In border cities from San Diego, the largest on the west, to Nogales, to El Paso and Brownsville on the Gulf of Mexico, Mexicans are flooding across the border in record numbers today.
They come not surreptitiously or for illegal work or criminal mischief; they are coming with fistfuls of dollars to sweep our store shelves clean of flat screen televisions, Blue Ray players, digital cameras, computers and Nieman Marcus fashions.
While here, they buy food and drink, visit doctors, stay in hotels, take side trips to the San Diego Zoo and Sea World or up the coast to Disneyland, Lego Land and other tourist attractions.
They spend real money earned from national oil sales to the United States, from cars built by Ford, General Motors, Nissan and Volkswagen plants. Thousands of flat screen televisions are assembled in Tijuana and Rosarito Beach just minutes south of San Diego. Aerospace subcontractors of the largest U.S. companies hum with activity in massive industrial parks of Tijuana, Mexico. That is, companies that survived the great exodus to China ten, twenty years ago.
For a while, it seemed like “Chia” pets would be the only industry left in Baja California, in Tijuana, which the New York Times once called the “Silicon Valley” of Mexico. SONY used to build thousands of brand name television sets in factories all over Tijuana. Two hundred 18-wheel trucks full of SONY televisions were shipped through the border EVERY DAY of the week, Monday through Saturday. But SONY pulled out; China beckoned.
The Los Angeles Times recently published a lengthy article that American firms are returning to Mexico and creating thousands of new jobs like they used to twenty and thirty years ago.
American companies are opening manufacturing facilities every day in Tijuana. It has a large international airport, good roads and trucking facilities, access to San Diego and Los Angeles/Long Beach harbors, rail service from San Diego/Orange and Los Angeles Counties and a highly skilled work force that earns the highest wages of all working Mexicans.
Tijuana has been a boom town many times in the past. 40 years ago real estate developers would come from Mexico City buy land on the city’s outskirts erect billboards selling two and three bedroom tract houses with tiny yards and sell out the entire project without grading the land or building roads. Then water shortages would slow development down then spike up again when the federal government opened up aqueducts from the Colorado River on the east.
Tarpaper shacks covered every square foot of river bottoms and hillsides. Poverty abounded, no? Actually, people were stunned to see brand new pick-up trucks parked in front of those very same tarpaper shacks. Houses couldn’t be built fast enough to satisfy demand. Tijuana streets were paved in “Gold.”
Meanwhile, Mexico passed laws that conformed to American customs duties that allowed American companies to ship raw materials or semi-finished goods to Tijuana where the final products were assembled then returned to the US with customs duties just on the “added value” which meant the cost of the Mexican labor, not on the value of the finished product.
Then companies left for China for cheaper labor. But now that it costs more to manufacture in China than in Mexico, and costs less to ship the products into the U.S., allowing management to exercise real time management of products and designs and labor forces, Tijuana is back; Mexico is back.
At the same time, drug cartel violence along the border has receded and American tourists are returning to Baja California where 250,000 Americans live in oceanfront luxury for a fourth of what it costs just a few miles north in San Diego/Coronado/La Jolla.
Mexico is our third largest trading partner after Canada and China; there is a huge difference between American trade with China and Mexico. China restricts American imports into China and Mexico doesn’t. Mexico buys more from the US than all of Europe, for example.
Mexicans come to shop, to spend money and to enjoy themselves. It helps that the new left-of-center government of the resurrected Partido Revolucionario Institucional (PRI) has increased the Value Added (sales) Tax (VAT) from which the Republic of Mexico derives most of its revenue. Everyone pays when they buy goods and services.
Shrinking birth rates over the past thirty years have contracted the famous Mexican labor surplus, the national population is stabilizing and it is aberrational today to find mothers with 7 to 10 children.
Shrinking labor pools mean higher wages and fewer young men going north for jobs in America. Mexico is growing again.
Other Latin American countries are mired in perpetual poverty, little or no economic growth, lack of free enterprise and in some cases, are failed states run by communists, criminals and/or drug cartels.
Economists generally agree that Mexico is rising fast; they are right. We in San Diego see it every day in our shopping malls.
Contreras’ books are available at amazon.com.