an operator to install on the product. “They were teaching the robot and the human to work together. The shortage is really at the technician and manager level. The plants in Reynosa are already moving towards the use of more robots, more automation equipment to replace the direct labor. We need technicians to maintain and program the robots.”
Patridge gave an example of a Honda manufacturing plant in U.S. It was eliminating 100 jobs on the assembly line due to automation but not laying anybody off. Instead the operators were being retrained as technicians. “If we can provide the technical skilled workers, living in McAllen, they are not going to move to Monterrey. They are going to live here and drive 15 minutes to work in Reynosa. That is the advantage we have.”
Rio Grande Guardian reporter Dayna Reyes reports from Reynosa: INDEX Reynosa has three big events for its members in the coming days. On Sunday, starting at 7 a.m., the group holds its Family Day for maquila workers at the Parque Cultural in Reynosa. On Monday, starting at 5:30 p.m. , INDEX Reynosa’s gala and dinner takes place at the McAllen Convention Center. On Tuesday, the day-long Foro Internacional INDEX forum takes place at Parque Cultural in Reynosa.