<i>Maquilas</i> Are Like Aspirin: Temporary Pain Relief but No Cure

Information and opinions on the free trade assembly plants operating in Nicaragua, with a closer look at an anomaly: the contradictions of one such industrial plant operating in the middle of nowhere.

Jon Bilbao

Although it is generally thought that Nicaragua’s maquila sector started up under Violeta Chamorro’s government, these sweatshops, which essentially assemble imported raw materials for re-export, have actually existed under the last five governments. The first maquilas dedicated to garment production set up shop in free trade zones (so-named because of the special duty-free conditions their occupants enjoy) in 1965, during the Somoza government. Between then and 1979, 12 such plants were operating, employing 8,000 workers in all. A free trade zone also operated during the Sandinista government, with 5 state-run garment factories employing around 3,000 workers.

It was indeed during the Chamorro government that the passing of a free trade zone law in 1992 triggered a rapid growth in maquilas (also sometimes called maquiladoras). This law is totally unfavorable to workers, benefiting only the foreign investors who also enjoy the unfailing complicity of the Ministry of Labor. By the end of the Chamorro government, there were 17 garment maquilas employing 9,000 workers. The real maquila explosion took place during the Alemán government, however, with 33 garment factories employing 35,000 workers by the end of his term. Only one new plant has come so far under the Bolaños administration, but some of the existing ones have enlarged their operations, so there are currently 34 providing work to 47,000 people, with 99% of the clothes they make exported to US chain stores and the remaining 1% to Canada. In addition, 20 non-apparel maquilas (footwear, communications, decorations and wigs) have arrived over the past decade and tobacco products started to be made in the maquila sector during the Alemán administration. For the first time, a textile factory has also opened on the highway to Mateare that produces cotton cloth, leading some people to start talking about growing cotton again.
Honduras’ maquilas employ 120,000 people, nearly three times more than Nicaragua’s, but one of President Bolaños’ most clinching campaign pledges was that he would provide jobs in the maquila sector for some 100,000 Nicaraguans by the end of his term in 2006. At the time, there were already plans to build an industrial park with 85,000 square meters of plant space near the Las Mercedes free trade zone on Managua’s northern highway and an even bigger one, with 100,000 square meters of plant space, three kilometers outside of Granada.

Not only do many Nicaraguans delude themselves that working in the maquilas will answer their prayers, giving them a stable job and a wage that will improve their standard of living by leaps and bounds, the government, too, seems to see that sector as the answer to all the country’s ills, as the goose that lays golden eggs. For all that, the complex near Las Mercedes was to start operating in 2002, providing jobs to 8,000 people, but we are now in 2003 and not a brick has been laid in either it or the other project.

Maquilas in Nicaragua and elsewhere

“Maquila” is an Arab word for a unit of measure. It was used in medieval Spain to express the measure of the product that peasants had to give the owner of the place they took their olives to be pressed or their wheat to be ground. The maquila, or toll for the processing service, was 7% to 10% of the resulting oil or flour. It was the Mexicans who chose this word for the runaway US sweatshops that began to invade the country’s border zones in the sixties and it stuck. Perhaps they chose it because a similarly small percentage of the money generated was left behind in the country in the form of the low wages paid, or because of the country’s dependence on the foreign “millers” who own such companies.

The maquila investors exploit the low-wage national labor and the fiscal incentives and exemptions offered by governments desperate to palliate their problems of high unemployment and social unrest. Each host government, in competition with governments in similar conditions, creates a special world for these companies, first to attract them and later to get them to stay put, as they tend to pull up stakes easily to follow a better offer. As a result, these investors generate profits they could not possibly achieve in their own countries, where they must pay better wages and would not enjoy so many privileges.

As is generally the case in any country that encourages them to come, the maquilas in Nicaragua pay no taxes on the income generated by their operations and no duty on the importation of machinery, equipment, tools or the raw materials they assemble, much less on the re-exported finished goods. They are also exempted from municipal taxes and receive special water and electricity rates. All that Nicaraguans get out of the deal are the wages these companies pay, which invariably are quite low.

