Another Maquiladoraville

San Luis Rio de Colorado, Sonora
There's a weathered wooden sign across the street from an industrial park where maquila workers toil, making clothes, toys and expensive stereo speakers.

Through peeling paint, the sign proclaims this as the future site of 550 dwellings for the maquila workers.

But there are no homes. Beyond the sign, the desert stretches nearly unblemished to the horizon, save for a deserted block building accented with spray paint by the gangs that make this one of the most notorious of border cities--U.S. Drug Enforcement agents call this boom town south of Yuma "Dodge City."

The crumbling block structure appears to be the model home for the phantom housing development.

Once again, a promise for better housing for maquila workers goes unfulfilled.

But that doesn't mean nothing was built.
Just west of Parque Industrial de San Luis, thousands of workers have taken urban development into their own hands and pounded together a neighborhood out of scrap materials. Using cardboard, packing foam, pallets and other cast-off items, they have settled in less than 100 meters from the Arizona border.

Buses from the maquila industrial park ply the dirt roads of the shantytown, taking workers to and from their factory jobs. Kids play soccer in the street. Young men wash their battered Datsun sedans. Women spray water in front of their homes to reduce dust. Teenage lovers walk down the sandy streets.

Life simply goes on.
The slum--the latest in a seemingly never-ending string of slums that spring up around maquila industrial parks--is an embarrassment to the city of 200,000 trying to market itself for major maquila expansion.

"When investors came out and saw the shacks near the industrial park several years ago, officials told them it was part of a film set," says one prominent San Luis civic and business leader.

It wasn't supposed to be this way.
In the early 1990s, German-born Hans Wohlfarth, president of Zollhaus Holding, joined Canadian, U.S., Mexican and Spanish investors in a plan to expand the industrial park and build suitable worker housing. The investment group hired some of Arizona's slickest and smartest business leaders to make it happen.

One of the key players was former Arizona Department of Commerce director Rita Carrillo, who headed the agency under Governor Bruce Babbitt in 1986. In the early 1990s, Carrillo worked for the Phoenix political-consulting firm of Jamieson & Gutierrez, which was also an investor in the project.

Carrillo spent two years negotiating with Mexican authorities.
"What started out as a plan to build a few maquilas turned into a plan to develop an entire industrial and residential community," Carrillo told a Phoenix newspaper in 1993.

Carrillo's investors envisioned a $177 million, 15-year project that would anchor a community of about 250,000 people.

Instead, they got another maquiladoraville.
In an interview last month, Carrillo tells New Times the investment group seemed on track to build the project when she left it in late 1993. She says investors later ran into problems negotiating with the owners of the land, which is controlled by an agrarian cooperative called Ejido San Luis that has more than 200 voting members.

The failure of the housing project hasn't dampened enthusiasm for maquilas in San Luis, where 23 maquilas have generated more than 9,000 steady jobs. The growing industrial base has allowed the city to reduce its dependence on agriculture.

Korean companies have invested heavily in San Luis. Daewoo Electronics de Mexico has about 2,000 employees in three factories, building television and consumer electronics equipment. Daewoo's presence already has lured two of its Korean suppliers to set up operations in San Luis.

Many overseas suppliers for maquilas are shifting operations to Mexico to take advantage of trade rules that will go into effect under the North American Free Trade Agreement. After 2001, all raw materials used in maquilas must originate in the United States, Mexico or Canada, or the finished product will be slapped with stiff tariffs.

The provision is forcing many Asian and European manufacturers that already have maquilas to encourage their suppliers to set up operations in North America. San Luis hopes to capitalize on the influx of maquila suppliers moving to North America.

"This is the time for more growth in the maquilas," says Carlos Lopez Canedo, former president of Maquiladora Association of San Luis Rio de Colorado.

Canedo says housing shortages haven't stopped factories from being built elsewhere, and San Luis is poised to attract the next wave of maquila expansion.

The city has plenty of water, thanks to an aquifer saturated by the Colorado River. The flat terrain eases construction. There are plenty of workers to fill the jobs. And the city has a close relationship with Yuma business leaders, who see the maquilas as a powerful economic development tool.

San Luis also has solved one of the biggest obstacles to growth, a lack of electricity.

For the first time, the Mexican government has agreed to allow a U.S. utility to sell power in Mexico. Arizona Public Service Company reached an agreement last year with Bose Corp. to provide electricity to the Bose maquila in San Luis.

The groundbreaking agreement allowed Bose to triple the size of its plant, adding 176,000 square feet in April 1997.