Medical supplies boom in Baja California despite risks to workers

Foreign investment pours in as the state government battles to retain equipment in Mexico's fight against Covid-19 and workers demonstrate over safety

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Covid-19 Mexico

A man sells facemasks in Tijuana, near the US-Mexico border, where hospitals are becoming overwhelmed with cases of Covid-19 (image: Alamy)

The coronavirus has dramatically increased global demand for medical equipment and despite being a producer, Mexico's shortages, along with a lack of staff, have contributed to the country having one of the highest Covid-19 death rates in the world.

Factories in states such as Baja California, in the northeast of the country, have been producing crucial medical equipment, such as disposable intravenous sets, syringes and catheters, but only for export to other countries. This has angered local authorities.

In April, a conflict erupted when Jaime Bonilla Valdez, the governor of Baja California, accused multinational company Smiths Medical, which manufactures ventilator parts, of refusing to sell equipment to the government. This happened a few weeks after the state reached peak infections and while it still had one the highest case and fatality rates in the country.

The governor addressed citizens in one of his daily reports and explained that if the company would not sell medical equipment to the state, then it would lose its status as an essential business. He subsequently shut down their operations.

By the end of April, the same governor announced that the company could restart operations, after the state government and executives from transnational companies reached an agreement for a portion of equipment to go to Baja California hospitals.

Covid-19: an "unmissable opportunity"

Mario Escobedo Carignan, Baja California's secretary of the economy, said that developing the medical equipment industry while the pandemic is in full swing is an opportunity that cannot be missed. While industries elsewhere are paralysed, in Baja California they are ready to open their doors to new ventures.

Two North American companies, Medline and Centerpiece, which produce sterilisation equipment and other medical products, have already announced investments close to US$200 million in Baja California. The industry there has been growing by between 9% and 10% annually over the past five years, with investments of up to US$800 million per year.

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Maquiladoras: Also known as maquilas, are factories in Mexico run by foreign companies that export finished products to their country of origin

Both companies have chosen to locate themselves in Mexicali and Tijuana, Baja California’s two largest cities. They contain 80% of the 918 maquiladoras in the state and they border US economic powerhouse California.

In addition to its export-friendly location, the state has a lot of experience in the medical equipment industry. There are currently 76 factories either manufacturing medical devices or assembling them. Forty-eight of these are in Tijuana, generating 49,000 direct jobs according to the Baja California Medical Products Cluster.

In Mexico's maquilas, Covid-19 deaths continue

Growth in the medical sector during a pandemic is not without consequences. In May, during the critical period for controlling the spread of Covid-19 in Mexico, many of the maquilas continued to operate. Tijuana recorded more than 1,000 infections and 203 deaths.

Workers angry about the spread of Covid-19 in the maquilas sparked protests in Tijuana and Mexicali, in the north of Mexico. One of the first companies to host a protest was Prime Whell, where one of the workers told me on condition of anonymity that the 4,000 or so employees were only allowed to return home if they signed a document agreeing to forgo wages, or log the time as holiday.

During the following days, the employees stood at the entrance to the factory and stopped production, demanding the presence of those in charge. The worker I spoke to said half the work force, including those with chronic health conditions, were sent home to avoid crowding and protect the most vulnerable. Those that stayed on were given facemasks and antibacterial gel.

a lot of manufacturing that is in Asia today is going to come to Mexico and it is going to come to Baja California

Later in March, the Ministry of Labour and Social Security tightened social distancing measures. Protests continued at other points. On 8 March, one of the first non-essential manufacturing companies was closed in Mexico after a worker died from Covid-19 and 11 others were infected and hospitalised. Even so, the company refused to stop production.

It was not until 14 April that the state’s labour secretary, Sergio Moctezuma, suspended activities in 64 factories in Tijuana. That meant more than 18,000 non-essential maquiladora employees must stay at home, where they would receive at least 30 days of their full salary before returning to work. 

Despite warnings that infections had not yet peaked in Baja California and other regions of Mexico, the state governor allowed more than 100 maquiladoras and thousands of workers to return to work in the first days of May.

Mario Escobedo Carignan, state secretary for sustainable economy and tourism, stated that “no company is above the health of workers. So this effort [to get production going again] is not misunderstood, what we want is to reactivate without putting anyone at risk.”

But Jesús Rogelio Casillas, a member of the Political Organization of the People and Workers (OPT) said that the manufacturing companies operating on the border have not only failed to comply with regulations, but have also violated the right to health and life of their workers by exposing them to infection at work.

Move to the north of Mexico seems inevitable

Despite the unsafe working conditions in the region, it is expected that by the end of 2020 the medical device industry will generate 18,000 new jobs. This may attract workers to the area that have lost jobs in other parts of the country.

Under this scenario, the Baja California state government has also planned a commercial tour to the early epicentre of the pandemic, Wuhan. The plan of the state’s commercial representatives is to meet with possible investors to offer companies that settle in the region the tax benefits of North American regional trade accord the US-Mexico-Canada Agreement, which in 2019 replaced the North American Free Trade Agreement (NAFTA). 

“Today, manufacturers want to be closer to their market. It means that a lot of manufacturing that is in Asia today is going to come to Mexico and it is going to come to Baja California,” said Escobedo Carignan. “The market also wants to avoid what is happening in China, where it is reactivating but not enough to meet the demand it has for supplies to the US,” he added.

According to a survey of around 260 executives of companies with manufacturing plants in China, 66% acknowledged their interest in settling in Mexico so as not to stop their production and to meet their delivery goals, mainly to the US, according to Escobedo Carignan reported during an interview.

The impact on the population’s health that will follow this economic growth will become evident in the months to come.

“The situation in Baja California is quite serious ... despite this situation, the authorities have decided to alienate the interests of companies to reopen the industry,” said Jesús Rogelio Casillas of the OPT.