There are now clothing maquilas all over the world. Those in Asia, India, Pakistan and Indonesia tend to supply the European markets, while the Latin American sector, which almost exclusively supplies the US market, is the most recent—and possibly most abusive. Maquilas started to spread to Latin America in the sixties, the first ones being installed by US capital in Chihuahua, Tijuana and Mexicali along Mexico’s border, in part to curb migration. Such plants later multiplied throughout Mexico and other Latin American countries. It soon became obvious that these plants were not controlling migration, because while women started working in them en masse, the men were still emigrating. While the migrant stream to the United States continued to rise, the stronger effect of the maquilas was to encourage people from different areas of Mexico to migrate internally to the border in search of work. The same is happening in Nicaragua, with the maquilas encouraging rural-urban migration to the neighborhoods surrounding the free trade zones of Managua and its outskirts.
In Nicaragua, 79% of the free trade zone capital is Asian, mostly from Taiwan and South Korea, although some is from Malaysia and the Philippines. The rest is US capital. Asians also make up 75% of the management and control posts in the plants, treating the workers in a despotic, authoritarian way, with the Koreans tending to be even harsher than the Taiwanese.

The maquila in Sébaco:
Inauspicious beginnings

The Nitlapán-UCA maquila team has been studying Nicaragua’s maquilas for over a year, particularly Presitex, a clothing maquila that has been operating in the small town of Sébaco for more than two years now. It is the only Nicaraguan maquila located in a rural zone, and we were attracted by the idea of studying the impact of this kind of plant on a peasant area. What kinds of effects is it having? What expectations is it creating? And why did it set up there? Neither anthropologists nor sociologists have the access we would need to directly research what is going on inside the maquilas because the owners keep all of their figures and other information secret, so we had to base our work on interviews with workers, who often contradict themselves or offer partial or dispersed information. Nonetheless, we now have some information on both the zone and the factory that we can begin to share.

The town of Sébaco, in a fertile vegetable-growing valley of the same name, is set at the junction where the highway from Managua splits to head for Matagalpa and Estelí. It has a couple of gas stations, an agricultural tools market, a small market famous for its brightly colored bunches of clean-scrubbed beets, carrots and onions, and nothing else. Its own residents still tend to get around on horseback rather than in vehicles.

For three years during the revolutionary eighties, one of the Sandinista government’s strategic agroindustrial mega-projects was based there. With Bulgarian investment and Bulgarian and Italian machinery and training, tomato concentrate began to be canned there, and later other agricultural products were industrially processed as well. There were big plans to extend this production, but the project was abandoned following the FSLN’s 1990 electoral defeat and a couple of years later sold off on the cheap in confused privatization processes.

Like its predecessor, the Alemán government had strong links with Taiwan, albeit oiled by many more “favors,” and when Taiwanese investors heard about the now dilapidated plant in 1999, they took an interest. They invested some US$12 million and turned it into Presitex, a maquila to produce pants. A pair of pants that sells for $48 in the United States costs $3 to produce in Nicaragua.

As the Bulgarians had learned two decades earlier, there is no industrial culture, no factory culture in Sébaco. The first step for the Taiwanese managers in September 1999, once the factory was ready, was to teach 500 workers to use the machines. Five months later, the workers were finally churning out pants.
When the company was formally inaugurated in February 2000, the Taiwanese announced that the project had three stages, scheduled to be concluded in three years, by which time it would have 7,000 workers and the capacity to produce 100,000 pairs of jeans a day. 100,000 pairs of jeans a day! That optimistic prognosis has not happened; the factory has grown, but within limits imposed by reality. An interesting question is why such a small backwater place like Sébaco has attracted two gigantic industrial projects—“white elephants” as they were called during the eighties. It appears to have nothing to do with the town itself having set the ball rolling. In fact, the real Sébaco doesn’t even seem very interested in the maquila installed there. Talking to Sébaco’s mayor, for example, we were told that the local government has no information on Presitex, about what’s happening in it or even on the ways it is affecting local inhabitants. Or is that seeming indifference masking congenial collusion with the maquila penchant for secrecy?
There was no environmental control in the factory the first year, so dye water containing carcinogenic toxins was simply dumped into the Río Zanjón Negro, from where it passed into the Río Grande de Matagalpa and finally flowed out into the Caribbean Sea. It was only after a series of charges in the media from environmental associations such as the Humboldt Center and a number of decisions by the Environment Ministry that the factory finally inaugurated a modern treatment system to remove these toxins this year.

