A Border Town Warns Main Street, USA to Adapt

LOUIE VALDEZ shifts in his cowboy boots as he stares out his office window at Nogales, Ariz., and deadpans, ''Whew, I picked a pretty contentious time to be mayor.''

Mr. Valdez, all 24 years of him, is the youngest mayor in the United States. He finds himself at the helm of his native town on the US-Mexico border as it confronts its worst economic crisis in nearly seven decades.

Nogales, Ariz., has survived Mexican peso devaluations before, but this one is worse: The buying power of average Mexican shoppers, this city's bread and butter, is down by over 50 percent. And the long-term effects of closer trade relations with Mexico are still unclear here, leading to uncertainty about the city's future.

''When I took office a year ago, there was still a lot of hope about things getting better and new opportunities with Mexico, but that's pretty much gone,'' Valdez says. ''People are maxed out just worrying about whether or not they're going to lose their jobs.''

That's understandable. Unemployment in Nogales is 19 percent, with retail job losses alone topping 1,000 in a town of 21,000. ''Downtown is never coming back,'' says Steven Colantuoni, the county's economic development director.

The city lives off the county sales tax, 40 percent of which used to come from Mexican shoppers. But tax receipts have plummeted as Mexicans burned by the peso devaluation stopped shopping. As a result, Valdez is implementing a 10 percent across-the-board budget cut that could force 100 of the city's remaining 280 employees out of work. (The city work force was 321 when he took office).

Despite the day-to-day focus on the current crisis, however, Valdez says Nogales and similar border cities must develop a long-term outlook to prepare for economic change. ''We can't wait for retail to come back this time,'' he says. ''Our business mix is going to have to become more diverse.''

NAFTA is about a freer flow of goods with Mexico, he says, but ''it also means that certain aspects of that trade,'' like record-keeping and inspections, ''got more complicated.''

Border towns like Nogales can profit from that, Valdez adds, ''but it takes an educated work force that can adapt.''

Solving the border's environmental problems and water needs will also require new investment and workers, he says.

Most of all, sharing a border with Mexico must again be seen as an advantage ''and not as the negative that it might look like from Rhode Island or Kansas,'' Valdez says.

''We're on the front line of what eventually is going to happen on Main Street, USA, with the globalizing economy, so what happens to us should matter to the rest of the country.''