The colonial interest in precious metals so dominated the mining industry that it was not until well after Mexico had achieved its independence that thought was given to minerals other than silver and gold. When it was, it was chiefly by foreign investors from Britain and the United States who had both the capital and the technology to undertake such ventures, and then the spectrum of mineral exploitation widened to include such metals as copper, lead, zinc, and iron, as well as fuels such as coal, petroleum, and natural gas. Porfirio Diaz' "give-away" of minerals to foreign investors was meant to be remedied by the Constitution which revolutionary Mexico drew up in 1917, because in that document the sub-soil riches of the country were reserved for the Mexican state. Yet, with American intervention in the Revolution so fresh in Mexican memories, no president of the country dared enforce the Constitutional provisions until more than two decades later -- and then only after cautiously reassessing President Roosevelt's "Good Neighbor" declaration made in his augural speech of 1933 in which he promised that the United States would no longer intervene in Latin American affairs. Finally, in March of 1938, after a long series of strikes against the foreign oil companies, Lázaro Cárdenas took the momentous step of nationalizing the oil industry, but not, of course, without stirring angry emotions in Washington, London and the Netherlands and raising the specter of American troops being sent in to protect U.S. interests. The timing of Cárdenas move was critical, because in that very month -- only six days earlier -- Adolf Hitler had occupied Austria and was beginning to rattle his saber in the direction of Czechoslovakia. As a result, neither Roosevelt nor the U.S. War Department could be distracted by Cárdenas when an ominous game for much higher stakes was just beginning in Europe, especially when confronted by Cardénas’ vow to blow up the oil fields if Marines were landed on Mexican soil.
Thus, while Mexico looks back to 1821 to celebrate its political independence from Spain, it looks back to 1938 to celebrate its "economic independence" from foreign capitalists, for it was in that year that the country's nationalized oil company, PEMEX, began its operations. Nevertheless, the American, British, and Dutch oil barons did everything they could to prevent the sale of Mexican petroleum to Latin America and to prevent independent American oil companies from marketing Mexican oil in Europe, as well as to cut off all foreign loans to Mexico. The latter move made it impossible for PEMEX to buy machinery and replacement parts and forced the country to cut back its exports by more than one-third. The U.S.-led oil embargo against Mexico continued until 1942, and even after the war the Americans were so reluctant to help the country that, ironically enough, it was from a defeated Germany that much of the capital came which enabled Mexico to modernize its oil industry. Only much later, when they felt the pinch of the Arab oil embargo of 1973, did Americans once again turn with "kindly eyes" toward Mexico and its burgeoning oil industry.
But it was not only oil and natural gas that were nationalized, for a spate of other takeovers of mining enterprises has subsequently taken place as well, among them Sidermex, Industria Minera de México, S.A., and ASARCO, S.A. Since the signing of the NAFTA agreement in 1994, however, moves have been made to amend the Mexican constitution to permit foreign investment in mineral extraction once again, but it remains to be seen how far the country is willing to go in this direction. In any case, it is quite clear that business interests, both in Mexico as well as in the United States and Canada, would dearly love to return to the days of Porfîrio Díaz if they could.
Because Mexican official statistics differentiate between the extraction of minerals as "mining" and the extraction of petroleum and natural gas as a branch of "industry" we shall look first at the former. In terms of present-day mining activity in Mexico, the category with the largest single value of production is the quarrying of building stone, sand, gravel, and clay, which made up 58.3% of the country's mineral output in 1993. Quite predictably, the major areas of such production were the largest metropolitan regions where the construction industry was the most active. Thus, the Federal District accounted for no less than 11.6% of the country's output, followed by the state of Mexico with 10%, Jalisco (the Guadalajara region) with 9%, Veracruz with 7.5%, and Nuevo Leon (i.e., Monterrey) with 6.4%.
The production of non-ferrous metals was the second-largest branch of the industry, contributing some 18.3% to the total value of its output. The state of Sonora, dominated by the copper industry, led with 35.3% of non-ferrous metal production, followed by Zacatecas at 17.4%, the latter still largely made up by silver. Chihuahua was a close third with 16.6%, its wealth being derived from a variety of minerals of which silver, lead, and zinc are the most important. A secondary group of producers, all located on the northern plateau, were led by Durango with 7%, San Luis Potosí with 5.8%, Guanajuato with 4.8%, and Hidalgo with 4.6%, again chiefly dominated by the output of silver.
