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

1. Revisiting Local Clusters in Global Chains:From Boom to Bust in Mexico’s Blue Jeans Capital Jennifer Bair University of Colorado jennifer.bair@colorado.edu

2. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital 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? University of Vienna, April 13, 2010

3. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital Post-NAFTA boom in apparel exports to the U.S… Source: US International Trade Commission, U.S. imports customs value, SITC 84 University of Vienna, April 13, 2010

4. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital …and in Apparel Employment Source: Mexican government (INEGI data), various years. University of Vienna, April 13, 2010

5. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital La Laguna in north central Mexico University of Vienna, April 13, 2010

6. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital 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 University of Vienna, April 13, 2010

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

8. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital Evidence of Industrial Upgrading: La Laguna’s Lengthening Chain 1993 1996 2000

9. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital 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% . University of Vienna, April 13, 2010

10. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital University of Vienna, April 13, 2010

11. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital 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. University of Vienna, April 13, 2010

12. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital 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? University of Vienna, April 13, 2010

13. Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital The New Blue Jeans Capital: China’s exports surge, Mexico’s declines U.S. Apparel Imports in US$ billions, 1996-2008 University of Vienna, April 13, 2010

14. The Apparel Commodity Chain Revisiting Local Clusters in Global Chains: From Boom to Bust in Mexico’s Blue Jeans Capital Fiber Segment Fibers (production/ processing of natural/synthetic fibers) Yarn (spinning fibers into yarn) Fabric (knitting/weaving yarn into fabric) Textile Segment Pre-production (design & Pattern/marker making) Production (Cutting of fabric Assembly of garment) Post-production (laundering & finishing) Apparel Segment Retail (marketing, distribution and sale) Apparel Retail Segment University of Vienna, April 13, 2010