Tight Security Stifles Twin Cities

NUEVO LAREDO, Mexico â€”  After seven years of boom times, the twin-city border crossing known as the two Laredos had already begun hurting from this year’s economic slowdown. Then came the Sept. 11 terror attacks, and suddenly this city and Laredo on the U.S. side of the Rio Grande are reeling.

Truck traffic has flattened after a decade of double-digit growth. Retailers on the Mexican side of the border complain that business is off 50% to 80%, dependent as they are on day-trippers, who are steering clear of lengthy border waits and close customs inspections.

“It’s work now to cross, so the people aren’t coming,� said Max Hernandez, manager of Don Cuco’s Boots on Guerrero Avenue, the main shopping street, just three blocks from the boundary. “We’re getting two or three people in the store a day, and they’re not buying.�

Business is just as bad on the U.S. side of the border, and it’s likely to worsen.

About 1.5 million U.S. multiple-entry shopping visas issued to Mexicans who live near the 2,000-mile border expire tonight. Visa renewals have been delayed, partly because of security precautions. Hotel and shop owners in Texas expect sales to fall further.

“Eventually this is going to trickle down to everyone,� said Larry Norton, owner of three apparel stores in Laredo, Texas, who relies on Mexicans for two-thirds of his sales and who reports that business is already down by more than half in the last two weeks.

The foreign-owned manufacturing plants known as maquiladoras, many of them automotive parts makers, so far have resisted the dot-com bust that has hurt border assembly hubs from Ciudad Juarez to Tijuana. But companies now fear that declining U.S. consumer confidence and a possible drop in auto sales will filter down to suppliers here and cost jobs.

“I don’t think Sept. 11 has hit yet. Nobody has called us up to cancel an order,� said Ed Sherwood, manager of the Ugimag automotive magnet factory where 650 people work. “But vehicle sales did go down immediately after the attacks, and if they stay down, our sales will as well. So will everyone else’s in the North American vehicle industry.�

The economies and populations of the twin cities have risen with the success of the North American Free Trade Agreement. Booming transportation has spawned 500 trucking firms here and endless acres of warehouse space in Laredo.

Nearly 40% of all U.S.-Mexico trade flows through the Laredos, commerce that grew to nearly $250 billion last year. The region can thank geography and the designers of the U.S. interstate highway grid that put the terminus of Interstate 35, a trade conduit that stretches all the way to Canada, in downtown Laredo.

In addition to trade, cross-over cash from shoppers and manufacturers has greased the regional economy.

“We’re in it together, and we have been over the last 100 years,� said Michael Patrick, economics professor at Texas A&M; International University in Laredo. “Our future is a joint one. We will prosper together and weather downturns together.�

Although the Mexican maquiladora industry on the whole has lost 130,000 jobs, or 10% of the total, since the first of the year, plant jobs here are believed to have held steady due to a traditional manufacturing profile and a minimum of consumer electronics goods that other hubs have relied on.

Boosted by trade, construction and an influx of public sector jobs--about 58 government agencies have regional offices in Laredo--the Texas-side metropolis grew at an annual average of 4% in the 1990s.

Nuevo Laredo is growing at least as fast, filling up with Mexicans who have migrated from the interior, attracted by work and proximity to the United States. The region’s population is estimated at about 700,000, with 500,000 living in Mexico, the rest in Texas.

But the events of Sept. 11 have darkened an already unpromising economic mood, and there is a sense in the region of impending repercussions. The attacks probably shoved the faltering U.S. economy into a recession that is bound to affect manufacturing and transportation.

“The effect of the war against terrorism is the big unknown,� said Sherwood, of Ugimag. “What effect it has on all of us is hard to predict. This is going to be a different kind of war, no playbook to tell you what’s going to happen next.�

James E. Jackson, manager of Cives steel fabrication plant here, which is owned by a Georgia-based company, said the attacks came just as maquiladoras were hoping that the economic downturn had bottomed out.

Although the strong Mexican peso has kept demand for U.S. imports high, the American economic slowdown has been felt acutely in Mexico since the end of last year, when northbound shipments of Mexican goods began to tail off. Things have gotten noticeably worse in the last two weeks, said Roberto Quintanilla, owner of a 300-truck nationwide fleet that is based here.

“Business is off 30%. I’ve had to lay off 14 people, and we’re out looking for business as hard as we can,� said Quintanilla. “We’re living day to day.�

Though truck crossings take about 45 minutes, no longer than usual, passenger crossings now take twice as long, officials here say, as papers and vehicles are inspected more closely. That has discouraged Mexican shoppers from ducking into Texas to make purchases. Although the waits are shorter going into Mexico, U.S. tourists are staying home too.

As a result, the La Mina bar and liquor store two blocks from the border has suffered an 80% drop in foot traffic. “People are afraid they might close the border and get stuck if there is another attack,� said owner Juan Miguel Anzaldua. “So there is no one.�

Gloria Diaz de Hinojosa, owner of Tienda San Antonio, which sells blankets, shirts and other souvenirs, said: “It’s terrible in the economic and moral sense. People are saving their resources and not coming.