UB: "LETS' RIDE THE BI-NED MAQUILA ROLLER COASTER"

By Juan Montoya
On it's face, the announcement of a $300,000 grant from the U.S. Economic Administration to United Brownsville to analyze how Brownsville can compete with suppliers to the maquiladoras across the Rio Grande seems like a plausible idea.
They're there. They use manufactured parts shipped in from elsewhere in the United States and foreign countries to to put assemble everything from automobile parts to electronic components.
Why not, asks the United Brownsville boosters, have some of those parts manufactured here, so that instead of merely being a pass-through location Brownsville can manufacture the products they need?
This would make sense only if we overlook a most critical issue. The manufacturing companies located along the border are here for one crucial reason, and one reason only: to save money on labor and boosts their profits.
By espousing an economic development approach that supports U.S. manufacturers to remain on the other side of the river, we are in fact, placing ourselves on the Mexican side of the river as providers of cheap manufactured goods. We will be gearing the entire thrust of our development based on being competitors with other manufacturers around the world by providing these runaway industries with cheap goods. Brownsville, in effect, will become a maquiladora on this side of the river.
The reason that these former U.S. manufacturers earned the name of "runaway" industries is because after the initial boom in U.S. manufacturers relocating from the Midwest across the river on Matamoros, Reynosa, Rio Bravo and the length of the U.S-Mexico border, some learned thaey could get labor at half the cost in other places in the Third World and in places like China and India and "ran away" from Mexico.
Guess what? They're still running. But not hat far. They're leaving the border because of security issues and because the labor costs and costs of development are much lower in the interior of Mexico. Much has been made of some of these "runaways" coming back from these locales and returning to the interior of Mexico.
Is this the star that the mavens over at United Brownsville and Imagina Matamoros would have us hitch our wagons to?
This sort of thinking convinced institutions like the Chamber of Commerce, the Brownsville Economic Development Council, the Greater Brownsville Investment Corporation, the Port of Brownsville, the University of Texas at Brownsville (now UTRGV)  and other state and federal agencies to place all their economic development golden eggs in that basket.
The in-bond plant program is a facet of the foreign investment law of Mexico which allows for the creation of Mexican companies that import component parts or other materials into Mexico for assembling or processing with Mexican labor. The finished product is then exported. The in-bond plant concept started as a border development plan by Mexico in 1965, the legal framework was established in the in the 1971 and evolved into a fully institutionalized into a formal governmental policy in 1983.
The nut of the legislation is that Mexico benefits from increased employment and foreign currency exchange, while the United States manufacturers receive the benefits of the lower labor costs available in Mexico not available in the United States. The Mexican tax program allowed imported components to be shipped into Mexico, assembled for export products and then shipped out and therefore the companies could avoid very high import tariffs.
Many U.S. manufacturers – companies like RCA and Sylvania – fled the Midwest and other regions of the county to flock to the border. One of this was the old Saginaw Steering Gear Corp., which used to employ thousands of workers in Saginaw, Mich. and sell its steering gear components to General Motors.
Saginaw Gear was owned by Troy, Mich.-based Delphi Corporation, one of the larges maquila plants along the border, and was one of the companies that moved to Matamoros.
When it left Saginaw to "runaway" to Mexico, it left thousands unemployed and – along with other General Motors suppliers – established plants outside the United States. According to industry journals, "Steering," as it is now called, has 18 manufacturing plants, 16 customer support centers and six regional engineering centers in the United States, Mexico, Brazil, Italy, France, Germany, Poland, India, Australia, China, Korea and Japan. North America brings in the largest share of revenue, but Europe and Asia-Pacific are growing fast.
These jobs that were performed by U.S. workers will never return to this country. It makes no economic sense. Why pay a U.S. worker $13 to $25 an hour when maquilas in Matamoros average $5 a day? Who know what they pay in China? Logically, it would have to be less to compensate for the cost of transportation to the maquilas and then to U.S. markets.

Maquiladora Jobs By The Border

About 62 percent of the Maquiladora industry's jobs are in Mexican states along the border with the U.S.