The mining of coal and graphite rank as the third largest branch of mining in terms of their annual value of production and are overwhelmingly concentrated in two states. Coahuila, the only real source of bituminous coal which Mexico has, totally dominated the industry with 89.6% of its output in 1993, whereas Michoacán, just coming into its own as the center of a revived Mexican iron and steel industry, accounted for 8.7%. Increasingly this proportion may be expected to rise as Coahuila's declines, now that the steel industry in Lázaro Cárdenas is coking imported Colombian coal on an ever-larger scale.
Similar shifts may confidently be expected in the mining of iron ore, a branch of the industry that Coahuila dominated with 40% of the output in 1993. Colima ranked second with 31.5% and Michoacán third with 13.2%, and Jalisco followed in fourth place with 10.4%.
In the realm of non-metals, a variety of very different minerals come into play. The most important of these is salt, produced in vast evaporating pans along the coast of Baja California Sur and exported from Isla Cedros just off the state's northwestern tip. Barite and fluorite fall into this category as well, and Nuevo Leon produces 18.2% of all non-metals, whereas neighboring Coahuila accounts for another 15%. It also includes sulfur, of which the state of Veracruz accounts for virtually all of the country's production from deep wells utilizing the Frasch process, as in Texas and Louisiana. This one product makes up some 16.1% of the branch's value of production.
The energy branch of Mexico's industrial sector accounted for just under 10% of the value of all industrial output in 1993. Naturally, its geographic distribution is totally dependent on the presence of slightly domed sedimentary rock of Mesozoic age, a condition that exists in Mexico only along the coast of the Gulf of Mexico. Geologists who first discovered the requisite formations for oil and gas along the Texas coast (Spindletop's dramatic gusher in 1901 was one of the first of these developments) quickly realized that the same formations continued southward into Mexico and not too surprisingly it was the area around the present-day city of Tampico that initially became the "oil boom" region of Mexico. Soon thereafter even larger deposits were located farther south in what came to be called the Faja de Oro, or "Golden Lane" field that centered on the boomtown of Poza Rica (literally, "Rich Well"). Although the requisite formations are broken in the south of Veracruz state by the volcanic block known as the Tuxtla Mountains, they resume to the east in Tabasco, northern Chiapas, and Campeche. Indeed, as prospecting technology improved, it was soon appreciated that even vaster reserves of both oil and gas were to be found offshore in the Gulf of Mexico, and there many wells have been drilled to depths exceeding 3600 meters (11,800 ft). By 1996, fully 75% of Mexico's crude oil and 38% of its natural gas was coming from offshore wells, chiefly off the coast of the state of Campeche. The state of Tabasco was in second place, producing 20% of the country's crude oil and 32% of its natural gas. Although Chiapas produced only 2% of the Mexico's petroleum in that year, its output of natural gas had already grown to more than 15%.
The Federal Electric Commission (CFE) was the creation of President Lázaro Cárdenas in 1937 and its original mandate was much like that of the Rural Electrification Administration launched by President Roosevelt in the United States. It was intended to extend the reach of electric service to rural areas of Mexico and "to produce, transmit, and distribute electric energy" at fair prices. As this program was gradually implemented and the role of government in the energy sector increased, it was decided to totally nationalize the industry in 1960. The objectives of the decree issued by President López Mateos were "the rational use of natural resources, even development of the country, and the contribution to raising the standard of living".
Beginning in 1992, however, the Mexican Congress approved changes in the structure of the industry allowing the participation of private companies in the generation of electricity. Nevertheless, the opening to private investment remained extremely limited and the government continued to retain majority control. Early in 1999, when President Zedillo put forward new proposals to attract private investment into the Mexican electric industry, fully 49% of the planned investment in the sector during the period 1996-2000 had already been advanced by private interests and represented almost the entire generation budget. However, while giving private investors great benefits, the new initiatives left the CFE with the majority of the risk, and also with long-term payment obligations that it will not be able to meet. Thus, further private investment will seek not only to broaden the participation of private firms but also to have them assume a greater part of the responsibility and risks involved in all aspects of the sector's operations -- including electric short-falls and blackouts.
Opponents of privatization blame the CFE's problems on years of insufficient budget outlays and government negligence and corruption, and decry Zedillo's proposal as both "alarmist" and "false". They cite it as simply another example of "cow towing" to U.S. and international capitalists rather than constituting a practical necessity.
