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Brief boom ending at Mexico maquiladora factories
http://www.alertnet.org/thenews/newsdesk/N1590219.htm
By Brian Winter
15 Dec 2004
Reuters
MEXICO CITY, Dec 15 (Reuters) - A short-lived boom is fizzling out at Mexico's "maquiladora" factories as weaker U.S. demand for some manufactured
goods, plus local factors like crime and a strong peso, take their toll.
Industry leaders say activity is now flat after several months of double-digit expansion at the factories, which import raw materials from the United
States and ship assembled products back across the border duty free.
"Growth has definitely slowed down," said Roberto Mattus, president of the main maquiladora association in the border city of Matamoros. "We think
activity will remain stable, but somewhat level through the beginning of 2005."
Weaker-than-expected manufacturing output led Mexico's overall industrial production to be flat in October compared with September. The data was well
below the projections of economists, some of whom dismissed it as a statistical hiccup.
"What's happening is that the maquiladoras that are already here are reaching capacity, and new ones are not coming at the same pace we saw a few
years ago," said Cesar Lopez, president of the maquiladora association in Tijuana, which has Mexico's highest concentration of such plants.
Mattus said more than 1,000 maquiladora jobs were lost in Matamoros in October due to lethargy in the city's two biggest sectors: auto parts and
electronics.
"Those jobs probably won't come back until next year, if at all," he said. "The main reason is that demand in the United States continues to be weak
in areas important to Mexico."
Mexico sends about 90 percent of its exports to its giant northern neighbor. U.S. industrial output grew a slight 0.3 percent in November and motor
vehicles and parts were down 0.5 percent.
"Our members are talking about a slowdown," said Rafael Maccadden, president of Mexico's Industrial Parks Association. "We're just not seeing the same
rate of growth we had before."
"RAREFIED POLITICAL ENVIRONMENT"
Maquiladoras started coming out of a three-year slump in late 2003, and double-digit annual growth rates during the middle of this year have been a
main driver of Mexico's economic recovery.
Economists point out that annual growth rates will no longer look as spectacular in comparison with late last year, when the recovery was underway.
But analysts said that the soft patch is not merely a statistical anomaly.
"I think it's just now sinking in that we're not going to close out the year as strongly as some people believed a couple of months ago," said John
Christman, a Mexico City-based maquiladora specialist for the Global Insight consultancy.
He said this week's announcement of 8,500 global job cuts by auto parts supplier Delphi Corp. -- which he termed "by far the most important
maquila operating in Mexico" -- would also weigh heavily on local sentiment.
Other negative factors include the Mexican peso's appreciation of about 3 percent against the dollar since Nov. 1 and what Mattus deemed a
"rarefied political environment" ahead of presidential elections in 2006.
Tension over the tight-three way race has been blamed for Mexico's inability to pass a budget for next year and wiped out the chances for major
economic reforms.
"And you wouldn't believe the amount of complaints I've heard about crime," Mattus said. "Foreign investors feel threatened by the assaults,
robberies, kidnappings and murders. They ask why they should do business in Mexico."
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Bruce R Leech
Elite Nomad
Posts: 6796
Registered: 9-20-2004
Location: Ensenada formerly Mulege
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Mood: A lot cooler than Mulege
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Chicken Joke:
Bill and Hillary are at a restaurant. The waiter tells them tonight's special is chicken almondine and fresh fish.
"The chicken sounds good; I'll have that," Hillary says.
The waiter nods and asks, "And the vegetable?"
"Oh," replies Hillary, "He'll have the fish."
Bruce R Leech
Ensenada
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