Whatever economic revival may be developing in the United States and elsewhere, it isn't doing much for Mexico's struggling manufacturers.
The government said on Thursday that industrial production was down again in February, by 1.8 percent from February 2001. It has now been more than a year since the sector showed any significant growth.
The report had been anxiously awaited by analysts, who had hoped for signs that Mexico had begun to emerge from a recession that has destroyed some 450,000 jobs over the last year. But though the figures were not as bad as January's -- they showed a slight increase in output month to month -- they nonetheless offered little grist for broader optimism.
And that may spell political trouble for President Vicente Fox, who promised to build employment, not watch it wither.
Manufacturing is a dwindling source of jobs in the United States but remains crucial in Mexico, where factory employment peaked in June 2000 and has since fallen 4.3 percent, a sharper decline than any other sector.
Much of the decrease has come among the maquiladoras, plants that import duty-free components for assembly into products for re-exporting; most are owned by foreign multinational corporations.
The maquiladoras have been a powerful engine of job growth in areas near the American border, and they employed 1.2 million workers in mid-2001. Since then, 240,000 maquiladora jobs, or one-fifth of the total, have been lost.
Positive signs elsewhere in the Mexican economy, like three consecutive months of export growth and a rise in total investment, had prompted hopes that manufacturing might soon turn the corner, though few analysts expected industrial production to shoot up in February. So far, those hopes have been disappointed, suggesting that greater forces are at work than month-to-month shifts in the climate.
In some ways, Mexico is a victim of its own success. The high demand for factory labor created by the maquiladora plants in their salad days drove wages up to the point that companies focused primarily on cheap labor began abandoning Mexico for countries like Guatemala and China. Some 350 maquiladora plants have shut down in the last year. Many of those that remain have invested in more sophisticated manufacturing and created more skilled jobs, but they employ far fewer workers overall.
Both employment and productivity in the maquiladoras began to decline in February 2000 and fell steeply after the Sept. 11 terror attacks, when demand from the United States contracted sharply. Few analysts are optimistic that an economic upturn will restore the maquiladoras to their former vibrancy any time soon.
Also working against a manufacturing revival is the Mexican peso, which has remained surprisingly strong against the dollar, driving up production and energy costs, compared with weak-currency countries.
"I think international companies have determined that Mexico has become too costly," said Rogelio Ramirez de la O, a prominent economist in Mexico City, "and that's why they're moving."
Analysts say that Mexico will be able to maintain its competitiveness in high-end manufacturing jobs, like electronics and heavy machinery, but will continue to lose low-end textile jobs.
Cities on both sides of the Mexican-American border are feeling the pinch of the downturn in the industrial sector. For example, Nogales, Arizona, developed a symbiotic relationship with Nogales, Sonora, just across the border, where the population grew rapidly as maquiladora plants were established there. Many of the Mexican workers would cross the border to do their daily shopping.
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