Trade and manufacturing is vital to the U.S. and Texas economies. The trade route in the Juárez/El Paso area is one of the busiest in the country.
But with the current U.S. political climate and international relations, job losses in Juárez manufacturing are rising. That’s according to a published report on the economics of the area by the University of Texas-El Paso.
Mayra Maldonado, executive director of UTEP’s Hunt Institute for Global Competitiveness, joined Texas Standard to talk about the twin manufacturing plants that are split across the border, the instability of the U.S. market, and tariffs. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: So these job losses are primarily at what are called maquiladoras. Could you explain what those are and why they’re important in this economic context?
Mayra Maldonado: Of course. I’d like to start by saying that the manufacturing in Ciudad Juárez represents 60% of total employment. And that’s even more than double the national average of 28%.
So the manufacturing industry is the core sector in terms of formal employment in Ciudad Juárez. And that’s why it’s so important.
So why are these job losses happening primarily on the Mexican side of the border? Is it in part just because it is so much of the economy?
There are policies and other disruptions that have happened along the recent years.
One of them is a wage increase that occurred in 2019. The minimum wage doubled in Ciudad Juárez, and actually not only in Ciudad Juárez, but also along the northern border free zone that was designated in Mexico.
So, right now, the minimum wage along the border, on the Mexican side, is 1.5 times higher than the rest of Mexico.
So are employers just not able to keep up with those higher wagers? What’s happening exactly?
So there are a lot of other disruptions, right?
So in 2020, COVID hit. In 2019, we had this policy about the minimum wage doubling. We also have been witnessing automation more and more.
So all of these factors, along with recent uncertainty with respect to some other policies here in the U.S., have impacted the manufacturing sector.
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So how does this affect the U.S. economically and, I guess, Texas specifically?
So what we are currently doing is trying to understand how our economies are intertwined. So it’s not only the communities that are intertwine, but also the economies.One of the things that we have been listening to is the businesses with all of these tariffs that have been happening recently.
So here along the border, it’s very special. We have what we call twin plants or twin-site models where operations between two companies are closely linked with a counterpart facility on the U.S. side and then another one on the Mexican side. So they complement each other.
So let’s say that the binational integration means that any reduction, for example, in personnel production or output in one facility directly impacts operations at the other side – whether in supply chain coordination, inventory floor or turnaround times. So the impact that it’s having – and I’m gonna focus right now on that policy that happened in 2019… So for some of these companies in issue at Juárez in particular, it’s being an operational burden in terms of costs. So they are trying to cope with this increase in wages through a reduction of several other operation costs.
The impact is that on the U.S. side… So if we are talking about these twin plants, the reduction in personnel or production in one plant is impacting the other side. Not always, it’s not necessarily always the case, but it’s been happening.
Well, I wonder, this might be beyond the scope of your economic reporting, but I know in the past that when times are difficult in Mexico… I mean, it makes sense along the border that we’ve seen an increase in immigration to the U.S., but right now with the U.S. policies cracking down so hard, what are we seeing?
Well, I want to say that we are seeing more informal employment in Mexico. And I’m not attributing this to that particular policy, but in general, given all of these disruptions, informal employment reached 55% in December of 2024 in Mexico, and that’s the highest rate since 2023. So they don’t have legal protections or benefits.
So that’s what we are seeing. Those job losses in formal employment are being translated into more informal employment in Mexico.
So that might mean just working for a few dollars, doing something for someone – kind of what in the U.S. we call sort of gig working.
Exactly, yes.
Mayra, I want to ask you about tariffs. If anybody at home has been watching, it’s been hard to keep up with the back and forth. Do we know how that’s impacting manufacturing and trade between the U.S. and Mexico?
Of course. What we are seeing is that businesses are stockpiling imports ahead of tariffs and tariff uncertainty.
We are seeing an uptick in terms of trade – in particular, imports. And what’s been happening is that there’s an anticipated production, increase in production from Mexican maquiladoras and manufacturing industries to export these commodities that they usually… Maybe, let’s say, if they send those goods in over the fall, they are trying to think ahead of these tariffs and increase the production so that they don’t face these tariffs.
