Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital Jennifer Bair University of Colorado [email protected]

Revisiting Local Clusters in Global Chains:From Boom to Bust in Mexico’s Blue Jeans Capital

Jennifer BairUniversity of Colorado

[email protected]

Global Commodity Chains

• Old development model = Domestic Industrialization (ISI)

New development model = Export-led growth via integration into global commodity chains

• Policy-oriented strand of GCC research focuses on how firms and regions can develop via participation in GCCs

• Under what conditions can GCCs stimulate jobs, export revenues, and industrial upgrading to higher value-added activities or industries?

Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital

University of Vienna, April 13, 2010



Post-NAFTA boom in apparel exports to the U.S…

Source: US International Trade Commission, U.S. imports customs value, SITC 84



…and in Apparel Employment

Source: Mexican government (INEGI data), various years.



La Laguna in north central Mexico

Indicators of La Laguna’s Post-NAFTA Boom

1993 1998 2000

Total output/wk. 500,000 4 million 6 million

Max. output/company/wk. 50,000 230,000 480,000

% Mexican denim 1-2% 5% 15%

Employment 12,000 65,000 75,000



Source: Fieldwork carried out in summers 1998 and 2000


“Local Clusters in Global Chains”

• In series of papers, Bair and Gereffi analyzed the causes and consequences of region’s post-NAFTA boom in blue jeans exports (2001; 2003; Gereffi, Martinez and Bair 2002)

• Based on fieldwork carried out in the Laguna in 1998 and 2000

• Found that surge in local production and exports was caused by the changing organization of North American apparel commodity chain in post-NAFTA period

Change in institutional context created by new regulatory regime (NAFTA rules of origin)

Arrival of new types of buyers sourcing from or coordinating production in the region

Positive development outcome/ Industrial upgrading

Evidence of Industrial Upgrading: La Laguna’s Lengthening Chain

UNITED STATES

LA LAGUNA

Textiles Trim and Design and Cutting Assembly Laundry and Distribution Marketing Retail

Labels Product Dev. Finishing

UNITED STATES

LA LAGUNA



UNITED STATES

LA LAGUNA



1993

1996

2000


The Blue Jeans Capital in Decline

• Fieldwork in March 2008 revealed that three of the five largest firms in 2000 were no longer in business.

• Production volumes declined in all but two (both foreign-owned) of the seven factories that remained open.

• Combined production of region’s largest companies fell from 2.6 million/week in 2000 to less than 1.1 million/week in 2008.

• Masculinization of local garment workforce: In all companies we interviewed, half of the sewing machine operators were men, ranging from 50% to 70% .



From Boom to Bust in the Blue Jeans Capital…

Production Capacities of La Laguna's Largest ManufacturersJuly 2000 and March 2008 compared

Rank Firm Capacity July 20001

Emp. July2000

Capacity March2008

Emp. March2008

1 Wrangler 480,000 1,900 est. 500,000 NA

2 Kentucky-Lajat 400,000 5,500 150,000 2,500

3 Libra 400,000 5,000 est. 50,000 NA

4 Siete Leguas 250,000 3,200 80,000 1,800

5 Grupo Denim 245,000 3,300 120,000 2,800

6 Maquilas Pami 240,000 3,800 CLOSED CLOSED

7 Red Kap (RKI) 156,000 1,430 NA NA

8 Pafer Huichita 150,000 2,450 CLOSED CLOSED

9 Impeccable 150,000 1,500 CLOSED CLOSED

10 OMJC 135,000 3,000 185,000 2,600

Total 2,606,000 31,080 1,085,000 9,700

1Pairs of pants per week.Source: Fieldwork conducted by Bair and Gereffi 2000; Bair and Werner 2008



Employment Declines, but More Men Sewing

Number of monthly employees classified as workers (obreros), not seasonally adjusted.Source: INEGI, Banco de Infomacion Economica, Industria de Maquiladora series.



Making Sense of La Laguna’s post-NAFTA Trajectory

• Boom to bust cycle underscores mobility of capital in contemporary global economy, but what explains emergence and timing of local export surges and declines?

• What happens to a place when it becomes “delinked” from a particular commodity chain?

• What lessons can be drawn from La Laguna’s experience for GCC analysis more broadly?



The New Blue Jeans Capital: China’s exports surge, Mexico’s declines

U.S. Apparel Imports in US$ billions, 1996-2008



Fibers(production/processing of natural/syntheticfibers)

Yarn(spinning fibers intoyarn)

Fabric(knitting/weaving yarn into fabric)

Production(Cutting of fabric Assembly of garment)

Pre-production(design & Pattern/marker making)

Retail(marketing, distribution and sale)

Post-production(laundering & finishing)

Fiber Segment

Textile Segment

Apparel Segment

Apparel Retail Segment

The Apparel Commodity Chain Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital


Documents

Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital Jennifer Bair University of Colorado [email protected]