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Viewing cable 08MERIDA222, YUCATAN MAQUILADORA INDUSTRY CAUTIOUS ABOUT ITS FUTURE

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Reference ID Created Released Classification Origin
08MERIDA222 2008-10-28 18:23 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Consulate Merida
VZCZCXRO6997
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRS RUEHTM
DE RUEHRD #0222 3021823
ZNR UUUUU ZZH
R 281823Z OCT 08
FM AMCONSUL MERIDA
TO RUEHC/SECSTATE WASHDC 4658
INFO RUEHME/AMEMBASSY MEXICO 1229
RUEHXC/ALL USCONS MEXICO
RUEHRD/AMCONSUL MERIDA 1992
UNCLAS MERIDA 000222 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ETRD PGOV MX
SUBJECT: YUCATAN MAQUILADORA INDUSTRY CAUTIOUS ABOUT ITS FUTURE 
 
1.      (SBU)  Summary.  Approximately 200 leaders of Yucatan's 
business community gathered in Merida on October 23rd  to 
celebrate the 21st anniversary of the Maquiladora Association 
and 26 years of maquiladora activity in the state.  Business 
leaders report already feeling the pinch of the U.S. economy's 
downturn.  End Summary. 
2.      (U)  There are 32 active maquiladoras in the State of 
Yucatan, with approximately 20,000 employees.  About half of the 
factories are geographically centered around the state capital 
of Merida while the others provide key economic support to 
smaller towns.  According to the association, these companies 
export annually to the U.S. market goods valued at approximately 
300,000,000 Mexican pesos.  The companies fall into three 
principal product sectors:  clothing manufacturing; low to 
mid-range jewelry production; and manufacturing of dental 
implements, devices, and tools.  The jewelry and dental 
companies benefit from easy and relatively low cost shipping to 
the USA.  Most of the clothing manufactured by Yucatan-based 
maquiladoras is shipped by sea from the Port of Progresso to 
Florida for markets on the Eastern Seaboard. 
3.      (U)  At their annual dinner, the head of Yucatan's 
Maquiladora Association and industry representatives celebrated 
21 years as an organization and looked backwards to past 
successes.  The current U.S. economic downturn is clearly having 
a negative affect on the industry.  Most hard hit appears to be 
the jewelry sector with industry leaders easily conceding that 
in a period of economic downturn, luxury items are cut first. 
Dental industry representatives report less turmoil.  And 
clothing manufacturers report a mixed picture.   Ganzo Azul, a 
company manufacturing uniforms for law enforcement officers 
indicates that business is steady.  In contrast, companies 
manufacturing clothing for large scale retailers report 
decreased orders for the holiday season and corresponding cuts 
in production, staffing, and income. 
4.      (U)  All sectors report some impact from increased 
transportation costs.  However, they remain hopeful that their 
relative geographic proximity the U.S. market provides a 
sufficient cost advantage over other production centers, 
particularly those located in Asia. 
5.      (SBU)  Comment.  Although Yucatan based maquiladoras have 
been suffering over the last several years from lower labor 
costs in other countries (principally Central American and 
China), they have remained optimistic that their geographic 
proximity to U.S. markets and the relative security of the 
peninsula would improve their competitive advantage.  The U.S. 
economic downturn appears to have had a more rapid effect on 
production levels and schedules than was anticipated. Pessimism 
in certain sectors is spreading.  End comment. 
 
MARTIN