Arizona Firms Look South

Ruben Aguilar has been with Fender since it started operations in Mexico. A college graduate, Aguilar has risen through the ranks to production manager overseeing electronics final assembly.

There is no doubt in his mind what Fender's maquila has done for Mexico.
"It's good for us, for our families, for our community," he says. "It's good for our hearts."

Empalme, Sonora
Ten years ago, President Ronald Reagan awarded Phoenix entrepreneur Karsten Solheim the "E" Award for Export Expansion.

Solheim's company, Karsten Manufacturing Corp., was exporting Ping golf clubs and accessories to more than 60 countries and was a shining example of a small American business developing an international clientele.

Today, Karsten Manufacturing is not only exporting Ping gear worldwide, it is exporting Phoenix jobs to Mexico.

Faced with intense competition and weakening sales growth, Karsten is in the process of transferring 250 jobs--about a quarter of its work force--from Phoenix to a maquiladora in Empalme, a city of 80,000 located about 650 kilometers south of Phoenix.

Like many American companies whose competitors use low-cost, foreign labor, Karsten was faced with a difficult choice: Shift jobs out of the country or lose significant sales, possibly endangering the company.

Karsten enlisted the assistance of a Tucson maquiladora shelter company, Offshore International, to help it set up operations in Mexico. Karsten began transferring its golf bag manufacturing operations to Offshore's maquila industrial park earlier this year.

Karsten now has about 40 Mexican workers sewing golf bags in a 26,000-square-foot warehouse. There is plenty of room for expansion at Karsten's new Mexican operation called Bolsas de Golf.

Ruben Whitten, Karsten's manager for new product development, hopes the maquila will allow Karsten to produce a better golf bag at a much lower cost.

"We will become better across the board because of this," he says.
Shifting jobs to Mexico, Whitten says, was not an easy decision for Karsten, which has a history of promoting from within and taking care of loyal employees.

Whitten, for example, started as a maintenance worker in the early 1980s and weaved his way up the corporate ladder. When he unveiled his fluent Spanish, he was given the task of setting up the maquila.

But first, Whitten says, he had to take care of the Phoenix employees that would be out of jobs.

"Fortunately, about half of the workers were full-time, and half were temps," he says, adding that many of the full-time workers found other jobs within Karsten.

Next, Karsten hired Jose Luis Garza to manage the day-to-day manufacturing operations in Mexico. Garza, a former maquila manager for luggage manufacturer Samsonite, keeps busy training workers on industrial sewing machines.

"The training process is huge," Garza says during a May tour of the facility. "We have to teach the workers how to see."

Not that the workers are blind, but Garza wants the employees to be able to sense when a product is built correctly. Right now, he spends a lot of time simply making sure workers know what to do--let alone mastering what they are doing.

Dressed in casual attire, the workers appear relaxed but focused. The factory area is spotless and well ventilated, with comfortable lighting. An employee lounge adjacent to the factory floor contains a refrigerator and two microwave ovens. Workers leave the production area one at a time to take rest-room breaks without seeking supervisor permission.

Most of the work force lives in Empalme, and many ride their bikes to Offshore's industrial park, which has a child-care center and a medical clinic. Offshore provides transportation to workers who live in Guaymas, about 15 minutes north.

Whitten, who is black, grew up in Calexico, California, a small border town across from sprawling Mexicali. He developed tight bonds with Mexico and has an innate understanding of the culture.

"I'm completely comfortable here," he says, which is not always the case for American blacks in Mexico, where racism is prevalent.

Karsten, he says, conducted extensive research before selecting Mexico. Whitten says he and other Karsten employees were amazed at the conditions in overseas factories. In Vietnam, he says, workers considered themselves lucky to have jobs that paid 10 cents an hour.

"Asian prices are cheaper," Whitten says. "But Mexico is closer."
Whitten wouldn't say what the Mexicans sewing Ping golf bags are paid. Technically, the workers are not Karsten employees. Offshore International hires the work force and sets the pay for each employee. Karsten pays Offshore a flat rate. Wages for such work typically would be less than $1 an hour.

No company wants to be seen as exporting American jobs to Mexico, Whitten concedes. But he believes the issue over jobs leaving America for other nations needs to be widened.

"Is it a question of creating jobs, or creating jobs in the United States?

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