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Looser Trade Rules, Cheap Labor Fuel Texas-Mexico Border Boom

Economy: Businesses and workers flock to La Frontera. Three of 10 fastest-growing U.S. metropolitan areas are in this region.


LAREDO, Texas — As Julio Madrigal surveys his hometown, the now-bustling Gateway to Mexico, he wistfully recalls the past, the endless fields of mesquite brush, rows of snow-white onions and hunting pastures roamed by scrappy wild pigs.

"It was a whole different kind of community," says the 52-year-old native of Laredo.

Today, the onion fields are covered with houses, and the hunting grounds are home to the brand-new Texas A&M International University, where Madrigal heads the department of psychology and sociology.

Mesquite still rustles in the torrid South Texas wind, but Madrigal wonders for how long.

"Look at all the brush out here. It's beautiful," he says. "You come back in three years, and there will be no brush."

Today, La Frontera--the once-sleepy Texas-Mexico border--is awakening.

A metamorphosis is occurring all along the 700-mile stretch of the Rio Grande Valley from Brownsville to El Paso.

Looser trade restrictions and an abundance of cheap Mexican labor have lured more businesses and manufacturers to both sides of the river.

Over the last five years, the Texas side has become home to three of the 10 fastest-growing metropolitan areas in the country, the towns of Laredo, McAllen and Brownsville.

And if projections are correct, the Texas border has only begun to boom.

State demographers cite natural growth, spawned by a young population and high birthrates, as the primary cause of the population explosion. But Laredo City Manager Peter Vargas cites another factor: trade with Mexico.

More than one-third of all U.S. trade with Mexico is transported through Laredo.

"That's really spurred the population growth," Vargas says.

Laredo has swelled from 133,239 residents in 1990 to about 170,863 today.

The upswing started in the late '80s with the General Agreement on Tariffs and Trade and has continued with the North American Free Trade Agreement, Vargas says.

"We're very adamant that NAFTA has helped," he says. "We see it here on the border because it's very visual, whereas in other parts of the country, it's going on, but they just don't see it and so they don't understand it."

The growth is indeed visual. From the tractor-trailers clogging the city's three international bridges to the sounds of machinery working to expand the interstate highway and the ballet of cranes erecting still more buildings, development can be seen and heard all around.

Marina Sukup, director of Laredo's planning department, ticks off a shopping list of projects: New department stores are coming, more hotels are opening, construction on a fourth international bridge starts this year, and the hospitals are on "a building marathon."

In McAllen and its sister city to the south--Reynosa, Mexico--197 new companies opened and 45 businesses expanded in the last eight years, creating more than 50,000 jobs in both cities, said business consultant Michael Blum.

McAllen City Manager Mike Perez and others credit the expansion of the maquiladora industry in Reynosa for the economic development. Maquiladoras are foreign-owned assembly plants along the border that use cheap Mexican labor to make products mostly for export back to the United States.

From 1989 to 1994, Reynosa led all of Mexico in maquiladora construction, employment and production, according to the U.S. Federal Reserve Bank of Dallas. There are 126 such plants in Reynosa, employing about 50,000 people.

Although based in Mexico, maquiladoras directly impact the economy on this side of the border, Perez says.

For example, while most workers in the Reynosa plants live in Mexico, most of the managers reside in McAllen. Perez estimates about 6,000 plant managers travel each day between the two cities.

"The manager builds a house, he buys a car. There's a positive spinoff," he says. "For every three or four jobs in Mexico, you have one job that is created over here."

The industry also has greatly impacted the Mexican side. While McAllen's population has grown 25% since 1990, to about 479,783 people, Reynosa has nearly doubled.

City officials estimate the current Reynosa population is about 550,000. They, like their counterparts in McAllen, track the growth to maquiladoras.

Mexicans living in the country's interior have flocked to the border to find work, particularly since the 1994 peso devaluation, says Elsa Gutierrez, Reynosa's director for education, culture and sport.

"They came because of the maquilas, and they haven't been slowing down," Gutierrez says. "That's a magnet for sure."

The hope of eventually migrating to the United States also lures people to the border, she says.

"Living next to such a powerful country--economically as well as politically--attracts a lot of people from the center," she says. "Over 60% really come with the hopes of crossing over. Some of them make it, some of them stay."

Manuel Hernandez has chosen to stay, for now. He is one of the 50,000 Mexicans employed in a maquiladora. He earns just $5 a day at a textile factory, but says he is happy to have a job.

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