Economy, Drug Wars Hurt Cross-Border Business

Just across the Rio Grande from El Paso, Texas, sits the deadliest city in Mexico — Ciudad Juarez. These two cities are economically tightly intertwined, and the economic downturn in the U.S. is hurting the hundreds of assembly plants just across the border.

Meanwhile, a drug war that has killed some 1,400 people in Juarez this year alone is squashing tourism.

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.

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. Last month, they even strung a decapitated corpse over a roadway.

This city of roughly 2 million people also has been hard hit by the economic slowdown north of the border. Just weeks after the U.S. stock market's October collapse, factories laid off tens of thousands of workers. 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 nearly impossible to cross back into the United States.

"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 is competing with several hundred people in Juarez for a job that will pay $60 a week.

Economic Backbone

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. With far fewer labor regulations, they began laying off people 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 which is obviously coming from the interiors of the countries. But the two cities' economies are closely linked.

"All of this material is either inbound into Mexico or finished goods coming out," says Alan Russell, who runs a shelter company called TECMA in El Paso that helps U.S. companies set up manufacturing and assembly operations in Juarez.

Russell owns three warehouses on the El Paso side of the border. His 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, the 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, and 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.

"So far we've never had a shipment delayed or production slowed in any way as a result of that violence," Russell says.

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 U.S. companies look to cut costs without moving too far away from their customers.

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

The region has access to the technology, skills and vast market of the U.S. along with the low overhead costs of Mexico.

'An Unclear Strategy'

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, laid-back Southwestern feel. Juarez lies in the dusty lowlands across the Rio Grande and soldiers with machine guns stand guard on the Mexican side of the border bridge, giving Juarez a tense, we-are-not-in-Kansas-anymore feel.

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

"We have over 50,000 jobs that relate directly with trade to Mexico," Cook says, adding that El Paso and other border cities are being hurt by disjointed — and what he sees as misguided — federal policies on immigration and security.

"To give you an example, when the threat level goes up — when it moves to a new color — we feel that in our retail stores immediately," Cook says.

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.

"There just seems to be an unclear strategy right now," Cook says. "Are we building walls on the border right now as a homeland security measure or an immigration measure? If it's an immigration measure, it's a failed policy from the beginning, because people who are motivated to feed their families are going to find ways to get over walls and around fences."

Motivations To Leave Juarez

Across the border in Juarez, people are motivated to leave not just by economics, but by fear. The drug cartels not only move billions of dollars' worth of narcotics into the U.S. each year; 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 and party favors, but there's almost no one on the street.

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, business is off almost 70 percent in the past six months, Ramos says.

"The ones who do come, come early because they're afraid of the police, the assaults, the robberies," she says.

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.