EL PASO, TEXAS - You can drive the winding road up Franklin Mountain in El Paso for several minutes searching for the star.
Perched on the mountain top at an elevation of 7,200 feet, the El Paso Star is lit electronically every night, a ghostly beacon overlooking the smaller, concentrated lights below. The Texas star shines most brightly on Mexico's Ciudad Juarez, where most of the pinhole lights are clustered.
Many injection molders in El Paso would rather have the same distant view of Ciudad Juarez than locate on the Mexican side of the border. It is a place to do business, but it is not necessarily a place to locate for a company that does not pin most of its costs on labor.
``We have to automate our plant as much as we can,'' said Enrique Vargas, general manager of the El Paso facility of injection molder Titan Plastics Group Inc. ``Additional labor costs are minimal for us. And that does not make it of benefit for us to be in Mexico.''
Titan, a custom molder, has every reason to drive to Mexico, though: Many customers are across the Paso Del Norte Bridge in Ciudad Juarez, a 10-minute walk from downtown El Paso.
Over there, in Mexico's fourth-largest city, sit many of the world's largest manufacturers of auto parts, television sets, surgical instruments and laser printers.
The Ciudad Juarez-El Paso area is called the Hong Kong of North America by Jose Contreras Corral, vice president of the Ciudad Juarez Chamber of Commerce and Chamber of Industry. Both contain sophisticated industrial areas with a bicultural bent, he said, and both economies have tremendous cash flow.
``This is where the maquiladora program started in the 1960s,'' Contreras said in an early December interview. ``A lot of [Mexican] executives live in El Paso, and a lot of their employees live in El Paso. It's a very hard-working metropolitan area that can compete with anywhere in the world.''
The entire two-city area comprises more than 2.75 million people, including 220,000 workers in Ciudad Juarez, where labor costs per company average about $1.35 an hour with benefits, according to figures from the El Paso Chamber of Commerce. Those figures show that an industrial mechanic brings home about $840 a month.
The great divide
Yet, molders have not hitched up the presses and moved across the great divide to Mexico. In Ciudad Juarez, the fixed costs - in building, land and utilities - can be twice that of El Paso. And the labor force, while hard-working, must be extensively trained, said Ted Edmunds, general manager of the recently expanded El Paso plant of injection molder United Plastics Group Inc.
That could bring on a problem with Mexico as the place to go, he said.
``China and other parts of Asia will eventually kill us with labor rates,'' said Edmonds, who used to run UPG's Monterrey, Mexico, plant before coming to El Paso last year. ``The only way for Mexico to compete is to increase technology and skill levels. That will end up lowering the labor gap, but that's the only way to survive.''
Continued survival is on the minds of many in El Paso. A raft of layoffs has hit many manufacturing plants in Ciudad Juarez. On the Texas side, some industrial parks harbor empty buildings and available land loaded with sagebrush and jackrabbits.
El Paso's new mayor, Ray Caballero, speaks of bringing high-tech jobs to the area to boost employment.
``That's not going to help,'' said one city-connected source. ``We need to keep bringing more manufacturing here. Those are jobs we can get.''
Some have been gotten. Videotape duplicator Mediacopy Holding Inc. opened a plant in 1998 in El Paso and a smaller assembly facility in Ciudad Juarez to do the more labor-intensive packaging work for videotapes and compact discs.
In January 2001 the company was acquired by Taipei, Taiwan-based Infodisc Technology Co. Ltd., one of the world's largest producers of CDs. Infodisc made plans to build its North American presence; El Paso became a targeted location.
By the end of April, the Texas plant - a cavernous site in three buildings storing endless rows of computer games, movies and instructional offerings - became a major molder of CDs and digital versatile discs, both made from polycarbonate.
The company added 16 DVD molding lines and six CD lines in 2001. In June, it closed its San Leandro, Calif., plant, where the cost of living was out of hand, said Mediacopy Chief Financial Officer Gerald Drozd.
The company invested more than $70 million to mold discs in El Paso, he said. This year the company expects to spend another $15 million to expand the 562,000-square-foot site.
For skilled workers, Drozd much prefers the El Paso facility to his company's smaller Ciudad Juarez plant.
``Everything other than labor is more expensive in Mexico than here,'' he said. ``Generally for us, we only use low-skilled workers there, what we call McDonald's [restaurant] labor. But the elevated lifestyle is a complicating factor.''
Indeed, that elevated lifestyle could raise the labor rates substantially. Many of Mexico's workers want middle-class amenities, Vargas said. So, they buy a home in El Paso, where housing is plentiful and fairly inexpensive, and search for educational opportunities.
``It's been a two-class society of have's and have-not's,'' said Vargas, a Juarez native. ``But now you have huge amounts of Mexican nationals looking for administrative, accounting, engineering and quality positions. It's the beginning of the social basis for the middle class.''
Processors cannot afford some of those costs. Injection molder Mag Inc. investigated working on the Juarez side before opening a 32,000-square-foot plant in El Paso in 1999. While it does a significant chunk of business in Mexico's interior - especially in medical and industrial parts - the company found it could be more competitive working from Texas, said President Rod Fye.
``We don't have the deep pockets to buy and establish facilities wherever the customer likes us to,'' said Fye, based at Mag's headquarters in Martinsville, Ind. ``Luckily, most of our customers move our products across the border themselves from their El Paso warehouses.''
But working with molders in Mexico creates unique challenges, even from El Paso, said Vice President and General Manager John Bonham of Menasha Corp.'s Thermotech division.
Thermotech, based in Hopkins, Minn., has a 50,000-square-foot plant in El Paso and another site in Queretaro, Mexico.
Menasha recently closed an underutilized Thermotech facility in St. Petersburg, Fla., and moved 10 injection presses to the El Paso plant. Many Thermotech customers are in Mexico.
The company must bridge language and cultural barriers in the border region, Bonham said. It also must manage what can be confusing lines of authority working with multinational customers, he said.
``People down in Mexico say they are the decision makers, when their counterparts in the United States say they have responsibility,'' Bonham said. ``We have to overcommunicate at times to understand each other.''
Yet, as with many molders, Bonham takes the good with the bad. The proximity to his Mexican customers makes it a plum location, he said. But it is not for everyone.
``El Paso is a nice town but it is a little isolated,'' said Bonham, who is based in Hopkins. ``A lot of molding companies have struggled down there. There's a huge industrial base, but there's also concern along the border how well it will grow.''