Most of the zones that have been set up around Managua are also close to lakes and rivers, and in this country with no effective environmental controls, the factories continue to dump chemicals, colorants and all kinds of other poisonous substances into the adjacent bodies of water.

Great expectations versus real impact

Around 80% of the labor is female in the maquilas in Nicaragua and the rest of Central and Latin America; in Sébaco we learned that the figure is 87%. We also discovered that the town of Sébaco itself cannot fill this factory’s labor needs, so around 60% of the workers come from rural communities with severe unemployment problems as far away as Tuma-La Dalia, Esquipulas, Terrabona, San Isidro, Ciudad Darío, Estelí, Santa Rosa del Peñón and even Malpaisillo. Our research involved examining the lives of 35 families from three extremely poor communities: Tuma-La Dalia, Santa Rosa del Peñón and Terrabona. In Tuma-La Dalia, the coffee crisis has left thousands of people jobless and constantly affected by hunger, while Santa Rosa del Peñón and Terrabona are very dry zones with poor agricultural land. Our sample also covered former workers from the local rice growing area.

Until recently young women from the surrounding rural areas left their communities to work as domestics in Managua, León or other cities, earning between 300 and 700 córdobas ($20 to $46) a month. Others emigrated to work as domestics in Costa Rica or Guatemala. Because there was no other alternative for these women, the appearance of the maquila in Sébaco created great expectations. They saw it as an opportunity to get ahead without having to abandon their communities and families. If they were mothers, the factory offered them the chance to “return” home and look after their children. They had hopes of leaving domestics or seasonal agricultural labor and landing a stable urban job where they would receive a fixed wage on a regular and permanent basis.

But the reality is that a woman who lives in or near a small outlying town like Tuma-La Dalia, 65 kilometers away from Sébaco, has to get up at 3 am to prepare the day’s food for her family before making her way to the highway to catch the bus that swings through at 5 am. She then works 10 exhausting hours and finally gets back at 9 pm. In Presitex, the wages increase by about 20% ($6) per fortnight if you work overtime, but most of these women find it literally impossible to do so. What time would they get back home, and how would they make it back at that time of night if they missed the company bus? And when would they sleep, if they’re lucky to sleep six hours a night as it is?
Presitex has 14 big buses to transfer workers, but while they are only 2.5 córdobas ($0.17) for the round trip, the workers have to foot the bill. The buses arrive at the factory packed with hundreds of people they’ve picked up along the way. The factory also helped workers purchase 600 bicycles, so many pedal to work, while others simply walk.

Presitex initially paid 45 córdobas ($3) a day, until a rice grower from Matagalpa begged the Taiwanese managers to lower this “high” wage, because they were paying their field hands a third of that and were losing them all to the factory. So the basic daily wage was dutifully dropped to the equivalent of $1.30, although it was later increased again to 450 to 500 córdobas ($30 to $33) a fortnight. But nobody can provide for the kind of large family found in the countryside on that wage. It doesn’t even cover the basic food needs of a typical rural family of five to eight people; at best, it takes the edge off their hunger.

Expectations increase if two family members work there—and there are many such cases. Certain improvements can in fact be seen, including the appearance of a radio or four of those cheap molded plastic chairs you find everywhere in Managua to replace the wooden planks where people used to sit. And occasionally the family can eat meat or chicken. Some families have three maquila wage earners, which really helps solve problems by generating savings that can be reinvested in new beds, for example, or a wall to replace the sheets used as improvised room partitions. The best example of progress attributable to the maquila that we found was in a house in Cuajiniquil where three single sisters worked at Presitex, while the married fourth sister invested part of their wages in a small home business. Coming across a refrigerator full of cold beers for sale in Cuajiniquil is the most obvious sign of economic progress. But when push comes to shove, a lot of family labor is needed for the maquila wage to have any real economic impact.

