A 'desert gateway' blooms on big pool of low-wage labor

The view from the mayor's 10th-floor office in El Paso's sparkling new City Hall is spectacular - and challenging.

Whether from City Hall or 2,000 feet farther up the side of the rugged Franklin Mountains overlooking the town, it is impressive to see a remote stretch of Western desert blooming with rich clusters of modern manufacturing facilities. Here, halfway between the Gulf of Mexico and the Pacific, corporations such as General Motors, GTE Lenkurt, Sylvania, RCA, and Atari have set new industrywide productivity records.

But no one familiar with El Paso ignores the difficulties of maintaining the delicate balance which has brought prosperity to this desert gateway through the Rockies.

El Paso is one of the country's point men with Mexico. This means access to a big labor pool but can also mean social and economic problems when things go awry south of the border, as they have done recently.

Ten blocks from City Hall, two congested bridges over the shallow Rio Grande connect downdown El Paso with Ciudad Juarez, Mexico's fourth-largest city. The Mexican city's 800,000 people, added to El Paso's 480,000, create a remarkably close-knit economic unit, identified in studies by Chase Econometrics, the Fantus Corporation, and others in recent years as having perhaps as much growth potential as any metropolitan area in North America.

Just south of the largely unfenced border dividing Juarez from El Paso, wooden shacks crowd together on the desert floor and push up into the mountains beyond. These ''Colonias'' slums, mostly without electricity, gas, or running water, are one key to El Paso's growth prospects. The area fills with newcomers drawn from the Mexican interior faster than Juarez and El Paso can absorb new workers. The result is a labor force eager to work for low wages.

The Colonias slums, however, also represent a potential powder keg, liable to explode if United States and Mexican policies fail to keep pace with the demand for new jobs.

Former El Paso Mayor Judson Williams, now a management consultant advising companies on both sides of the border, explains that the large pool of available labor is a key asset. With 40 percent unemployment in Mexico and over 12 percent currently in El Paso, he says, expanding or relocating industries can recruit workers without depleting the labor supply.

Traditionally, El Paso has drawn on its constantly replenished labor pool to cash in on the region's ''five c's'' - copper, cotton, cattle, clothing, and climate.

Now El Paso wants to expand its alphabet into high technology. This area has long produced copper wire, which Mexican and Mexican-American workers weave into complex wiring harnesses for automobiles. Electrical goods manufacturing has led to electronics. While the US recession has cut demand sharply for clothing made here, hands long skilled in stitching together work jeans and now designer jeans and fancy cowboy boots are busy wiring silicon chips.

Timothy Roth, an economist with the University of Texas at El Paso and Congress's Joint Economic Committee in Washington, says, ''We are at the center of a hub which provides direct access to all the major US markets as well as to new Latin American markets to the south.''

One puzzle is why El Paso - put on the map as ''the Pass of the North'' by Spanish explorers headed west in 1581 - has waited so long to capitalize on its natural Sunbelt advantages. Comparing their city with relatively nearby Tucson and Phoenix, both native and newcomer El Pasoans explain that locally owned banks helped strangle development here through tightfisted lending policies. With the town's major banks now taken over by Texas-wide holding companies, business leaders here expect growth to accelerate. But this penny-pinching tradition may also be spawning a new generation of home-grown financiers.

Maury Kemp is a local Ford dealer whose family came to El Paso in 1877. Now he is into banking. His rapidly growing First Financial Enterprises Inc. offers a ''no load'' deferred annuity plan which may mean a lot more development money for El Paso. Economist Roth, for one, believes the operation has alreay begun to attract a ''potentially massive pool of investment capital from outside.''

''We have plenty of labor, access to natural resources, and the right climate ,'' Mr. Kemp explained. ''But this is a capital-short community, so we need to attract capital.''

Another key factor in El Paso's growth is Mexico's ''maquila'' program - often referred to as the ''twin plants program.'' Set up in 1965, the program permits Mexican plants of wholly US-owned companies to put together, under favorable terms, components which are then shipped back into the US for assembly in finished product.

With the US recession cutting demand for goods from El Paso and the Mexican peso devaluation cutting back on El Paso retail sales to Mexican visitors, Kemp says that ''we are probably in the worst economic catastrophe that El Paso has had in 50 years.'' But he adds, ''It just isn't that bad.''

Not only is Kemp's financial empire growing, but he says he is meeting an increasing number of Northern corporate executives ''coming here incognito to check out our banking, the labor situation, housing, and our cultural activities.''

Glenn Palmore, a marketing professor at the University of Texas at El Paso, also finds himself busy dealing with outsiders considering shifting their manufacturing operations to El Paso, Juarez, or both. Dr. Palmore expects the stream of high-technology industry to increase as the area's universities add to the pool of trained workers originally built up by the military facilities ringing El Paso.

Ronald Coleman, a Democrat just elected to his first term in Congress after nearly a decade in the Texas Legislature says El Paso needs federal help to ensure adequate water supplies, improve its school and transportation systems, and deal with the illegal immigration from Mexico. But, he says, El Paso has the advantage of ''learning from the mistakes'' of Sunbelt cities such as Houston and Phoenix.