HR Over the Border

Each week, Rita Soza crosses the Mexican border, headed for a place that a growing number of HR professionals may soon call their second home: the maquiladora, or foreign-owned assembly plant.

When Soza, vice president of HR for Astec Power’s North American and European operations, goes to Tijuana to meet with the human resources manager of Astec’s plant, the agenda

almost always includes a discussion about recruiting and retention. “We’re constantly working on strategies to attract and retain new employees,” says Soza, a U.S. citizen and San Diego County resident, whose firm manufactures power-conversion equipment.

For HR people overseeing maquiladoras, retention and recruiting — from the workers on the shop floor to top border-commuting executives — are not easy tasks. Nor are they the only ones. Workers’ health and safety issues and corporate security fill out the challenging list.

There are 4,000 maquiladoras operating in Mexico today. Most are clustered near such border towns as Tijuana, Mexicali, and Juarez, and are operated predominately by U.S. companies eager to benefit from Mexico’s proximity, cheap labor and tax breaks. But establishing a stable maquiladora requires business savvy, cultural sensitivity, and social responsibility. So if your boss assigns you to set up your maquiladora’s HR functions, here’s a primer on what you face, and strategies for dealing with this special challenge of global HR. Crossing the border doesn’t have to mean crossing your fingers.

First, some history and an update.

Maquiladoras were first established in 1965, and since the North American Free Trade Agreement (NAFTA), the tax breaks enjoyed by the industry have expanded throughout Mexico.

“The Mexican workforce is highly productive and turns out high quality goods,” says Dennis Briscoe, professor of international human resource management at University of San Diego. The media and politicians, he says, have fostered misperceptions of maquiladoras only as sweatshops. Advocates of maquiladoras contend that most of the plants today are modern and sophisticated places to work.

Mexico, with a population of 97 million, is a developing country undergoing dynamic, turbulent change. Approximately 26 million are reportedly living in extreme poverty. That’s a major concern as the country simultaneously seeks to become less authoritarian, less centralized, and more open to the world. Meanwhile, the country continues to be plagued by disturbing headlines of assassinations, drugs and regional strife.

It’s no wonder that potential U.S. recruits will have reservations about working in Mexico. HR can overcome these obstacles, however:

Partner with executive recruiters.

HR directors say they can barely keep pace with the growth of maquiladoras. “We’re always looking for ways to improve recruiting, but it’s never enough,” says Ana Sotomayor, a Mexican citizen and director of personnel administration for Saft America Inc., which produces rechargeable batteries in Tijuana. With low unemployment [2 percent in Tijuana], the market for workers at all levels is extremely tight, she says.

For its higher-level jobs, companies including Saft turn to executive recruitment firms such as Barbachano International, a San Diego-based firm whose American clients include Tyco International and Johnson & Johnson.

Seventy-five percent of the firm’s recruitment efforts are targeted at maquiladoras, says Fernando Ortiz-Barbachano, general manager and vice president. Of those, 80 percent of the positions are in U.S.-owned operations, not only in the border towns, but also in Mexico City, Guadalajara and Monterrey.

Ortiz-Barbachano’s clients are primarily searching for professionals who are either in upper-level plant positions (general manager or vice president of operations) or middle-level positions (materials managers, production managers, controllers, and HR managers). Bilingual candidates are especially sought for the mid-level jobs because these employees interface with workers on the shop floor.

In working with executive recruiters, ask them to provide information and materials that address

several key issues, including safety in the host city, politics in Mexico, housing and education, and cultural differences.

Sotomayor, who was already working for a maquiladora when Barbachano International recruited her, has the best of both worlds in her job. She currently lives in San Diego on a working visa and expects to soon acquire permanent residence. Many HR executives whose plants are along the border enjoy the flexibility of being able to commute to Mexico while living more comfortably in the United States. But that’s not an option for those execs employed in the interior.

The benefits of settling in Mexico, however, can definitely be enticing. In a recent The Wall Street Journal article, Mexico’s border towns were headlined as “Perk Paradise for U.S. Middle Managers.” Managerial salaries are reportedly rising at a rate of 8 percent a year, three times the U.S. average. And extras, such as golf-club memberships, free tickets to fly home, housing allowances, and fast-lane passes that avoid long lines at U.S. Customs have become standard.

Partner with security experts.

Although the majority of Americans assigned to maquiladoras live in the United States and commute across the border, they still worry about their personal safety, says Rolando Soliz, director general of Vance International Mexico, an integrated security service firm in Mexico City. Mexico, he says, has the distinction of being No. 2 in the world in kidnappings. Although Soliz says that while the maquiladoras are safe, city crime and violence surrounding the factories are the greatest threats.

HR directors can alleviate an employee’s security worries by taking steps that include:

• Providing the employee’s family with a security awareness briefing before arriving in Mexico.
• Ensuring secure transportation.
• Providing a 24-hour Emergency Response Service by a local security vendor for those living in Mexico.
• Providing employee vehicles with satellite tracking.

Maquiladoras are a magnet for low-skilled workers from the country’s interior, but wages are low by U.S. standards (between $3 and $4 per day on the border). Employee turnover is subsequently high, reaching 80 percent in some cities, says George Kourous, program director of Silver City, N.M.-based Interhemispheric Resource Center, a non-profit organization that focuses on U.S.-Mexico border issues and U.S. foreign policy.

Companies might have to make peace with attrition because of wage competition, but there are other reasons employees quit: Occupational health and safety issues and sexual harassment, Kourous says. Attrition for executives and managers falls within the range of two years. But workers, mostly women between the ages of 17 and 25, often quit their jobs within months. Employers say it’s not uncommon for a worker to walk across the street, quitting one maquiladora for another. Advice from the pros? Don’t lose employees because they believe the work environment is hazardous to their health.

The Berkeley, California-based Maquiladora Health & Safety Support Network (MHSSN) is one group that would like to work more with HR managers in maquiladoras. The volunteer organization of 400 occupational health and safety professionals provides information and technical assistance on workplace hazards.

But maquiladoras have denied such organizations access, says Garrett Brown, an industrial hygienist who works for the State of California’s Department of Industrial Relations and heads MHSSN. So Brown’s group usually works with activist Mexican workers off-site, where they don’t feel at risk of losing their jobs.

He suggests that HR managers:

• Send Mexican health and safety managers to Spanish-language OSHA training institutes in the United States. Or hire Spanish-speaking consultants, private and governmental, to conduct on-site training.
• Encourage the maquiladora associations that represent the corporations to monitor these issues more closely.
• Work with corporate headquarters’ health and safety representatives to ensure that Mexican operations meet U.S. standards.

The principles for managing HR are basically the same for any place in the world,” says Jesus Luis Zuniga, an executive advisor for Sony Centro de Manufactura de Mexico. “What is needed is to apply them within different labor laws, cultures and economies.”