Labor fluctuations and worker insecurity

By the end of the first year, the factory already had 2,000 workers. But in 2001, after the September 11 terrorist attacks and worsening recession had reduced consumption in the United States, it had to cut production and lay people off, leaving 1,460. Since then the numbers have gone up and down, which is how it always is. Everything depends on demand, on the vagaries of consumer spending patterns in the US stores, just as what is produced depends on current fashion tastes. The number of employees fluctuates for other reasons as well. There is currently an intense campaign by unions and human rights activists in the United States to defend the rights of maquila workers in the countries of the South and stop exploitative sweatshop conditions that violate human and labor rights. In June 2002, a lawyer and an economist from a US company that buys from the maquila “monitored” the Sébaco maquila. Sometimes monitors will turn up unannounced at a maquila to check it out, as they did in Sébaco, and they insisted that the Taiwanese allow them to interview 30 randomly chosen workers. After talking to the workers, visiting the restrooms and their workplaces, seeing the food they ate and hearing the complaints of maltreatment, the US company cancelled its contract with Presitex. This significant reduction in production resulted in the laying off of some 200 people.

The number of workers in the factory has again risen recently and there are now 2,043 people working in the Sébaco free trade zone. But such fluctuations imply serious instability, generating a tremendous feeling of insecurity among the employees. In January 2003, the workers held daily sit-down strikes in the company complaining that they had not been paid their Christmas bonuses. In response, the president of Presitex Corporation, Sam Ho, announced that due to a number of problems, including the strike, the factory had already lost $6 million and warned the government that the company would pull out of the country unless the strike were resolved. Investors constantly use this threat against the government: if the Ministry of Labor doesn’t concede them everything, doesn’t defend them every time... then quite simply they’ll go. And the ease with which they can actually pack up their sewing machines and leave for “greener” pastures ensures that they come out on top in every conflict.

The contradiction between
rural and industrial life

In cities and towns throughout the world that either have had or still have industries, a whole culture has been built up around the factory, which is a reference point, an identity and a goal, creating a sense of belonging and providing support. The future is organized around it: family plans, the courses studied and education received and the acquired vision of work and of organizing one’s life. Factories create a whole particular culture. In Sébaco, in contrast, the maquila is juxtaposed against a rural culture. And of course, this facilitates the ease with which one day it will go, leaving nothing behind.

The peasants have another culture. It was interesting, for example, to hear the comments of a 36-year-old woman and her 18-year-old daughter, both of whom were working in the Sébaco maquila. They’re happy because they now earn wages and can manage their money, but they are constantly surprised by the totally novel industrial reality. “Inside, everything is obligatory,” they say. “You do nothing of your own will; you’re required to do everything.” And the fact is that discipline, a fixed schedule, order and systematic production quotas are totally removed from peasant culture, where you are your own boss. You rest when you want, enter, leave or gaze at the sky when you want; sit down or eat when you want... In the maquila, these peasants find themselves subjected to extreme control, robbed of their freedom. Until recently, the supervisors even used tickets to control how often the 15 to 20 workers under their responsibility went to the restroom; they were allowed to go twice a day and after that they just had to grin and bear it. Meanwhile, the Taiwanese bosses calculatedly look for ways to promote rivalry between workers within the maquila to prevent with the development of friendships and solidarity. For example, they assign certain workers the job of watching the restrooms or the doors for a week or make them heads of the line. And as always, such a post generates perversion.

The contrast between rural and industrial life, between poverty coupled with freedom and the money to survive coupled with no freedom, between preferring the factory to the countryside as a way of getting ahead, then immediately switching preferences for the countryside to the factory to recover your freedom are constants in the subjectivity of the Sébaco workers.