United Brownsville would have Brownsville "capitalize" on this "opportunity," and fully invest its assets and economic development dollars to literally "chase the maquila dragon."
Toward that purpose they have "commissioned" publicly-funded study after study to steer the direction of the area's economic development to service these industries. They managed to convince the Brownsville Public Utility Board, the Port of Brownsville and the Greater Brownsville Incentives Corporation to pay  for Robin McCaffrey of Needham, McCaffrey and Associates to chant the maquiladora mantra the tune of $454,592.02 in their "Brownsville Strategic Infrastructure and Land Management Plan."
They came up with something called the Bi-National Economic Development Zone (BiNED) and named a Coordinating Board to be made up by equal Representation from United Brownsville, Imagina Matamoros, and the City of Harlingen in order to promote and plan the development of the Bi-Ned Zone.
That, in turn, generated another outlay of another $185,000 in public funds for San Antonio-based Jacobs' Engineering to identify 10 of the "economic clusters" in that plan and to "suggest" ways which they can be implemented. Thus was the BiNED Coordinating Board to be made up by equal Representation from United Brownsville, Imagina Matamoros, and the City of Harlingen in order to promote and plan the development of the Bi-Ned Zone.This latest EDA $300,000 grant will also be used to "conduct research and an analysis" over the next 18 months to see how the city's economy can be geared toward supplying the maquiladoras across the river with manufactured parts.
If you add the initial $1 million cost of the original "Imagine Brownsville" comprehensive plan, the annual $200,000 in public funds that local entities of Brownsville have paid United Brownsville to "study" and "analyze" since its inception.
These entities – as we have pointed out before – are: the City of Brownsville, the Greater Brownsville Incentives Corporation (GBIC), the Brownsville Independent School District, the Brownsville Navigation District, the Brownsville Public Utilities Board, the Brownsville Community Improvement Corporation (BCIC) and the University of Texas-Brownsville/Texas Southmost College."
Since 2009, this group and their willingly co-opted public officials have gone to the public-treasury well to strong-arm eight public entities for their $25,000 "annual membership" payment.
From 2009 to 2012 the public had shelled out $810,000. That doesn't include the $200,00 from 2013 and the $200,000 to be collected for 2014.  All told, the taxpayers of Brownsville will have shelled out $1,210,000 to United Brownsville for the privilege of having a troika accountable to no one "implement" their dubious "plan."
That troika is made up of none other than IBC President Fred Rusteberg, UTB President Julieta Garcia and banker-cum-academic Irv Downing and form what they called the United Brownsville Coordinating Board and. They use the annual $200,000 in "membership" contributions to hire an executive director (Mike Gonzalez, former mayor of Kyle) to do their bidding.
The United Brownsville board consists of people from the eight entities and set about to do business. That business was the hijacking of elected and representative government handed over on a silver platter to these bunch to do as they saw fit with the people's money.
The people's investment of $1 million for the initial Imagine Brownsville plan, 1.2 million in annual membership dues to United Brownsville, the $454,592 for the comprehensive study, and $185,000 to suggest how to implement the economic cluster "plan," in addition to the EDA's $300,000 equals to $3,149,592 without one job so far to show for it.

The $1 million for Imagine Brownsville went to United Brownsville Carlos Marin's Ambiotec Group, the $454,492 wen to Robin McCaffrey of Needham, McCaffrey and Associates, the same company that United Brownsville CEO Mike Gonzalez used to form a comprehensive plan for Kyle, Texas, when he was the mayor there. And the local operations manager for Jacob's Engineering which got the $185,000 contract is none other than Oscar Garcia Jr., the son of United Coordinating Board member Juliet Garcia. Garcia used to be the operations manager for Su Clinic Familiar, a facility run by Marin's wife, a doctor.
Garcia was the vice-chair on the PUB when it approved the $454,492 award to Robin McCaffrey of Needham, McCaffrey and Associates, but resigned from the board just in time to latch on to the $185,000 contract for his new employer Jacob's Engineering.
As if all this self-dealing wasn't bad enough, we have allowed this group to hijack the direction of our economic and social development. Neither our nor I can fire Rusteberg, Garcia or Downing if we don't agree with their policies. They answer to no one. They are accountable to no one. Instead, they have been allowed to funnel and attract public monies in our name to this dubious economic development approach based on the maquiladoras.
Very few people on this side of the river benefit from these plants. Instead of warehousing their goods here, they store them in warehouses in the ports of Altamira and Tampico, Mexico, to lower their costs. By the same token, the much-vaunted industrial park touted by BEDC as a way to attract industry remains empty. Baesa, the company that wanted to import spices from Mexico, process them, and sell them to U.S. customers never came. Why should they? Labor in Monterrey easily undercuts local labor.
However, maquildoras do require financial service sin the United States (IBC's Rusteberg's bailiwick), accountants, some engineers, and real estate. In the case of engineers, the UTB quickly moved to produce industrial engineers, a type of "tecnicos" that amount to nothing more than old-fashioned "efficiency experts" who get paid to show the maquilas how to speed up the production line and pay workers less.
Is this the type of future that this city wants for itself and its residents? If we accept this approach, we will be relegated to nothing more than scrambling for crumbs from the maquiladora industry and hope that international market forces don't send them packing somewhere else where they can get their products produced more cheaply than we can.