Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, December 11, 1994 TAG: 9412140009
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: TOD ROBBERSON THE WASHINGTON POST
DATELINE: SAN PEDRO DE LAS COLONIAS, MEXICO LENGTH: Long
``They ran me out of town,'' Salinas recalled recently. ``They threw tomatoes at me.''
Today, San Pedro represents one of the success stories that Mexican supporters of the North American Free Trade Agreement repeatedly cite. Employment is up, commerce is up, American-owned manufacturing plants are moving in, and hope and optimism are in the air. When Salinas returned here in September to say goodbye as his six-year presidential term came to a close, the streets were so packed with supporters - tens of thousands of them - that his motorcade was barely able to squeeze through.
As NAFTA nears the first anniversary of its implementation, Latin American and Caribbean leaders are pressing for inclusion in the same trading bloc that appears to have vastly broadened Mexico's economic horizon and opened a new range of employment possibilities for its people.
The experience of San Pedro, situated in an isolated ranching and cotton-growing region of northern Mexico's Coahuila state, helps explain why the rest of Latin America is so eager to climb aboard the free-trade bandwagon.
Salinas was received here with such animosity during his 1988 campaign because the town was sinking deeper into poverty, with an unemployment rate of 70 percent, according to Mayor Gabriel Sanchez Garza. Most of the 115,000 inhabitants in the area surrounding San Pedro lacked indoor plumbing, clean drinking water or electricity. The main roads into town were two-lane, heavily potholed highways that were shunned by truckers coming south from the area bordering Texas. Commerce and industrial activity were scarce.
After taking office, Salinas ordered construction of a $23 million, four-lane highway to San Pedro. While campaigning for NAFTA, Salinas administration officials lobbied heavily for American manufacturing companies to open plants here, arguing that the high unemployment rate meant labor could be secured cheaply. Salinas later opened a $1.5 million industrial park and established a technical college that trains San Pedro students how to operate and repair computers, robotic equipment and industrial machinery.
Three American companies, including the Sara Lee Inc. subsidiary that manufactures Hanes underwear and sportswear, have since opened factories here.
``I think we benefited more than any other town in the country'' from the Salinas administration's trade policies, Sanchez said. Nevertheless, by the time NAFTA was implemented last Jan. 1, the town still had an unemployment rate of up to 50 percent, he said.
``NAFTA was what really changed everything,'' said Alberto Gallardo, human resources manager at the Hanes factory. ``Before the treaty, we were severely limited on what we could produce and what we could import. The rules were very strict. Now we can produce just about anything we want. Everything is easier.''
Gallardo said that, as a direct result of NAFTA, employment at his plant has jumped from 150 workers a year ago to 900. Hanes predicts employment of about 1,200 people here by 1996 as the plant expands into a variety of new products.
Peter Bruder, a garment manufacturer whose 400-employee plant produces Rigoletto blue jeans and clothing for J.C. Penney and Target, said he opened his factory in San Pedro in the early 1990s in part to get away from major corporations setting up operations nearer the U.S. border. Instead, he is competing with Hanes for skilled tailors.
Virtually all of those employed at the two plants worked previously as cotton-pickers, both here and as migrant workers in the United States, Bruder and Gallardo said. This region's labor-intensive cotton industry has been hit hard by competition from highly mechanized U.S. growers and by a downward trend in prices in recent years, exacerbating the local unemployment problem.
But the economic infusion of the manufacturing plants has helped put money in the pockets of local cotton farmers, enabling them to buy seed, fertilizer and insecticides. Sanchez said he expects a bumper cotton harvest next year.
``Some of our producers already have contracts to export to the United States and Japan,'' he said. ``Clearly, it's going to take some time to change things here. But the situation is changing for the better.''
Nationwide, the effects of NAFTA have been harder to gauge. The pact is only in the preliminary stages of what is to be at least a 10-year phase-in. For example, American banks only received permission in October to begin competing in Mexico. American telecommunication firms will not be able to take advantage of Mexico's lucrative long-distance telephone market until 1997. Labor and environmental side accords to NAFTA still are being ironed out. A special labor-arbitration panel created under NAFTA so far has heard only one case, which the panel threw out.
The dire predictions of anti-NAFTA activists such as Texas billionaire H. Ross Perot - who warned last year that the accord would produce a ``giant sucking sound'' of U.S. jobs heading south - simply have not panned out, said U.S. Ambassador James Jones. ``The statistics look excellent in terms of job creation. We have actually benefited more than the Mexicans, in general,'' he said.
Preliminary economic data suggest a positive economic trend for Mexico since NAFTA's implementation, Salinas said in his State of the Nation address last month.
``NAFTA has created unprecedented conditions for the growth of our exports. Initial data confirm this: Between January and August of 1994, total Mexican sales to the United States grew 22 percent over the same period'' in 1993, Salinas said. Exports of manufactured goods rose 27 percent during that period, he added, while exports to Canada grew 36 percent.
Still, Mexico continues to import far more than it exports - particularly in its trade with the United States. From January to August, imports totaled $51 billion, while exports amounted to $39 billion.
Investment analysts agree that so far NAFTA has not fulfilled the high expectations that foreign investors had for Mexico. In large part, they say, political instability more than economic uncertainty has caused foreign companies and investors to stay away.
by CNB