COMMENTARY:
The border city of Juarez in the Mexican state of Chihuahua is regarded as Mexico’s maquiladora (twin plant) capital. Maquiladoras (maquilas for short) are generally foreign-owned plants operating in Mexico, generating products, the overwhelming number of which are exported out of the country. Approximately 69 percent of Mexico’s maquilas are U.S.-owned, while another 13 percent are Canadian-owned. The odds are great that many of the components in your automobile, consumer electronics, and medical products have been manufactured in a Mexican maquila.
Since 1965, the Mexican maquiladora industry has grown and become part of the global supply chain. The billions of dollars of production occurring annually in Juarez has created a variety of industries and jobs in its sister city of El Paso, Texas and in Santa Teresa, New Mexico. Up until recently, the maquilas in Juarez employed more than 325,000 workers. However, a decrease in maquiladora employment in this city has been the trend during the past couple of years. Since 2023, the maquiladora industry in Juarez has lost 65,000 jobs, and maquiladora employment now stands at approximately 261,000.
Many people point to the fact that since 2018, wages in Juarez have soared by about 375 percent. Others view President Trump’s tariffs today, no tariffs tomorrow, tariffs the next day policy as having caused maquila owners to postpone expansion, and to curtail new-hires. However, another factor is definitely in play.
Many of the industry experts I have spoken to in the last decade have told me that the maquiladora industry’s path to future success lies in its ability to bring high-tech automation into production processes. A CBRE real estate official recently told me that he is seeing more infrastructure and capital investment being installed in new maquila production facilities. He stated that this is the case with the Taiwanese company Pegatron, which is building a four-story production plant in Juarez, a facility unique in a city of one-story plants.
Approximately 59 percent of the maquiladora industry’s production is in the automotive industry, followed by electronics at 27 percent and medical at 6 percent. As the automotive industry gravitates towards more electric vehicles, cleaner, more efficient production plants are needed. Factors such as dust, humidity, and temperature need to be monitored and controlled. In certain cases, clean rooms will need to be installed. It stands to reason that new production will require additional automation. As the CBRE official told me: “In many instances, we’re seeing more cost going into the building than the building itself.”
The industries where the job shifts are taking place are also important to understand why they are occurring. According to a recent report by the Hunt Institute of the University of Texas at El Paso, maquiladora jobs in the computer and medical industries, which have more capital-intensive operations, have risen greatly. Between 2019 and 2024, jobs in computer-related industries increased by 9,500, or 238 percent. In the medical industry, they grew by 12,500, which is a 41 percent increase. During this same period of time, the textile industry lost 8,000 jobs, while automotive electric systems (dominated by the wire harness industry) lost 5,000 jobs.
The interesting factor occurring during these job shifts is that the maquiladora industry continues to increase its exports abroad, particularly to the U.S. Americans are still buying automobiles, computer tablets, and medical equipment, all of which continue to be produced by maquilas. However, job losses could occur in the maquila industry if Trump imposes tariffs on Mexican products that are currently protected by the U.S.-Mexico-Canada Agreement. Economists have predicted that this will create economic uncertainty to the point of recession in the U.S., due to the rising prices of products imported into the U.S. from Mexico.
This, in turn, would lead to decreased consumer demand in the U.S. for maquila-produced goods. And as the old saying goes, “When the U.S. gets a cold, Mexico gets pneumonia.” Fewer maquila-produced goods being bought in the U.S. means decreased production and fewer jobs in Juarez and throughout Mexico.
Meanwhile, it is bittersweet what is happening in Juarez. On the one hand, 65,000 former maquila workers have had to seek employment in other sectors or they are plain out of a job. At a recent roundtable, one maquiladora owner mentioned that he is seeing less turnover in his workforce, which indicates that workers are more worried about keeping their jobs. On the other hand, it is encouraging that automation in Juarez maquiladora production continues to rise, as it has in the U.S. manufacturing industry. This will contribute to North America’s competitiveness in the world.
Jerry Pacheco is the president of the Border Industrial Association. Jerry Pacheco's opinions are his own and do not necessarily reflect the viewpoints of KRWG Public Media or NMSU.