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U.S. Food Processors Abandoning Mexican Dream

July 9, 1993

MODESTO, Calif. (AP) _ When the nation’s second-largest vegetable packer set up shop in Mexico, it hoped to save money and boost profits.

But after five years of trying, Tanimura & Antle is giving up and coming home, complaining that low wages south of the border are more than offset by low productivity and high costs.

″We found that we were not competitive with our operations in the U.S.,″ said Rick Antle, president of the Salinas-based company. ″We can even produce more efficiently for the Mexican market from the U.S.″

He’s not alone.

″We’re there now, and we’ve seen the ugly side of it,″ said Craig West of Eckert Cold Storage Co.

At Eckert’s plant in Modesto, Loretta Burch plucks unripened bell peppers from a conveyor belt for $7.75 an hour, the top wage for an experienced line worker at most California processing plants.

Mexican wages are about one-eighth that rate, said Eckert, Pillsbury and other companies that do business there.

Some companies estimated worker productivity in their Mexican plants at one-fifth to four-fifths lower than in their California plants.

Religious customs in largely Roman Catholic Mexico, workers’ feelings about the overall economy and the language barrier get in the way of efficiency, several managers and analysts said.

″On saints’ birthdays, the whole country shuts down,″ West said. ″And I don’t mean that negatively. There’s just a reverence for it. They take their celebrations very seriously.″

Tomato grower-packer Robert Meyer said efficiency at his Mexican plants was about one-fifth that of his California plants two years ago, but appears to be on the rise. He blamed low production levels on discouraged workers trapped in a mostly stagnant economy.

″The workers weren’t enthusiastic because there was no future,″ he said. ″The economy was dead.″

Still, Meyer has been successful overall, partly because he invests in his workers’ education and personal lives. ″The social relationship is very important,″ he said.

He has eight packing plants in Mexico so he can produce tomatoes, squash, cucumbers and bell peppers in winter. But it costs more overall to stay in the winter market.

″I’m one of the few people who is still left in Mexico,″ he said. ″And I can tell you that it costs more in Mexico to produce the vegetables that I’m growing than to produce them in California.″

University of California economist Kirby Moulton said Meyer’s experience is typical. Overall costs in Mexico are higher because companies may have to grade roads, build water systems, educate and inspire work forces and import everything from harvesters to seeds from the United States, he said.

″They not only have to be the processing company, they have to be an extension service and a bank,″ Moulton said. ″Support for processors and growers by a university or government or banking system either isn’t working or isn’t doing very well.″

Some companies said they don’t even want to try producing in Mexico because they value reliability more highly than cheap labor, said Ed Angstadt of the Central California Grower-Shipper Vegetable Trade Association.

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