In 1996 Mexico produced a total of nearly 152,000 GWh of electricity, of which hydroelectric plants generated some 21% and the remaining 79% came from thermal electric plants. Chiapas alone produced over half of Mexico's hydroelectric energy (50.6%) in that year, followed by Guerrero with 15.4%. Michoacán ranked third with just under 8% and Puebla fourth, with just under 5%. In thermal electric output, Veracruz was the largest producer with 18.4%, followed by Coahuila with 14.7%, Hidalgo with 10.6%, Colima with 7%, and Baja California Norte with 6.2%. Of the electricity emanating from Veracuz, just over a third (35.6%) comes from Mexico's one nuclear power plant situated on the coast of the Gulf of Mexico about 50 km (30 mi) north of Veracruz city.
In 1991 just under 23% of Mexico's gross national product was generated in manufacturing. When this branch of the economy is examined geographically, it is found that the Federal District is the largest single industrial center in the country, accounting for 25.8% of the GNP generated by manufacturing, with the adjacent state of Mexico adding a further 17.4% to the total. Thus, more than 40% of Mexico's total industrial output stems from the Mexico City metropolitan node. The state of Nuevo Leon, with Monterrey as its hub, contributes 9.4% of the country's industrial output and Jalisco, centered on Guadalajara, ranks third with 6.8%. Next in importance are Veracruz with 4.8%, Coahuila with 3.9%, and Puebla with 3.4%. Taken together, these seven political entities produce over 70% of the industrial output of the Mexican republic.
Within the industrial sector, the largest branch is that dedicated to the manufacture of chemicals, rubber, and plastic goods, accounting for more than one-third of Mexico's total industrial output. In second place is the food, beverage, and tobacco industry which produces just over one-quarter of the country's manufactures by value, followed by machinery and equipment in third place, with just under one-quarter of Mexico's industrial output. A more distant fourth place is held by textiles and clothing which produces some 10 percent of the country's manufactured goods.
In 1993 the Federal District accounted for 31.1% of output of the country's chemical industry, followed by the state of Mexico with an additional 24.1%. Nuevo Leon (i.e., Monterrey) was in third place with 7.6% and Veracruz close behind with 7.5%, followed by Jalisco (i.e., Guadalajara) with 6.5%. Within the industry, the locus of production varied widely according to whether a particular branch was raw material-oriented, as in the case of petrochemicals, or more market-oriented, as in the case of pharmaceuticals. In basic petrochemicals, for example, only ten states in all were involved, with Veracruz alone accounting for about two-thirds of the total output (65.8%). Tabasco ranked a poor second with 7.8% and Chiapas came in third with 6.4%.
In the production of basic chemicals otherwise, all but five of Mexico's states were involved. The largest producer was the state of Mexico (27%), with Nuevo Leon in second place (15.4%), Veracruz third (13.1%), the Federal District fourth (7.8%), and Guanajuato fifth (7.6%).
Three states dominate the fertilizer branch of the chemical industry: Veracruz leads with 44.7% of its production, Michoacán comes in second place with 17.9% of its output, and Querétaro follows up with 12.9%.
In the synthetic resin and artificial fiber branch, the state of Mexico is in first place with 22% of the country's production, Tamaulipas follows with 16.3%, and Nuevo Leon ranks third with 12.9% of its output. Querétaro and Jalisco round out fourth and fifth places with 11.8 and 11.4% of Mexico's production, respectively.
Pharmaceutical production is overwhelmingly concentrated in the Federal District (63%) and the adjacent state of Mexico (20.4%). An even stronger geographic concentration exists in the soap, detergent, and cosmetic branch, with 67.8% of all output emanating from the Federal District and 20.3% more coming from the state of Mexico. The production of rubber products is more dispersed, with the Federal District accounting for only 35.8% of the total and the state of Mexico for 20.4%. Jalisco contributes 12.1% to the total, Guanajuato 6.1%, and Querétaro 3.1%. However, in the production of plastics we see the major urban areas asserting their dominance once again with the Mexico City core contributing 58.6% of the total (broken down between the state of Mexico with 31% and DF with the remainder), the Monterrey node in Nuevo Leon making up 10.4%, and the Guadalajara node in Jalisco adding 8.7%.
Eight different companies, three of which are North American, three German, and two Japanese, carry on the production of automobiles in Mexico. The biggest market by far is in the sub-compact area where the largest producers are Volkswagen, General Motors, Chrysler, Nissan, and Ford in that order. In the compact size, General Motors leads in production, followed by Nissan and Volkswagen. In the luxury class, Honda is the largest producer, followed Mercedes Benz, General Motors, and BMW. The principal producers of sports vehicles are Nissan, General Motors, Volkswagen, and Chrysler. In 1996, of the nearly 164,000 vehicles produced, 47.9% fell in the compact class, 47.6% were sub-compacts, 2.3% were sport utility vehicles, and 2.2% were de luxe models.
