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More and more, companies that crossed the Mexican border after passage of NAFTA in search of cheap labor are finding out that the costs of doing business south of the border are too much.

Free Trade Backfires in Mexico

By Clayton Potts
Exclusive to The Spotlight

Some internationalists who rushed to close their industries in the United States to exploit cheap labor in Mexico under NAFTA are departing broken-hearted, according to Ted Farrell, who has been involved in business there for 50 years.

Long-standing, entrenched government corruption that extorts entrepreneurs, extensive crime by public officials and private citizens and workers who toil hard while illegally in the United States but become lazy when sent back to Mexico are among the factors Farrell cited.

Farrell, 71, operates out of Coronado, Calif. and Ensenada, Mexico. "Many a company from the United States is closing and trying to escape with some of their expensive, movable equipment to avoid confiscation of whatever they have," Farrell said. Such departures are usually on "weekends and at night with the help of their lawyers and truckers," Farrell said.

Farrell's wife, Elisa, said that while Mexico has many unemployed loafers begging, the "help wanted" signs abound.

"It seems that anything more complicated than sewing a T-shirt is cause enough to walk off the job," she said.

One businessman shifted operations from Glendale, Calif., where his company was producing uniform shirts at a cost of $4.50 each for labor to Mexico, where he expected to reduce the costs to $3.50 each.

"The gentleman said he started off with 300 employees upon opening," she said. "He started with T-shirts and when he thought he was ready to do uniform shirts, 200 employees walked off because it was too much work."

"Here in Mexico we cannot find responsible people who will take the work for $3.50 in U.S. currency," she said.  Corruption prevails at the petty level in Mexico, said Farrell.

"When the police needed CB radios, any American caught with one in his vehicle lost it," he said. "I fought for mine, and, as it was illegal to steal it and with powerful friends, I did not lose mine. But I did move it from my vehicle. These acts are a national custom."

On one occasion, the government seized a television set belonging to his company, claiming a small tax liability. He paid the tax, but they could not find the TV to return to him. Months later, it was discovered in the home of one of the employees of the agency that had seized it.

Mexicans are unaware "that their nation and military have been passed on to the United Nations," he said.

Mexico is an oil-producing, oil-exporting nation, yet when the U.S. industrial complex raises prices on oil that the United States is importing, Mexico raises its prices accordingly, he said.

"I say buy from Iraq and stop murdering that sovereign people," Farrell said.

"There is no way to be honest and survive in business in Mexico; for that reason, the government likes the American factories that come south leaving Americans jobless or working for less," Farrell said.

American entrepreneurs in Mexico who fail to "become close to those in power, or marry into their families, will be putting their plant or factory in the hands of the government," he said. "That is the name of the game."

While "I disapprove of drugs, if they were legalized the government might go bankrupt" because it is heavily involved for immense profits, Farrell said.

A particular extortion involves government utility companies that discover an "unpaid" bill, sit on it while interest rates of 300 percent mount up, then chase down the consumer for payment, Farrell said.

Many Americans cross the border for cheap auto repairs but "if you are not lucky, Mexican authorities will confiscate your vehicle and whatever else you may have," Farrell said.

"They make it so expensive for you to recover your losses that, after many months and trips with attorneys, most Americans just give up and take their loss," Farrell said.

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