STEVE INSKEEP, host:

Just across the Rio Grande from El Paso, Texas, sits the deadliest city in Mexico. It's called Ciudad Juarez. The two cities are tightly linked. The economic downturn in the United States is hurting the hundreds of assembly plants just across the border. A drug war has killed about 1,400 people in Juarez this year alone, frightening away many tourists from the United States. As part of our series on the U.S.-Mexico border, NPR's Jason Beaubien reports on the changing economic relationship between Juarez and El Paso.

JASON BEAUBIEN: Juarez is a tough city. Residents even point out that on a map it looks like a vulture with its beak stuck under New Mexico, its craggy back pushed up against El Paso, and its claws sunk deep into the Mexican state of Chihuahua. And things have gotten even tougher in Juarez, as two of the nation's most powerful drug cartels battle for control of smuggling routes into the U.S.

Cartel hit men regularly execute their rivals in public, assassinate police, and string up threatening messages from highway overpasses. They even last month strung up a decapitated corpse over a roadway. This city of roughly two million people has also been hard hit by the economic slowdown north of the border. Just weeks after the U.S. stock market's October collapse, factories here laid off tens of thousands of workers.

(Soundbite of women speaking Spanish)

BEAUBIEN: In a scene that was rare just a year ago, women had been standing all day outside a Juarez maquiladora trying to get jobs. Sandra Corea had been working without papers in Albuquerque for five years. She came to Juarez to visit family and now finds it's nearly impossible to cross back into the States.

Ms. SANDRA COREA: (Spanish spoken)

BEAUBIEN: You get accustomed to a prosperous country, she says, and then it's really hard to return to a poor one. Corea was making $50 to $60 a day in Albuquerque. Now she's competing with several hundred people in Juarez for a job that will pay $60 a week. All along the border from Tijuana to Mexicali to Matamoros on the Gulf Coast, maquiladoras are the economic backbone of Mexican border cities. They crank out auto parts, television sets, and medical supplies destined almost exclusively for the U.S. And with far fewer labor regulations, they began laying people off at the first signs that the American economy was sliding into recession.

Fifty billion dollars' worth of imports and exports cross between Juarez and El Paso each year. Some of this obviously is coming from the interiors of the countries, but the two cities' economies are closely linked. Alan Russell runs a shelter company called TECMA in El Paso that helps U.S. companies set up manufacturing and assembly operations in Juarez. He's standing in one of his three warehouses on the El Paso side of the border.

Mr. ALAN RUSSELL (Co-Founder and President, The TECMA Group): All of this material is either inbound to Mexico, or it's finished goods coming out.

BEAUBIEN: Russell's plants south of the border produce products for 35 U.S. companies. TECMA takes a client's raw materials, assembles them in Juarez, then moves the finished goods back through customs into El Paso. From his warehouses, products are available for next-day shipping anywhere in the U.S. or Canada.

His company straddles two worlds. El Paso is one of the safest cities in America. Juarez is the murder capital of Mexico. Last year, Juarez set a record for homicides with 316. This year the death toll has jumped to more than 1,400 so far. Many people in El Paso are terrified to go across. But Russell says the killings seem confined to the drug trade and haven't affected his business.

Mr. RUSSELL: So far we've never had a shipment delayed or production slowed in any way as a result of that violence.

BEAUBIEN: The cartels have appeared to stay away from the maquiladoras except for a rash of ATM robberies earlier this year in which gang members were ripping the cash dispensers straight out of the factory floors. Russell says TECMA has been affected by the economic slowdown, particularly in the automotive industry. But in the end, he says the downturn may benefit places like Juarez-El Paso as companies look to cut costs without moving too far away from their customers.

Mr. RUSSELL: If I had to pick one spot where I would want to be professionally right now, it would be in the El Paso-Juarez area.

BEAUBIEN: The region has access to the technology, skills, and vast market of the United States along with the low overhead costs of Mexico. El Paso is about half the size of Juarez. Arid mountains rise behind the Texas city, giving the place, at least at sunset, a rugged, laidback Southwestern feel. Juarez lies in the dusty lowlands across the cement embankments of the Rio Grande. Soldiers in Humvees with machine guns stand guard on the Mexican side of the border bridge giving Juarez the tense feel of a warzone.

Bob Cook, the president of the Regional Economic Development Corporation in El Paso, says trade between these two cities is what's driving the El Paso economy right now.

Mr. BOB COOK (President, El Paso Regional Economic Development Corporation): We have over 50,000 jobs that relate directly to trade with Mexico.

BEAUBIEN: Cook, however, says El Paso and other border cities are being hurt by disjointed and what he sees as misguided federal policies on immigration and security.

Mr. COOK: And to give you an example, when we see the threat level go up, you know, when it moves to a new color, we feel that in our retail stores immediately.

BEAUBIEN: El Paso relies heavily on Mexican consumers coming across to shop. And when it's harder for them to do that, sales evaporate. He says the federal government doesn't seem to understand the concerns of people and businesses on the border.

Mr. COOK: Are we building walls, for example, on the border as a homeland security measure, or is it an immigration measure? If it's an immigration measure, it is a failed policy from the beginning because people who are motivated to feed their families are going to find a way to get over walls and around fences.

BEAUBIEN: And across the border in Juarez, people are motivated to leave not just by economics, but by fear. The drug cartels move billions of dollars' worth of narcotics into the U.S. each year. And they also run protection and kidnapping rackets that terrorize the local population. Thousands of people have moved across into El Paso to get away from the violence of the criminal gangs.

Just off the main square in Juarez, on Avenida Lerde, there are rows of small shops selling quinceanera dresses, wedding gowns, party favors, but there's almost no one on the street.

Ms. MONICA RAMOS (Shopkeeper, Gallery Printshop): (Spanish spoken)

BEAUBIEN: At the Gallery Printshop, Monica Ramos and four other women are assembling party invitations. She says the majority of their invites are for customers who live on the other side of the border in El Paso. As the drug war has grown more gruesome and the death toll keeps rising, Ramos says business is off almost 70 percent in the last six months,

Ms. RAMOS: (Spanish spoken)

BEAUBIEN: The ones who do come, she says, come early because they're afraid of the police, the assaults, the robberies. Ramos says her little shop is setting up a Web site so customers in Texas can order invitations online. And just this year, they started delivering their finished product across the border to El Paso to save their clients a trip into this beleaguered city. Jason Beaubien, NPR News, Juarez.

INSKEEP: The series continues tomorrow as we look at the controversy over the border fence under construction in Eagle Pass, Texas. Now, for more on this series, you can go to npr.org where you can look at this interactive map I'm seeing here. It shows the entire border from Tijuana to Brownsville, Texas. And you can see photos along key points on the border.

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