Border factories brace for the unknown

»If you sleep on a memory foam mattress, chances are good that its fabric cover was made here in a small factory in this desert border town on the westernmost edge of Texas.

Well, here and over there, across the Rio Grande in Ciudad Juarez, a Mexican city where pieces of fabric cut in El Paso are stitched together and shipped back across the border. The supply of cheap labor in Mexico has fueled the rise of manufacturing plants dotting the border known as maquiladoras.

The journey of this mattress cover, from El Paso to Ciudad Juarez and back, illustrates the far-reaching tentacles of free trade and its impact on the border economy and across the United States. It’s a journey now fraught with tension as President Trump moves to renegotiate — or even unilaterally withdraw the country from — the 23-year-old North American Free Trade Agreement that has allowed maquiladoras to flourish but that Trump

and some Rust Belt communities blame for the loss of U.S. manufacturing jobs.

Perhaps no one knows the complex implications of trade agreements better than a family whose prosperity and company profits were built on their promises. MFI International is a U.S. textiles manufacturing firm that has operated on the border for three decades. Now, in a moment of uncertainty and flux, the tweaking of any trade deal will change the foundation on which the company runs as well as the economic fates of two cities that are inextricably linked.

“We are in the desert where things don’t look that green, but what makes our area very fertile is our people on both sides of the border who work in the manufacturing industry,” said Cecilia Levine, who, along with her husband and son, owns MFI International. “Every job in Mexico produces jobs in the United States.”

Altering NAFTA could raise another complexity — the higher prices likely to follow would make U.S. companies less competitive against manufacturers overseas.

“Stopping NAFTA doesn’t stop the flow of goods coming in from China,” Levine said.

NAFTA, which Trump has called “the worst trade deal in history,” set the foundation for the current economic ecosystem in border towns by allowing companies in the United States to send raw materials to their plants in Mexico for assembly and import the finished product back to the United States — generally without paying duties.

The result for consumers: finished goods at a lower price.

On a recent morning in an industrial park on the eastern outskirts of town, rolls of bound cloth waited to be inspected and processed by the 100 or so workers in MFI’s El Paso plant.

Once the pieces for the mattress cover are cut, they are loaded onto semi-trucks bound for Ciudad Juarez, where workers earning less than half the salary of their U.S. counterparts sew the pieces together.

Cecilia Levine used to cross the U.S.-Mexico border four to six times each day.

She started manufacturing plus-size fashion in Ciudad Juarez with a six-person plant in 1986, seeking to take advantage of a previous customs rule that allowed U.S. materials to enter Mexico duty free as long as the manufactured products were exported back to the United States. Within a couple years, her factory had grown to 260 workers.

Then a single mom, she recalled her daily routine of piling her three young children in the car and driving from their El Paso home over the bridge to Ciudad Juarez to open the factory by 6:30 each morning before schlepping them back to El Paso in time for school. Her American children grew up in the factories, doing their homework, learning to sew and driving forklifts.

Shortly thereafter, she met Lance Levine, who had just moved his vacuum cleaner filter factories from New York and Illinois to El Paso and Ciudad Juarez to better compete with the Asian market. He was expanding manufacturing to include other goods. She snagged a contract away from him to make slippers, and they fell in love. She sold her company and joined his, as the chief of operations.

Maquiladora employment in Mexico grew 86 percent in the first five years after the onset of NAFTA, according to the Federal Reserve Bank of Dallas. MFI expanded the number of workers in its El Paso and Ciudad Juarez plants.

Economists say NAFTA has benefited the United States overall and that raising tariffs would risk sparking a trade war and wreak havoc on the manufacturing supply chain. Slapping a 35 percent import tariff, as Trump has threatened with Mexico, would be “bad for growth, bad for business, bad for jobs,” said Caroline Freund, senior fellow with the Peterson Institute for International Economics in Washington.

Others are more supportive of the Trump administration’s attempt to renegotiate NAFTA. Raising the requirement for parts originating in North America would encourage foreign companies to locate production plants in North America and prevent “free-riding imports” from China and elsewhere, said Scott Paul, president of the Alliance for American Manufacturing.

MFI currently imports about 20 percent of its cloth from Asia because it’s cheaper than domestic cloth.

Still, Lance Levine said, finished goods are arriving in the United States from China at a lower cost than the materials themselves. Unless the United States increases tariffs on those finished products, U.S. manufacturers would still lose, Levine said, because renegotiating NAFTA to raise the percentage of materials sourced from North America would result in higher priced mattresses made in the United States and Mexico.

Already, MFI produces some “Made in the USA” mattress covers completely assembled in El Paso for mattress companies who request them — at a higher cost.

“If my products were to become more expensive, I guarantee you my clients are going to buy where they can get equal products at lower cost,” Levine said.