Presentation for GLOBAL INSIGHT LII Maquiladora …1 Presentation for GLOBAL INSIGHT LVIII...

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Presentation for GLOBAL INSIGHT

LVIII Maquiladora Industry Outlook Meeting Tijuana B.C.

MAQUILADORA EMPLOYMENT INDICATORS FOR BAJA CALIFORNIA

January 26th, 2007Juan B. Morales de la Garza MBA CCP

Senior Partner RUIZ-MORALES Y ASOCIADOS

Tel :(01152664) 686-4116 Fax: (01152664) 686-1998 Email: [email protected] www.ruiz-morales.com.mx

Employment Indicators inBaja California Maquilas

•Employment Indicators

Increased Hiring Levels

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Increase in Maquila Employment

Average Headcounts

Increased Turnover Rates / Labor Shortage ?

•.

3

Hiring Comparative Increased Hiring Levels

•Not Hiring

4


•Hiring to Replace

5


•Hiring to Grow

Maquila Jobs Created Oct. 2005-2006

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(National Maquila Employment Increased 2.8%)(BC Maquila Employment Increased 3.3%)Tijuana Maquila Employment Increased +4.6% (Oct ’05-Oct. ’06)

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B.C. Maquila Jobs Lost 2006 vs 2000

X ( National Maquila Employment Decreased -10.1% vs Oct. 2000 )X ( BC Maquila Employment Decreased -13.3% vs Oct. 2000 )X (Tijuana Maquila Employment Decreased -11.8% vs Oct 2000)

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B.C. Maquila Plants Lost 2006 vs 2000

= (A nivel Nacional el Número de Plantas de Maquilas Disminuyó un -23.1%)= (A Nivel Estatal el Número de Plantas de la Maquíla Disminuyó en un -28.0%)= (El Número de Plantas de la Maquíla de Tijuana Disminuyó en un -29.5% )

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Tijuana Hourly Direct Labor Costs in U.S. Dollars

Average Headcounts 2006 vs 2000

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Increased Monthly Turnover Rates

by Month

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Employee Turnover Varies by City and Growth

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Monthly Average:

9.7% Tecate

9.3% Tijuana

6.6% Ensenada

5.9% Mexicali

In an Ideal WorldIn an Ideal World……………………(Low Growth Labor Market)(Low Growth Labor Market)

CURRENTHEADCOUNT

GROWTH

CURRENTHEADCOUNT

• If you lose 1 Employee • Or if you want to add 1 Employee

• Then you Hire 1 Employee13

In the Real World…………(High Growth Labor Market)

If you want to add 1 Employee to your Headcount……

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In the Real World…………(High Growth Labor Market)

If you want to add 1 Employee to your Headcount……

GROWTH

CURRENTHEADCOUNT

• Then you Hire 4 Employees (or More)

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Tijuana Inflation in 2006 higher than National Inflation

Nacional Tijuana MexicaliMensual Acum Mensual Acum Mensual Acum

Ene 0.59% 0.59% 1.14% 1.14% 1.07% 1.07%Feb 0.15% 0.74% 0.42% 1.57% 0.45% 1.53%Mar 0.13% 0.87% 0.82% 2.40% 0.11% 1.64%Abr 0.15% 1.01% 1.73% 4.18% 1.01% 2.67%May -0.45% 0.56% -0.37% 3.79% -7.06% -4.58%Jun 0.09% 0.65% 0.12% 3.92% -0.06% -4.64%Jul 0.27% 0.93% 0.30% 4.23% 0.14% -4.51%Ago 0.51% 1.44% 0.43% 4.68% 0.41% -4.12%Sept 1.01% 2.47% 0.55% 5.26% 0.79% -3.36%Oct 0.44% 2.91% -0.29% 4.95% -0.05% -3.41%Nov 0.52% 3.45% -0.39% 4.54% 6.88% 3.24%Dic 0.58% 4.05% 0.66% 5.23% 0.45% 3.70%

Inflación 2006

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Mexicali Inflation in 2006 slightly lower than National Inflation, but…

Nacional Tijuana MexicaliMensual Acum Mensual Acum Mensual Acum

Ene 0.59% 0.59% 1.14% 1.14% 1.07% 1.07%Feb 0.15% 0.74% 0.42% 1.57% 0.45% 1.53%Mar 0.13% 0.87% 0.82% 2.40% 0.11% 1.64%Abr 0.15% 1.01% 1.73% 4.18% 1.01% 2.67%May -0.45% 0.56% -0.37% 3.79% -7.06% -4.58%Jun 0.09% 0.65% 0.12% 3.92% -0.06% -4.64%Jul 0.27% 0.93% 0.30% 4.23% 0.14% -4.51%Ago 0.51% 1.44% 0.43% 4.68% 0.41% -4.12%Sept 1.01% 2.47% 0.55% 5.26% 0.79% -3.36%Oct 0.44% 2.91% -0.29% 4.95% -0.05% -3.41%Nov 0.52% 3.45% -0.39% 4.54% 6.88% 3.24%Dic 0.58% 4.05% 0.66% 5.23% 0.45% 3.70%

