### Why is Manufacturing Employment Decreasing in Baja California?
In recent months, several companies have moved out of Baja California to relocate to northeastern states in Mexico, aiming to cut down on logistics costs, according to Montejo. This shift has led to a noticeable decrease in job opportunities within the manufacturing sector in the region.
From May to August, the number of employees registered with the Mexican Social Security Institute (IMSS) has decreased. This job shrinkage can be attributed primarily to businesses seeking more cost-effective ways to distribute products to the United States. However, industry experts argue that this is not an alarming situation since many of those who have lost their jobs have filled the labor gap that has been an issue for four years. Nonetheless, it is crucial to ensure that more investments are retained in the area.
#### Employment Trends and Shifts
According to the National Occupation and Employment Survey (ENOE), conducted by the National Institute of Statistics and Geography (Inegi), the number of workers in the manufacturing industry dropped from 431,402 in the last quarter of 2023 to 423,398 in the first quarter of this year. This number fell further to 414,572 in the second quarter. Thus, the sector saw 16,830 fewer workers in the first six months of 2024.
Despite these numbers, the overall worker deficit in the industrial sector has lessened since the post-pandemic period. Pedro Montejo Peterson, president of the National Council of the Maquiladora and Export Manufacturing Industry (Index) in the Zona Costa, noted that the worker deficit was 40,000 people post-pandemic but has now decreased to 4,000 in Tijuana alone.
### Causes Behind Job Losses
Montejo explained that in recent months, several companies have relocated from Baja California to northeastern states to reduce logistics costs. Previously, lower costs in the region made it feasible for businesses to balance overall expenses. However, increasing costs have driven companies to explore more affordable logistics routes to reach their final customers.
Economist Jorge Fonseca noted that manufacturing export companies prefer to establish operations near Texas, where distribution costs are considerably lower than in California. Better railway connectivity in central and eastern U.S. makes the region more competitive for production line relocations. Montejo added that around six to ten companies in the Zona Costa have moved to other states, though this represents a small proportion of the 900 companies in the area.
### Manufacturing Sector’s Role in Employment
According to the ENOE, nearly a quarter of formal employees in Baja California worked in the manufacturing sector during the second quarter of this year, representing 414,572 out of 1,794,675 jobs. Since May, there has also been a decline in the number of IMSS-registered workers in the state.
Although the percentage decrease in IMSS-affiliated workers was modest between May 2023 and May 2024, the trend continued to worsen in the subsequent months: down 0.5% in June, 1.1% in July, and 0.8% in August. Despite these unfavorable numbers, Montejo highlighted that Baja California remains the state with the most companies and is second only to Chihuahua in producing direct employment.
Montejo emphasized that it is crucial for the new municipal administration, starting October 1, to collaborate with the state government to retain businesses in the city and state. It is also essential to find ways to counteract the high logistics costs of importing raw materials and exporting products. The focus will likely shift from labor-intensive industries to those centered on science and technology, particularly in aerospace and medical devices, which have significant presences in Tijuana.
### Additional Insights
#### Increase in Manufacturing Wages
Despite the declining employment trend, wages within the manufacturing sector have seen an increase. On average, maquiladora workers are now being paid 391.50 pesos daily.
#### Broader Economic Impact
According to a recent study, the decreased employment in the manufacturing sector is also linked to broader global phenomena, such as the war in Ukraine, the conflict between Israel and Palestine, and political situations in Latin America. These factors have resulted in a 30% decrease in exports in the first quarter of the year.
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### Related News
#### Baja California’s Manufacturing Sector Reflects National Trends
In line with broader national trends, Baja California is witnessing a decline in its manufacturing employment due to companies relocating to reduce logistics costs. This shift is seen across various states in Mexico as businesses aim to enhance their competitiveness by being closer to key markets, such as Texas.
For a deeper understanding of these trends and strategies for addressing them, stay connected with TJGringo.com.