Maquiladoras have to calculate costs, effects of the coronavirus
The coronavirus pandemic has forced factories along the border and the transportation companies that service them to adapt, adding expenses that impact their bottom line.
Gustavo Farell, owner and cofounder of Cesar-Scott Inc., said he always had considered the option of having a production site in El Paso in case of any bridge closures or halt at the company’s factory in Ciudad Juárez, Mexico.
But the wire harness and cable manufacturer hadn’t seen a need to do so until this year when COVID-19 regulations hit the Borderland.
“You want to have a backup plan,” Farell said. “What prompted us this time was that I never imagined that we would actually shut down operations in Mexico, and not just ours, several companies did. That’s when I made the decision that we had to start producing some things here in the U.S.”
In June, maquiladoras in Juárez restarted production at limited capacity.
Even the small ramp-up made an immediate difference for factories on both sides of the U.S.Mexico border, but COVID-19 has created long-term effects on the way Borderland businesses operate.
In response to reduced staff capacity on production floors, companies in Santa Teresa, N.M., had to add a third shift, said Jerry Pacheco, president of the Border Industrial Association.
“The challenge was to keep people safe in production,” Pacheco said. “But it wasn’t like you just flip the switch and everybody’s back online.”
The interconnected industries mainly have been affected by the changing business cycle caused by the temporary shutdown of factories at different times on each side of the border, said Tom Fullerton, chairman of the Study of Trade in the Americas at the University of Texas at El Paso.
“All those interconnections cause repercussions when one sector on one side of the river either accelerates or decelerates,”
Fullerton said.
The adjustments maquiladoras had to go through to reduce the spread of COVID-19 might need to be considered in the long term, Fullerton said.
For Farell and other companies, it meant following COVID-19 regulations to keep employees in their warehouses, transportation sites and administrative offices in El Paso and southern New Mexico safe, while also following a different set of rules for their factories in Juárez.
The purchase of personal protective equipment, constant cleaning, staff reductions and screenings have added a significant cost to production in his company, Farell said.
“Is (COVID-19) going to change the way we do business? It has already, and I think that is going to continue through the end of the year.”
Transport firms hit
Staff transportation companies in Juárez still are struggling to recover from factory closures. Now, with workers returning to factories, they are finding different problems.
In order to follow state guidelines, companies have been doubling the number buses in circulation, adding to their expenses.
“I think a lot of companies are going to go broke,” said Matias Prieto, president of the Union Nacional de Transportistas de Cambio in Juárez.
Prieto said companies barely are breaking even, but they still are expected to pay taxes.
Transporte de Personal Select must keep bus capacity to a maximum of 50 percent, which is 22 to 26 people.
“It’s necessary to reincorporate the (maquiladora) industry, but at the end it is us who are moving the workers and we need that support from the companies and the state government,” said Carlos Solis, operations manager for Transporte de Personal Select.
Solis said there currently is a bus shortage due to the need to limit capacity while still being able to transport the increasing number of workers in the past weeks.
The cost of adding more buses and gasoline use grew by 40 percent for the company, which serves 14 maquiladoras in Juárez, Solis said.
When nonessential factories closed in April and May, close to 2,500 drivers stopped working, Prieto said.
All the drivers who walk into the headquarters of Transporte de Personal Joselyn are screened. They then pass through sanitation tunnel, where they are sprayed with a disinfectant.
The drivers clean the interior of the buses and then take their seats behind plastic shields and start their morning routes. All drivers are required to wear face masks, and each passenger undergoes a temperature check.
When the first shift is dropped off at the factory entrance, drivers disinfect the buses again to get them ready for the second shift.
Since March, the company estimates it has spent close $15,500 on personal protective equipment, cleaning supplies and sanitation equipment, operations controller Oscar Castaeda said,
“We saw it as a financial investment but also to protect ourselves and our employees,” Castaeda said.
For Transporte de Personal Joselyn, the investment also meant adapting more trucks to get them ready for circulation and hiring more drivers.
The changes have been complicated, Castaeda said, but overall, the company has been able to reactivate at full capacity without letting any of its 345 employees go.
The company only has seen one confirmed case of COVID-19 in a worker.
“This (pandemic) is going to be on the long term,” Castaeda said. “I like to think that, ultimately, this came in and made our security and sanitation processes even more effective.”