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The Export Elite Rises in Mexico

Dollar-earning entrepreneurs and their workers are riding a boom while the rest of the nation languishes. This economic gap represents both promise, peril for country.


AGUASCALIENTES, Mexico — For Alejandro Alvarez, owner of a Levi's factory, these are the best of times. With his profits soaring, the entrepreneur has bought a new house, packed off his son to a Texas boarding school and thrilled his wife with a European holiday.

Ricardo Magdaleno is optimistic too. As factories busily add extensions, the construction executive has rehired all 40 workers he laid off during the economic crisis.

Julio Villanueva, a night-shift mechanic at the Nissan plant here, is cheered to see new employees and more overtime. "You feel a bit more secure," he said.

As Mexico emerges from its worst recession in 60 years, a new elite is emerging--people like Alvarez, Magdaleno and Villanueva. Call them Dollar Mexicans.

They are part of the country's export boom, turning out ever more cars, clothes and televisions for U.S. consumers. An insignificant group only 15 years ago, they now produce one-fourth the country's output--and are leaping ahead at Asian-style growth rates.

But if they are living the best of times, most of their countrymen are still living the worst. Peso Mexicans--those who produce goods for local consumers--are barely scraping by.

Little noticed outside Mexico, the split between the Dollar and Peso Mexicans represents one of this country's greatest difficulties.

The Dollar Mexicans have emerged as a large enough force to keep social peace, analysts say. And they could eventually lead Mexico into an era of strong economic growth and higher living standards.

But they are still a minority--and will probably remain so for several years. Many analysts are concerned that in the meantime, Mexico's historic gap between rich and poor is being significantly widened and the country becoming increasingly polarized. The question is whether the Dollar Mexican economy can grow fast enough to bring the rest of the nation along with it and avoid a political backlash that could reverse Mexico's direction.

"There are two different economies. One . . . is growing fast. But it doesn't have the capacity to create the jobs or growth to pull the rest of the country along," said Luis Rubio, director of the Mexico City think tank CIDAC.

Said Alejandro Valenzuela, a senior Finance Ministry official: "You could call it a tale of two countries."

To get a look at Mexico's new elite, consider Aguascalientes, a central city of 600,000 with a tiny core of Spanish colonial palaces and mile after mile of whirring factories.

In the past two years, foreign exports from the city and its suburbs have nearly doubled. While Mexico's economy withered 6.2% during the worst year of the crisis, Aguascalientes' output barely dropped.

"We bet very strongly on the opening up of foreign trade," said Otto Granados Roldan, the state governor. "The results are clear."

Look no farther than Alvarez's assembly plant, or maquiladora. Women furiously jam denim into sewing machines, turning out 50,000 pairs of Levi's and Gitano jeans a week bound for bedroom closets from Glendale to Scarsdale. Alvarez's laundries "stone wash" tens of thousands of other pairs for local plants.

When the peso crashed in late 1994, Alvarez's services became cheaper in dollar terms, enabling him to sell more. He's hired 600 new employees--part of a job explosion in clothing factories here.

"The crisis helped us," boasted Alvarez, 42, who sports a Ralph Lauren sweater and works at a desk decorated with golf knickknacks.

'A Different Mexico'

But Alvarez's success isn't just due to the peso's plunge. It represents the radical change wrought by free trade. Until the economy opened to the outside world in the mid-1980s, many Mexican firms displayed all the entrepreneurial flair of a Soviet potato collective.

"When we began our business, we told our people, 'This is a different Mexico. We have to change,' " Alvarez said.

That meant providing extra training and more-up-to-date machines, and insisting that shipments be timely. Alvarez's workers wear blue jackets emblazoned with the logo: "Quality is not an accident."

"We have seen a marked improvement" in quality and efficiency, said Levi's spokesman Vada Manager.

But Mexico's exporters now stretch far beyond the maquiladoras. There are the big cement, chemical and steel industries centered in Monterrey in the northeast. There are powerhouse multinationals like General Motors and Chrysler. And there are more than 10,000 Mexican firms exporting everything from evening gowns to frozen broccoli.

Even as Mexico has suffered an economic meltdown, these companies have quietly been working a revolution. In five years, productivity in Mexican manufacturing has soared 35%, according to the Central Bank. The exporters, of course, aren't the only efficient industries; but they are the most obvious symbol of the country's emerging modern business sector.

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