Maquiladoras evolve, fuel Texas job growth

TEXAS – Mexico’s maquiladora industry is evolving from simple assembly into the production of sophisticated technology and other high-value goods, creating higher-paying jobs and generating more business and employment for Texas border cities.

The maquiladora industry began in the mid-1960s, by allowing American companies to set up manufacturing facilities in Mexico — and to import the machines and materials needed for their operations duty-free — in exchange for employing Mexican nationals.

"Most of the manufacturing takes place in Mexico, but Texas Border cities such as McAllen, El Paso, Brownsville and Laredo have grown significant service-based economies," said Roberto Coronado, assistant vice president and senior economist at the El Paso branch of the Federal Reserve Bank of Dallas.

Modern maquiladoras manufacture auto parts, computers and servers, televisions, refrigerators, mobile devices and medical instruments. In the last ten years, the number of trucks importing goods into the U.S. has remained relatively stable, but the value of those goods is two to three times higher than before.

McAllen’s job count rises by 6.6 percent for each 10 percent production increase in Reynosa, according to the Dallas Federal Reserve.

El Paso employment rises by 2.8 percent for a similar increase in production in Ciudad Juárez. Equivalent figures for Laredo and Brownsville are 4.6 percent and 2.2 percent, respectively.

Today, the transportation, personal service and business service sectors are the fastest-growing sectors in Texas Border cities, and the influx of jobs has led to significant increases in per capita income.

"The gap that has always existed between U.S. and Border per capita income levels has been closing up," said Coronado. In 2010, for instance, El Paso’s per capita income rose to $28,365, 71 percent of the U.S. level — reflecting a considerably narrower gap than 2000’s 62 percent.

See the Maquiladora Production & Texas Jobs map in the article provided by the Federal Reserve Bank of Dallas.