In the same year, four firms were engaged in the production of light trucks, six produced heavy trucks, and four others specialized in the production of buses. In the light-truck category General Motors ranked first, Ford second, Nissan third, followed by Chrysler in fourth place. The builders of heavy trucks were led by Diesel National, Kenworth, Mercedes Benz, and General Motors, with Ford and Chrysler making smaller contributions. Altogether about 75,000 light-trucks were built in 1996 and just under 6000 heavy trucks. Four Mexican-national firms were responsible for producing just over 600 buses in that year.
Geographically, the industry is primarily concentrated in the Mexico City metropolitan area, with the DF accounting for 25.3% of all production, the state of Mexico for 23.6%, Coahuila for 8.3%, Puebla for 7.7%, Morelos for 6.8%, and Sonora for 5.6%.
Tracing its origins back to colonial times, the Mexican textile and clothing industry remains largely where it was initially founded. Based primarily on cheap female labor, the colonial obrajes were notorious for their long hours and poor working conditions, differing only in degree from the sweatshops of places like New York or Hong Kong. With their heavy dependence on labor, it is not surprising that they are most highly concentrated in the Federal District (30.1%) and the adjacent state of Mexico (17.2%), but also in the Guadalajara region of Jalisco (10 %), and in Puebla (5.9%). The principal detached outlier of the industry is in the Monterrey area of Nuevo Leon that accounts for 6.4% of the country's total output of textiles and clothing.
The Mexican iron and steel industry -- Latin America's oldest -- got its start in 1910 in the northern state of Nuevo Leon. It was one of the few places in the country where usable deposits of bituminous coal (located at Sabinas Hidalgo) were found in close enough proximity to iron ore of sufficient richness (situated at Las Golondrinas) to warrant building a steel mill. The site chosen was Monterrey, at the base of the pass opening up onto the plateau and having access to a river for cooling water. As it turned out, this site also worked to advantage when the larger and richer deposits of iron ore found at Cerro del Mercado, outside of Durango some 615 km (380 miles) to the west, came into production, a railroad having built been up through the pass and across the plateau to serve as the industry's vital link. Subsequent explorations revealed that a similar juxtaposition of raw materials existed in the adjacent state of Coahuila with coal coming from several mines in the Sabinas-Nueva Rosita area of the north and iron ore coming from Sierra Mojada on the state's western edge. In this instance, the rail links came together at Monclova, and thus it was here that a secondary center of blast furnaces and rolling mills was situated.
Although other, more market-oriented steel fabricating centers were built elsewhere in the country, especially in the Federal District, Monterrey and Monclova, despite their "offside" location remained the principal sources of Mexican pig iron and steel as late as the 1980's. By then it was apparent that the days of Monterrey, at least, were numbered, because the iron ore deposits of Cerro del Mercado were fast being depleted. This led the Mexican government to undertake a major geographic realignment of the country's iron and steel industry. Monclova naturally would continue in operation as long as it was economically feasible to do so, but if Mexico were to have a modern steel making facility it would have to be located where the richest and largest reserves of iron ore were situated, inasmuch as there were no other coal deposits of sufficient size and richness to be developed. This caused the planners to look to the coastal area of the state of Michoacán where the sizable reserves of Las Truchas had been known for some time. Moreover, the second richest iron ore deposits were scarcely more than 250 km (150 mi.) up the coast in the state of Colima, within easy access by cheap water transportation. Two things missing in this equation were coal and access to national market, for the nearest railhead lay some 80 km (50 mi.) away.
Fortunately, the development of major coal reserves in Colombia on the Guajira peninsula had begun just a few years earlier, so access to high-grade coal, again by cheap water transportation, was now possible. The only disadvantage, of course, was that it would have to be paid for in foreign currency. To help offset some of the need for coal, it was therefore decided to construct two major hydroelectric dams on the Balsas River. The larger one, at Infiernillo, sends its surplus power into several of the adjacent states, whereas the bulk of the output of the smaller dam at La Villita goes to the ovens and rolling mills at the newly constructed port city of Lázaro Cárdenas. As far as providing a connection to the national market, this was accomplished by constructing a new heavy-duty railroad up onto the plateau, although much of the finished steel also moves to market by truck.
