Arizona Firms Look South

Ensenada, Baja California
The road to Ensenada is a jewel.
The four-lane tollway cuts free of the industrial labyrinth of Tijuana and turns west toward the Pacific Ocean, where it clings to cliffs jagging into the surf. Snaking its way down Mexico's northernmost coast, every turn reveals another expansive, soft vista of sea, sky and earth.

Known mostly to Americans as a port of call for cruise ships, Ensenada has become a hot spot for maquiladoras. More than 75 maquilas operate in the city, including 16 that have more than 100 employees.

Just 100 kilometers from the border, the city is large enough to provide a stable work force but is not overwhelmed by a huge influx of job seekers from Mexico's impoverished interior. The slums dominating other maquila cities like Nogales and Tijuana are few and far between.

One of Ensenada's most successful maquilas is Scottsdale-based Fender Guitar Company. The venerable manufacturer of electric guitars and amplifiers has flourished since opening its maquila 12 years ago. Not only has the company created more than 700 jobs in Ensenada, the high quality of instruments made there is allowing Fender to greatly expand its factory in Corona, California.

"Ten years ago in Mexico, we had five employees," says Kurt J. Hemrich, senior executive vice president. "Now we have 716. Ten years ago in Corona, we had 40 people. Now, we have more than 800."

And more jobs are coming to both cities. Fender is nearing completion of what will be the world's largest guitar manufacturing center in Corona. The Ensenada plant is continuing to expand as Fender steps up production of a new amplifier series.

The privately held company nearly went under in the mid-1980s after its former owner, CBS, pulled the plug midway through a five-year turnaround plan. Fender had lost much of its once dominant market share to Asian and Japanese guitar companies.

A handful of Fender executives purchased the company from CBS and set out to re-establish Fender as the world's leading guitar manufacturer. A key element in rebuilding Fender was to find a low-cost, high-quality assembly plant.

After scouting guitar manufacturing centers in China, Japan and elsewhere, Fender settled on Mexico. The decision has proved to be fortuitous for both Mexican and American workers.

"We took business from Japan and Asia, brought it to Mexico and created jobs in the U.S.," says Bashar Omar Darcazallie, Fender's senior vice president in charge of Mexico manufacturing.

Fender eased its way into maquila manufacturing. It began with an operation set up in an old Ensenada church to coil guitar strings. Next, Fender added amplifier cabinet manufacturing. By the early 1990s, the maquila started manufacturing about 25 guitars a day.

Production expanded throughout the '90s. Fender's maquila now builds 600 guitars a day, in 20 models, including its famous Stratocaster and Telecaster axes. The maquila produces a number of Fender's "signature" model guitars, including the popular Jimmie Vaughan Tex-Mex Stratocaster.

Vaughan threw a 1996 concert for maquila employees at one of Fender's twice-a-year employee fiestas.

"When I came down and saw the people working, it really got to me," Vaughan says in an interview on Fender's Web site. "Over the past 20 years, I've basically had any guitar I wanted, and sort of forgot what it takes to make one. They were all doing such a good job down here, and it made me grateful."

Fender's progressive management style has earned it a loyal work force--30 percent of the workers have been at the maquila more than five years; total turnover for this year through mid-May was only 7.8 percent, well below the industry average.

While Fender isn't the highest-paying maquila in Ensenada--wages range from 350 pesos ($41) to 750 pesos ($88) a week for assembly-line work--it offers its employees numerous additional benefits, including a 401(k)-type savings plan, low-cost loans, athletic programs and free medical care.

The company is working with Mexican housing authorities and private contractors to build employee housing south of Ensenada. Fender plans to provide workers with no-interest loans for the down payment for the one-, two- and three-bedroom homes. The company expects to begin the first phase of the 750-home project this year.

Perhaps more important than the tangible benefits is the attitude Fender projects to its Mexican work force.

"I don't make a distinction between myself and the guys that clean the floor. We try to be correct and fair to the people working here," says Darcazallie. "This results in improved communication."

Fender employees work flexible hours, usually five days a week, between 7 a.m. and 5 p.m. If they fill their quotas, they can leave early.

On the day in May that New Times toured the facility (unescorted by Fender executives), many workers knocked off at 3 p.m.

Unlike most maquilas where workers never see the finished product and might not even know what they are making, Fender employees see and hear what they are building every day. In a nation where the guitar has deep cultural significance, it's no surprise that one of the most coveted jobs is actually playing the finished product to check for defects.

Fender has turned over nearly all of the maquila operation to Mexicans. There are only four U.S. citizens on staff. The rest, including middle managers, computer operators, electricians, engineers and accountants, are Mexican. Many were trained in nearby technical schools or the local university.

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