January 29, 1999
By Elliot Spagat
QUERETARO, Mexico - The city that housed the rebels who toppled Spanish rulers nearly 200 years ago is as good a place as any to witness Mexico's latest battle cry. Five industrial parks are under construction. Big factories are doubling capacity, while small garment shops are sprouting amid rows of houses.
Manufacturing has reshaped Queretaro's economy in the same way it transformed Mexico's. Low wages, modern technology and a border with the United States has made Mexico an industrial powerhouse and its manufacturers an early winner under the North American Free Trade Agreement.
Manufacturing exports totaled about $110 billion last year, up from $40.4 billion in 1993, the year before NAFTA began. The surge has helped Mexico become the world's 10th-largest exporter and the United States' second-largest trading partner behind Cana-da.
Queretaro, a city of 750,000 people 200 kilometers (125 miles) north of Mexico City, has lured many of the industries that have prospered most under NAFTA. Automotive and auto parts exports to the United States are up 165 percent; electronics, 147 percent; garments, 324 percent; and chemicals and plastics, 82 percent.
``The biggest growth in the economy has come from NAFTA,'' said Armando Rivera, the Queretaro state economic development secretary. ``Why? Costs. What you pay (in the United States) by the hour is what you might pay here for the day.''
Tremec, an auto parts company and one of the city's biggest employers, is making 1,400 manual transmissions a day, up from 600 last year and 300 in 1995.
It counts only one Mexican company among its 20 customers. General Motors Corp. accounts for about 20 percent of its sales.
Tremec's work force has nearly doubled to 1,850 in two years, thanks largely to the purchase by its owner Desc S.A. of an auto plant in Muncie, Indiana.
Desc closed the Indiana plant and in only 15 months hauled more than 700 machines across the border, needing 12 days to move each one from Muncie to Queretaro.
Desc never thought about keeping the Indiana plant because it considered its workers inflexible, said Alberto Alvarez, Tremec's director of human resources and purchasing. ``The problem with Indiana was a mental rigidity,'' he said.
Tremec's machine operators get paid an average of 142 pesos - about $14.20