In 1993, the latest year for which data are available for the iron and steel industry on a geographic basis, the shift from the Monterrey region to Michoacán had not yet been completed, so the former is "over-represented" and the latter is "under-represented" compared to what present-day figures would show. In that year, Coahuila still ranked first with 27.5% of all output by value, with Michoacán in second place with 24.6%. Nuevo Leon still had 17.7% of the country's production, whereas Veracruz, Puebla, and San Luis Potosí followed in fourth, fifth, and sixth places with 7.2%, 6.7%, and 5.9% respectively.
During the 1980's, reacting to overtures from the United States, Mexico decided to "capitalize" on two of its "comparative advantages" as a potential industrial nation: its vast reservoir of cheap labor and its geographic proximity to the largest and most affluent market in the world. The Mexican government agreed to provide fiscal incentives to American manufacturers to locate their factories in the northern border areas of Mexico, permitting easy access to raw materials, parts, and components shipped in from the United States so they could be assembled by cheap Mexican labor and then re-exported back to the United States. (Of course, it wasn't long before other countries seeking entry into the American market sought and received the same incentives, including Japan and South Korea.) Although the jobs in most cases were routine assembly-line or sweat-shop positions, to unemployed Mexicans even the low wages they offered were more than they could expect to find anywhere else in their country, and in short order migrants began swelling the towns of the border states looking for jobs, housing, and public services. The first were easier to find that the latter two, so Mexico's frontier cities -- already amongst the most depressed in the nation -- became even more crowded, blighted and polluted than they already were. Yet, ironically, despite the abominable conditions under which most of their residents are obliged to live, the northern border states of Mexico have become the wealthiest region of the country, relatively speaking.
From a geographic point of view, of course, there is little basic difference in the maquiladora arrangement than that which had been envisioned for the industrial development of white supremacist South Africa. An integral part of the Apartheid policy involved locating factories on boundaries between "black homelands" and "white areas", so that the black workers were able to enter the factory through one door each morning and return to their shanty-towns on one side of the line each evening while the white managers could enter the factory through another door and return to their villas on the opposite side of the line. Such it is along the U.S.-Mexican border today -- a line which separates one nation with an average annual per capita income of $25,000 from another whose living standard is scarcely one-tenth as great -- the only border in the world where the "First World" rubs shoulders with the "Third World".
In 1997 nearly 900,000 Mexicans found employment in more than 2700 factories built along the U.S. border and in that year the total value of the goods they produced amounted to more than 70 billion pesos (almost 10 billion dollars). The state of Baja California Norte had more than one third of all the factories (34%), followed by Chihuahua with 15% and Tamaulipas with 12%. Coahuila came in fourth place with 9%, Sonora ranked fifth with 8%, and Nuevo Leon was sixth with 4% of the plants.
In terms of employment, Chihuahua had the most (27%), Baja California Norte 22%, Tamaulipas 15%, Sonora and Coahuila each about 9%, and Nuevo Leon less than 5%. The same order prevailed in terms of value of production, as it did in proportion of wages paid as well. When the maquiladoras are examined on a city-by-city basis, Ciudad Juarez with 283 factories, 190000 workers, and over 15 billion pesos in production is the unquestioned leader. Tijuana has more factories (ca. 600), but on average they are smaller and employ a total of 136,000 workers, but with a total production valued at 11 billion pesos it ranks a comfortable second-place. Four other cities vie for third place in terms of the value of their output: Matamoros with just under 4 billion pesos, Reynosa with 3.9 billion, Mexicali with 3.6 billion, and Chihuahua 3.4 billion. The latter city, obviously not on the U.S. border, is one of several interior locations within Mexico that have been selected as maquiladora sites, among the chief ones being Torreón in Coahuila, Guadalupe and Monterrey in Nuevo Leon, Guadalajara in Jalisco, Mérida in Yucatán, and both the Federal District and the state of México. Indeed, although all parts of the country are eligible to be included in the maquiladora program, foreign manufacturers have seen fit to make sizable investments in only 16 of Mexico's 32 political entities, again demonstrating how critical the access to supplies and market remain in making such decisions.
Among the various branches of industry represented by the maquiladora plants, the most numerous factories in 1997 were those engaged in producing textiles and clothing (720). Factories producing electric and electronic materials and accessories numbered 440 and those producing furniture totaled 325. In terms of workers engaged, the electric and electronic materials and accessory factories had more than 225,000 employees, those manufacturing transport equipment had a labor force of over 176,000, and textile and clothing workers numbered almost 172,000. Measured according to the total value of their output, the electric and electronic materials and accessory industry was in first place with over 18 billion pesos in 1997, transport equipment occupied second place with nearly 15 billion pesos, and textiles and clothing came in third at just over 9.5 billion pesos.