Authors: Robert South*, University of Cincinnati
Topics: Economic Geography, Latin America, Development
Keywords: Keywords: apparel industry, closure, maquiladoras, Mexico
Session Type: Paper
Start / End Time: 11:50 AM / 1:05 PM
Room: Beverly, Sheraton, IM Pei Tower, Terrace Level
Presentation File: No File Uploaded
Apparel manufacturing exemplifies more than any other industry production sharing, the process by which firms relocate labor intensive production from high wage regions in advanced countries to low cost production sites in industrialized nations. The North American Free Trade Agreement (NAFTA, 1994) resulted in considerable growth of export-oriented production sharing in Mexico, principally U.S. firms or subcontractors (maquiladoras), manufacturing apparel for U.S. markets. In 1994, there were 398 export-oriented apparel manufactures. By 2000, there were 1225 apparel maquiladoras employing 282,759 workers. In recent years, however, more than 60 percent of the apparel maquiladoras have closed with employment losses exceeding 120,000 workers. The focus of this research is export-oriented apparel plant closure, 2000-2016. Based upon the literature on plant closure, causative plant closure variables are analyzed; internal economies of scale, plant location, and agglomeration economies. The results of a regression analysis show that much apparel plant closure is related to size of plant, number of employees, and plants located in high wage, border proximate, large urban locations. The findings also show that the analyzed variables explain approximately thirty percent of plant closure suggesting that exogenous factors underly most apparel maquiladora closure. Closed apparel plants are exciting plants seeking other lower wage venues to maintain market competitiveness in a global economy.