Inflación 2006

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Turnover - Rethink Hiring Profiles

T y p ic a l H ir in g P ro file fo r A s s e m b le r P o s it io n :A g e : 1 6 to 2 0 y e a rs .S e x : F e m a leE d u c a tio n : E le m e n ta ry S c h o o l.R e s id e n c y : 1 y e a r m in im u m liv in g in th e C ity .E x p e r ie n c e : P re v io u s M a q u ila d o ra E x p e r ie n c e R e q u ire d .P ro x im ity : M u s t liv e w ith in w a lk in g d is ta n c e o f th e P la n t.

D IS C L A IM E R : H ir in g P ra c tic e s m u s t c o m p ly w ith L o c a l R e g u la t io n s .

Crosstab

75 114 189

39.7% 60.3% 100.0%

73 114 187

39.0% 61.0% 100.0%

148 228 376

39.4% 60.6% 100.0%

Count% within First Jobin Maquiladoras ?Count% within First Jobin Maquiladoras ?Count% within First Jobin Maquiladoras ?

Yes, it´s my firstMaquila Job

No, I have workedin other Maquilas

First Job inMaquiladoras ?

Total

Yes No

* Likely to Retain After2 Years

Total

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Conclusions Main Challenges Companies Face:

• Leaner and Meaner Companies

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.• Strategic Initiatives

• Outsourcing Trend

• Competing not only in Labor Costs but in Total Costs

• Do the Right Things (Hire the right people and Treat them right).

• Strategic Direction:•Finding Competitive Niche

• Clusters (Medical, Electronics, Aeronautical, Automotive, etc.)

• Rapid Response

• Quality

• Finding the Right Mix (Mexico & China)

•.

THANK YOU !QUESTIONS ?

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Turnover - Rethink Hiring Profiles

* L ike ly to Re ta in A f te r 2 Y e a r s

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Typical Hiring Profile for Assembler Position:Age:?Better to go with Adults & Middle Age.Sex: ⌫Education: Elementary School.Residency: ?Experience: ⌫

Proximity: ⌫DISCLAIMER: Hiring Practices must comply with Local Regulations.

Ca te g o r y % nNo 6 0 .6 5 2 4 2Y e s 3 9 .3 5 1 5 7To ta l ( 1 0 0 .0 0 ) 3 9 9

No d e 0

Ca te g o r y % nNo 5 0 .0 0 9 2Y e s 5 0 .0 0 9 2To ta l ( 4 6 .1 2 ) 1 8 4

No d e 2Ca te g o r y % nNo 6 9 .7 7 1 5 0Y e s 3 0 .2 3 6 5To ta l ( 5 3 .8 8 ) 2 1 5

No d e 1

Ca te g o r y % nNo 0 .0 0 0Y e s 1 0 0 .0 0 2To ta l ( 0 .5 0 ) 2

No d e 5Ca te g o r y % nNo 6 7 .3 5 9 9Y e s 3 2 .6 5 4 8To ta l ( 3 6 .8 4 ) 1 4 7

No d e 4Ca te g o r y % nNo 7 7 .2 7 5 1Y e s 2 2 .7 3 1 5To ta l ( 1 6 .5 4 ) 6 6

No d e 3

9 3 - A g e C la s if ic a tio n

A d u lts ;M id d le A g e ,< m is s in g >Te e n a g e r s

i9 5 - L e s s 1 y e a r in T iju a n a

< mis s in g >Mo r e th a n 1 y e a r Re s id e n c yL e s s th a n 1 y e a r Re s id e n c y

Turnover – Treat People Right

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Category % nY es 40.82 258No 59.18 374Total (100.00) 632

Node 0


Node 2


Node 6Category % nY es 68.83 106No 31.17 48Total (24.37) 154

Node 5



Node 7


Node 1



Node 3

Likely to Retain A f ter 2 Y ears

i79-81-I Feel Departments w ithin this Company W ork Together to reac h Objec tiv es .

Y es

i67-85-I Feel Conf ident going to the HR Department to Solv e my Problems :

NoY es

i62-52- Our Superv is or lis tens to Sugges tions to Improv e our W ork:

NoY es

No

i67-85-I Feel Conf ident going to the HR Department to Solv e my Problems :

NoY es

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Source: National Baja Poblacion TijuanaINEGI Mayo 2006 Employment California Tijuana (INEGI y CONAPO)

Mar. 2006 1,191,250 245,226 166,702 1,795,470 Empleo Mar 2001 1,279,217 282,577 192,787 1,295,781 Empleo Difer Mar 2001 (87,967) (37,351) (26,085) 499,689

Presentation for GLOBAL INSIGHT LII Maquiladora …1 Presentation for GLOBAL INSIGHT LVIII...

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