January 13, 2015 | By Richard C. Longworth

Maytag and Mexico: The Border Has Two Sides

The departure of Midwestern manufacturing jobs is a sad but familiar story, told in economic statistics and in the almost prehistoric pictures of ruined old factories in cities like Detroit. There’s been some writing, if not enough, about what happened to the towns and people who lost the jobs, and almost nothing about what happened to the towns and people who got them.

A fine new book fills this gap. Chad Broughton was a young faculty member at Knox College in Galesburg, Illinois, when Maytag closed its huge refrigerator factory on the edge of town in 2004 and moved most of the production to one of the burgeoning maquiladora plants in Reynosa, Mexico, just across the Rio Grande from McAllen, Texas. Broughton wrote some good stories at the time, from both Galesburg and Reynosa, for the Galesburg Register-Mail. Then he got a better job at the University of Chicago, and I assumed he had left Galesburg, Reynosa and Maytag behind.

Wrong. Broughton kept digging and kept traveling, and the result is his new book, Boom, Bust, Exodus: The Rust Belt, the Maquilas, and a Tale of Two Cities, just published by Oxford University Press. I wrote a blurb for the book, commenting that “Chad Broughton combines a journalist’s eye for color and the telling detail with a scholar’s grasp of his subject and skill in putting it all into context. The result is a classic of post-industrial scholarship.”

It is indeed a tale of two cities, Galesburg and Reynosa (with side trips to Newton, Iowa, the site of Maytag’s headquarters and biggest plant, which closed three years later, after the company’s purchase by Whirlpool, and to Veracruz, the impoverished southern Mexican province that provided most of the workers for the new plant in Reynosa.) Galesburg lost, for sure, and so did its workers, but a decade later the sense of loss is less than you’d think. Reynosa won, for sure, and it gained thousands of jobs but again, a decade later, that victory seems less triumphant than you’d think.

Maquiladoras are factories in Mexican free trade zones, set up under the Border Industrialization Program in 1965 to combat unemployment in the border area, and vastly expanded after NAFTA took effect in 1994. In these zones, maquiladoras import materials and equipment duty free to be processed or assembled and then exported, again duty-free.

If there are few winners in either Galesburg or Reynosa, a few characters in the book truly triumphed. They include the end-day executives of Maytag, especially the last CEO, a despised character named Ralph Hake, who sold the once patriarchal company to Whirlpool and retired to Las Vegas on a golden parachute of $10 million. They also include the political entrepreneurs in McAllen, Texas, who promoted the free trade zone in Reynosa and the McAllen Foreign Trade Zone, a crucial twin to the Reynosa zone. McAllen’s Economic Development Corporation and its director, the late Mike Allen, essentially were the law on both sides of the border. They also include the corporations – GE, GM and nearly every other big US company you can think of – who run maquiladoras

Broughton tells his story both through the great economic milestones of the era, especially NAFTA and its aftermath, and through the personal stories of workers in Galesburg and Reynosa. Basically, it’s a human story because the two factories, in Galesburg and Reynosa, framed the lives of thousands of people and determined whether they had a place in society and a stake in the future.

Maytag, Broughton writes, “offered a fair exchange, a place where for over half a century a worker just out of high school could exchange his or her best working years for economic security, health care for his or her family, and comfort in old age. This came to an end in 2004.”
When Maytag announced it was leaving, the first reaction was anger, bitterness, disbelief. Broughton reports that some of the Maytag workers went back to school and about half took government-financed retraining. Most got new jobs, occasionally better, mostly worse, “scrambled from job to job, scrimped and saved.”

They “do not want to be viewed as victims,” he said. “For many this is a down-sized existence, but a full-sized life nonetheless.” Only about 7 percent of the workers left town. The population has shrunk about 5,000 over the years, but is still about 32,000. But once 30 percent of Galesburg’s residents worked in manufacturing, at Maytag and other factories around town. Almost all these factories are gone, and so are the jobs. Since Maytag left, the percentage of “low-income” school children has gone up from 42 to 67 percent.

The psychological trauma can be great. Midwesterners, Broughton writes, “are simply not hard-wired for downward mobility.” One man, George Carney, “had lost the way in which in which he contributed to and participated in society and connected with others. The place where... he earned his dignity was now a hollow shell. Carney felt cast aside and left behind.”

But most just adjusted. “On average, they were making much less and had fewer benefits, but their resiliency had kicked in.” They knew that, for factory workers, the American dream was gone, but they were getting by, and that was OK.

Workers in Reynosa never had it so good as the workers in Galesburg and their lot is still a hard one – tedious and badly-paid work, about 78 cents per hour on average, and very insecure. Maytag’s production went to Planta III there in 2004: four years later, Whirlpool closed it, and 750 workers lost their jobs. There are some 1,500 maquiladoras in Mexico, no less than 150 in Reynosa alone, all paying badly but all providing more than the hard rural life their workers used to know.

But if Galesburg today is a battered but stable old Midwestern town, Reynosa seems a battleground. As Broughton writes, the maquiladoras brought overnight industrialization, huge population increases, pressures on public services – challenges that the city was unprepared to meet. Schools and housing are overwhelmed. Many of the workers were young women with children, uprooted from their rural homes, living in a town without child care. Most important, the Mexican drug cartels moved in, especially the local El Cartel de Gulfo, which “became a regular part of everyday life.”

The founder of NAFTA and the economic overlords of Reynosa and McAllen believed “in the logic of market fundamentalism and...in laissez-faire to meet all needs and solve all problems,” Broughton writes. “In the virtual absence of government authority, effective regulations, grassroots democracy, and law and order, the powerful ruled with impunity. Reynosa was no longer governed by government. During the day, the multinationals held sway over the formal economy. At night, El Cartel dominated the lucrative informal security in the shadows. After 25 years, Reynosa had become a society held together by greed and desperation.”

By probing the two cities and studying both sides of the border, Broughton has done a service.

About

Richard Longworth is nonresident senior fellow on global cities at The Chicago Council on Global Affairs and author of On Global Cities and Caught in the Middle: America’s Heartland in the Age of Globalism, on the impact of globalization on the American Midwest. He also was a distinguished visiting scholar at DePaul University and adjunct professor of international relations at Northwestern University, and is a mentor at the Harris School at the University of Chicago.

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