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.