Those who leave and
those who stay and organize

There is a “club” of former maquila workers in Sébaco. In addition to the many people laid off for different reasons, many others can’t take it and quit. Although the Taiwanese will never provide the relevant figures, we’re pretty sure there are many more former maquila workers than current ones in the peasant area around Sébaco. This implies that people cannot withstand this work system for very long due to the lack of freedom or the illnesses it causes, including lung diseases from the cotton fibers saturating the confined space and back problems, arthritis or varicose veins from having to either stand or sit all day. In a 1999 study in Honduras in which we had access to reliable information, we were able to compare the number of former maquila workers with the number of current workers. The percentage of those who had left was almost 60% greater than that of people actually working there. Those who leave and receive severance pay often start micro commercial initiatives, setting up a tiny local store, buying bundles of used clothing to sell and the like. In this way the maquila reactivates local commerce, albeit in a very limited way.

There was no union in the Sébaco maquila until after the first strike in 2000, which was spontaneously organized without any leadership. Our research tried to uncover the history of both the factory and the union. Although the union is weak in the face of the enormous power wielded by management, it has 270 members and is therefore representative. And it has achieved some small successes in the strikes that have already taken place in this factory.

Like all realities, the maquila one is gendered

In Sébaco, the maquila causes serious family separation. A woman who sets out from home before 5 am and returns just in time to drop into bed exhausted has not abandoned her community, but she’s not really living with her family either. Given the obstinate unwillingness of most Nicaraguan men, particularly rural men, to trade some gender roles even under these circumstances, working women have to find a grandmother, aunt or someone else to look after their small children. If they cannot, they have to leave them with older sisters, sometimes themselves only 10 to 12 years old, with the enormous risks and dangers that this implies.

On the other hand, working in the factory generates great expectations among Sébaco’s young rural women—and half of all female maquila workers are under 22. Having money of one’s own coming in every two weeks and being able to manage that money and buy “bits of gold”—which is felt to be lasting and has a symbolic value as well—feed such illusions for a long time.

One of the maquila’s biggest impacts on women has to do with their personal esthetics and grooming. This is particularly true of young single women and of single mothers—whom we estimate at 35% of the women in the area. For many of them, the maquila has implied a new life and a lot more happiness, enabling them to leave the gender and family constraints of their rural community or town, go to the “city,” experience another world and get to know new people of both sexes. All of this is expressed in a change of appearance. They dress fashionably, do themselves up, learn to put on makeup. They wear sandals, sports shoes or even high-heeled shoes, experiment with new hairstyles and use perfume, cosmetics and creams. And they start wearing those yearned-for “bits of gold”: earrings, bracelets, necklaces, rings. In the communities, ranchera music begins to be forgotten and the strains of more “up-to-date” music, as they call it, start to be heard, like in Managua. Generally speaking, the maquilas have several positive effects on women, and it is clear that it is not the same to look at this complex reality through a man’s eyes as through a woman’s.

Temporary pain relief from a serious illness

The complex and contradictory maquilas are nothing more than a mirage, particularly to anyone who thinks that this mass generation of jobs will really help Nicaragua develop. On average they pay Nicaraguan workers $0.19 an hour and almost none of the raw materials used in the garment maquilas come from Nicaragua. In reality, it would be difficult to use Nicaraguan materials, seeing as the country doesn’t produce buttons, threads, zippers or very much at all for that matter. The only Nicaraguan product used, and only recently at that, is the pumice stone that gives jeans a fashionably stonewashed look. White pumice stone from around the Masaya volcano has allowed Asian businesses to save on the cost of decolorants. But with that exception, everything is imported from abroad, including label, design, raw materials... even management. And after receiving a load of privileges, all of the profits go abroad as well. The country is only left with the temporary relief that the wages provide in today’s climate of soaring unemployment.

At the end of the day, the maquilas in Nicaragua are like an aspirin: they get rid of a few headaches but don’t attack the illness that produces them. And like an aspirin, their effects don’t last. All of the fiscal exemptions and privileges offered to these companies are part of a 10-year contract. So after nine and a half years, the factory either leaves or, if it wants to carry on, changes its name or owner and continues enjoying the same or even better privileges, depending on whether the host country has ameliorated its desperation or bogged down even more. Traditional factories have lasted for decades in the industrialized world, becoming reference points for millions of people and therefore generating a whole culture around them. But free trade zone factories are fleeting quick fixes, common aspirin that only masks the serious underlying illness.

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