Maquila Wages, Sans Slums

Empalme, Sonora
Does a work force content to live in pallet houses while earning $1 an hour sound like the ultimate boost to your company's bottom line?

But are you concerned about dealing with the red tape, cultural differences and logistical maze of moving production to a Third World country?

Worry no longer. A maquiladora shelter company will happily act as the middleman for any American corporate executive who wants a jolt of cheap labor to fatten profits but doesn't want to deal directly with workers who live in slums.

Shelter companies operate maquiladoras for American manufacturers. They hire workers, rent warehouse space, file government papers, negotiate with American and Mexican customs officials and even deliver finished product to American warehouses.

All the U.S. company has to do is hire a manager to run the factory, set up the assembly line, import raw materials and press the "go" button. The shelter company will take care of the rest.

Richard Kean, director of special projects for Offshore International Inc., a Tucson-based shelter company, explains, "We shelter companies from all the slings and arrows of doing business in a foreign land."

For a price.
Shelter companies generally charge American clients a flat fee based on the number of maquila employees and the amount of hours they work. The fee typically ranges between $3.25 and $5.50 per hour, per worker--depending on the number of employees, and the services provided.

That's a substantial markup from the $1 an hour that U.S. businesses operating their own maquilas pay their workers. In addition to the hourly fee, U.S. clients are typically responsible for salaries paid to its American and Mexican executives, freight charges and customs fees.

Offshore is one of Arizona's largest and oldest maquila shelter operations. The company has 6,000 employees working at its 135-acre industrial park about 500 miles south of Phoenix.

It appears to be a lucrative business.
Offshore declined to discuss what it charges customers, but an estimate using industry averages works out like this: 6,000 employees, working 48 hours a week, at $1 an hour will cost the shelter company about $288,000 a week in payroll. If Offshore charges its customers an average of $4 per hour per employee for a week's worth of work, the company will generate $1.15 million in revenue. The shelter company's balance, before expenses, would be $862,000 a week.

Despite shelter companies' significant markups, U.S. businesses still find their services attractive. Offshore says its clients can save $5,000 to $20,000 per employee annually by transferring U.S. manufacturing jobs to its maquila shelter.

Many American companies use shelter companies such as Offshore for startup operations in Mexico. Once U.S. companies learn the ropes, a process that can take several years, they frequently set up their own maquilas.

The 18 companies operating in Offshore's Empalme industrial park range in size from 50 employees to 2,000. During a May interview in his Tucson office, Kean, a former chemical engineer, refused to name Offshore's clients.

"They don't want their names bandied about," says Kean.
His reluctance was baffling since Offshore lists clients on a Web site and in promotional materials. They include IBM, ITT Power Systems, Acoustic Imaging and Data General.

When asked whether any of Offshore's clients are from Arizona, he said no, only to be later contradicted by his boss, Offshore president Paul Karon.

Phoenix-based Karsten Manufacturing Corp. manufactures Ping golf bags under Offshore's maquila umbrella company called Maquilas Teta Kawi.

Kean's reticence to disclose clients is reflective of an industry that doesn't want public scrutiny. Kean and Karon declined to respond to numerous requests to tour the Empalme facility, although New Times later went there at Ping's invitation.

Another publicity-shy Arizona shelter company is Nogales-based Collectron of Arizona Inc., which, after 29 years in operation, is the granddaddy of all shelter operations. Collectron has launched 108 American businesses into stand-alone maquilas, and currently has 25 companies under its wing.

Collectron is encouraging American companies to move farther south, away from the border, where maquilas can take advantage of a captive work force that will accept even lower wages. Workers in rural areas are also less likely to quit.

Like Offshore, Collectron refused to reply to repeated requests to tour its maquilas, and to interview managers and workers.

Collectron also owns a business in Nogales, Sonora, called Sonitronies, which hires and places employees for Collectron clients, who have operations primarily in Nogales.

Sonitronies is well-known to maquila workers, many of whom have filled out job applications at school desks in the lobby under the tight supervision of power-suited executives. The room is sickly sweet with tropical air freshener. A glass suggestion box on a wall is empty.

In May, an impromptu interview and photo session with those executives ended abruptly.

Not only did Sonitronies demand a New Times photographer's film (since the photos were made on private property without Sonitronies' permission, the film was surrendered), the company dispatched a trio of junior execs in a shiny red VW bug to tail the journalists as they walked through Nogales.

The stalking continued for a few minutes before a Sonitronies boss started threatening arrest. Another Sonitronies staffer videotaped the entire encounter on Avenida Obregon, the main drag through Nogales.

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John Dougherty
Contact: John Dougherty