The Dignity and Justice Maquiladora:

A Dream on Hold

**Dr. Judith Rosenberg, January 2012

One July morning in 2001, I was snooping around the offices of the Comité Fronterizo de Obreras/os in Piedras Negras. I was teaching English to the workers’ children and waiting for the class to arrive. In a small back room, which housed a little refrigerator, a coffee maker, a stock of pan dulce, outmoded computers, and extra folding chairs, I discovered some sewing machines. A light lit up. Why do labor organizers need sewing machines? It was not hard to put together.

Sewing factories have been plentiful along the border in Mexico since the Border Industrial Program first authorized maquiladoras in 1964. Now, this sector was in the middle of a historic flight to lower-wage areas around the world. The CFO was helping workers assert and protect their rights; usually, that amounted to holding out for legal severance, generously mandated by Mexican labor law and if possible avoided by corporations leaving town. Women and men who sewed labels like Calvin Kline, Levy Strauss, Dockers, Dickies, and Liz Claiborn were losing their jobs. Margarita, one of the CFO’s organizers confirmed my suspicion. She said, “We want to start our own sewing maquiladora. We already have a business plan.” She said they wanted to give work to women whom the maquiladoras say are too old (over 40) or who are blacklisted because of their workers’ rights activism.

In April 2004, the Dignity and Justice Maquiladora opened its door. A modest effort—five women and five machines, set up in a small two-story house in a workers’ residential community. The D & J stated their goal differently than Margarita had: “To create a model for a worker-managed apparel business that provides dignity and justice for its workers.” An MBA was involved and he provided not only concepts, like “a business model” and “micro-business” but capital with which they bought the first machines and the first cotton material for producing t-shirts, sweatshirts, and tote bags. John Flory wanted to pioneer the development of an industrial fair trade apparel production and distribution model. He wanted to help the fair trade movement take the next step, beyond agricultural and crafts products.

John is an MBA and a lot more. Having grown up in Ecuador, he is fluent in Spanish and comfortable in Latin working-class culture.   In his hometown of Minneapolis, he played a key role in building Mercado Central, a cooperative of 36 Hispanic-owned businesses under one roof. It opened in 1999 and eventually revitalized its South Minneapolis neighborhood.   John became a 30% owner of the D & J.

The CFO also became a 30% owner contributing many kinds of support, including guidance and oversight to make sure the women stayed true to their founding principles of fairness and respect. The third owner was the group of workers themselves. The business plan values their contribution of start-up work, or sweat equity, to make them 40% owners of the enterprise.   Together the partners form a collective, structured for technical reasons under cross-border trade law as a “maquiladora” meaning they can manufacture in Mexico and sell in the US. On the surface, this is an obvious advantage. Because of the relationship between the Mexican Peso and the U.S. Dollar, they manufacture and incur costs in a low wage area and sell on the high-priced side of the border. The rules of international exchange under NAFTA also stipulates that the maquiladora on Mexican soil must purchase raw materials abroad, turn them into products and export within time limits.

Another feature of the current structure is that the Mexican exporter must pay a modest tariff of $150 every time it exports. The more the exporter produces the less the impact of the tariff. If the outbound shipment consists of 1,500 t-shirts the tariff adds only 10 cents to each shirt.

 The D & J marketing distribution plan depended on a fair trade network of buyers in the US whom John could access through directories or through contacting colleges, schools, churches, and non-profits who buy a fair trade shirt or tote bag in bulk on which to affix their logo or message. The D & J added more value to their products by using organic cotton and environmentally sustainable bamboo.

For the first few years, the D & J passed impressive milestones. The women who were sewing became efficient enough so that they earned three times an ordinary maquiladora salary—and still stitched at a quality level. Through networking in the US, John Flory garnered bulk orders that kept the women busy, most of the time.

But someplace between 2004 and 2008 things began to slip. A number of factors pushed against the little factory’s stability. One was personal antagonism among the workers. They were women who had grown up and gained their work experience in an abusive system. Now free of the pressure of exploitation and insult, they still didn’t know, sometimes, how to act like owners and think of the good of the collective. They wanted hierarchy. They wanted more money. They worried about feeding their families. Because of the high turnover, the worker/ owners were not really owners. They couldn’t always afford the commitment.

The factory always needed more capital – for material, for specialized machinery, for fans in the brutal summer, and heaters in the winter. John mortgaged his house to supply it. Then he ran into a health problem and had to step back.

All along it had been apparent that the maquiladora system was set up for large corporations. The export fee is a good example. The D & J was mostly filling orders in the range of 200 items. The $150 export fee added 75 cents to the price of each one. The D & J partners struggled to get around the obstacle by producing only in bulk and exporting to a warehouse across the river in Eagle Pass. However, that added another rental and handling expense. John closed out the warehouse and brought the inventory to Minneapolis. But he had no inventory system; since he didn’t know what stock he had on hand, he couldn’t fill orders. Today if you or I were to come up with an order for 500 t-shirts for our local soccer team, the D & J could not fill it.

There were many months when the D & J couldn’t pay its rent and employees’ health insurance. John kept stepping in and paying the shortfall. Then suddenly he stopped, telling the D and J that he could no longer afford to be a financial crutch for the factory.

The D & J is in a holding pattern right now. Most of the workers have found other jobs. If an order turns up the network to find the hands to do the work. They are experimenting with other kinds of work—some orders that begin and end in Mexico, for school uniforms, for example. The right kind of US designer/ entrepreneur could make a difference. The D & J is not ready to give up the dream, but they can’t quite see the future either.

** Dr. Judith Rosenberg was a founding member of the Women on the Border Board of Directors. She passed away on International Women’s Day, March 2015.