Ad For Dollar-An-Hour Workers Turned Some Against Nafta

WASHINGTON - Crusty old George Meany, the late labor leader, couldn't have written the ad any better. There, on the pages of World Trade Magazine, a balding, worried boss is rubbing the back of his neck and complaining because he can't find "good, loyal workers for a dollar an hour."

The advertisement, paid for by the Mexican state of Yucatan's Department of Industrial and Commercial Development, doesn't mince words in offering U.S. manufacturers a cheaper place to do business. With little else to sell, the government offered its people. Cheap.

"Labor costs average under $1 an hour, including benefits," reads the ad. "The turnover rate is less than 5 percent a year. And you could save over $15,000 a year, per worker, if you had an offshore production plant here. When the U.S. is too expensive and the Far East too far. Yes You Can In Yucatan."

"Yes You Can In Yucatan" is the answer to the questions posed in a series of ads designed to lure U.S.-owned businesses to one of the most isolated, least-developed states in Mexico. None of the ads displays even a hint of social conscience. Arguably the most offensive has a businessman wondering how he can keep his labor costs low and his own, personal standard of living high.

You guessed it. In Yucatan.

During the 27 months they ran in various trade publications, the ads caught the attention of thousands of U.S. businesses, whose executives called the given phone number to inquire about moving manufacturing plants to that Mexican state. More recently, though, Ross Perot and labor organizations have taken notice, making the Mexican government-sponsored ads the centerpiece of organized labor's campaign to defeat the North American Free Trade Agreement. NAFTA would gradually eliminate most barriers to free trading among the United States, Mexico and Canada, something business groups generally favor. A House vote on NAFTA is set for mid-to-late November, with Senate action to follow.

So effective are they at making labor's case against NAFTA that U.S. Trade Representative Mickey Kantor urged Mexican authorities to pull the ads, which they did, replacing them with ads that extol Yucatan's scenic beauty.

"If you wanted to play to labor's fears, you couldn't have produced a better ad," says U.S. Rep. Mike Kreidler, D-Olympia. "It's a classic case of one hand of the Mexican government not knowing what the other was doing."

But pulling the ads may have come too late. The Clinton administration is fighting what appears to be a losing battle in the House to win support for NAFTA. One member who was on the fence, Rep. Jolene Unsoeld, D-Olympia, fell off this past week on the side of labor. Holding up copies of the ads for other House members to see, she explained her opposition to the trade agreement.

"Keeping wages low is a part of the Mexican government's strategy for attracting U.S. investment," she said. "This isn't anti-Mexico rhetoric. It is the unfortunate truth. A NAFTA that fails to reverse Mexico's policy of menial wages and fails to bolster Mexican labor rights is bad news for their workers and bad news for our workers. It is also one of the reasons why I cannot support this NAFTA."

The irony in the debate over the ads is that they have almost nothing to do with NAFTA. For more than a quarter of a century the Mexican government has run an economic-development program known as Maquiladora. Thus far the effort has resulted in the establishment of more than 2,100 manufacturing facilities. About 85 percent of those are joint ventures between Mexico and U.S.-owned companies, most of which chose to locate their production facilities in states other than Yucatan.

The ads, in essence, are Yucatan's effort to compete with the other, more developed Mexican states. The producers of the ads say they weren't so much aimed at an American business trying to decide between South Carolina and the Yucatan as they were aimed at businesses considering Asia or other regions of Mexico.

"If one understands Mexico. . . . Yucatan isn't the place to locate there," says Barry Featherman, executive vice president of America's Industry Relocation Services, a consulting firm that helps businesses relocate to Mexico. "There are no roads from the Yucatan (Peninsula) to the U.S. There is no rail. The only way to get in is by ship or air. It does have cheap labor rates, but companies aren't going to locate there if they produce something that is heavy or bulky."

The MRB Group in Lake Bluff, Ill., which placed the magazine ads and represents Yucatan government in the Midwest, has distributed thousands of information packets and video tours of that Mexican state to companies that saw the magazine ads and were interested in setting up manufacturing plants in Yucatan.

While the ads haven't been wildly successful in luring American businesses to Yucatan, they don't lie about the low wages. Thirteen years ago a Glendora, Calif.,-based dental supply company known as ORMCO decided to locate a manufacturing plant in Mexico. If you've ever had your teeth straightened, there's a good chance the metal brackets came from ORMCO's plant in Yucatan, known as ORMEX.

The 200 Mexican workers there assemble, polish, package and ship the devices. And they do it all for between $1.20 and $2 an hour. That covers wages, taxes and benefits. It's a good deal for ORMCO and its customers, and a pretty good deal for the residents of Merida, the capital of Yucatan.

"It's no secret the company came here for the savings in the labor rates," says David Alpizar, a Mexican native and general manager of ORMEX. "And because the company doesn't sell anything here, it doesn't pay any taxes. But people here don't understand it when Ross Perot and others say we're being abused. I'm a native. This is my home town and I've seen it grow so much in opportunity. The wages may not buy them a car, but 12 years ago they didn't have enough to eat. This is the best chance they have for a decent life."

While ORMCO's move to Mexico pre-dates NAFTA, its experience there could serve as a poster child for supporters of the trade agreement. Company officials say no one was laid off when the low-skilled jobs were moved to Mexico. U.S. workers, instead, were retrained and in most cases were paid more. Most of ORMCO's skilled jobs remain in the United States or in developed European countries where its products are sold. And the low-skilled jobs that did leave helped stimulate more skilled jobs at ORMCO and benefited Yucatan's economy in the process.

"Our profits are up," says Alpizar. "Our sales force has grown. We've hired more engineers in research and development. Those 200 jobs not created in California 13 years ago have paid off considerably."