Migrants’ Dollars Cross Border, Brick by Brick

PACHUCA, Mexico â€”  Jose Antonio and Olga Lidia Mendoza have never set foot on the arid hillside lot they own here along Ejido Street near the corner of Agrarian Reform. They have never taken in the spectacular view of Pachuca’s old mining center in the valley below.

The Mexican couple live in Los Angeles County and have not been home in years.

Having managed a risky border crossing with two young children and no documents, they prefer to stay put for now, clinging to his $225-a-week job as a chef at a Japanese restaurant in Diamond Bar.

What they do know precisely, though, is the computerized blueprint of their future home, which is rising from the tiny lot here by an innovative form of remote control: With help from an engineer at no extra cost, Mexicans and Mexican Americans in California can design homes or businesses for construction in Mexico and order the building materials for next-day delivery to relatives who oversee the projects.

“The advantage is that I control the spending from here,� Olga Lidia, 34, said in a telephone interview from her rented apartment in Rowland Heights.

“Otherwise, I wire money home and, while mama is building the house, she can grab some of the cash for herself.�

The cross-border service, offered by the Mexican cement giant Cemex, is part of a scramble by financial and retail companies for a cut of the more than $10 billion that Mexicans abroad are expected to send home this year. The competition is driving down the once-excessive fees charged for moving these migradolares, or migrants’ dollars, and allowing even bigger sums to flow into Mexico, one of the world’s largest recipients of migrant remittances.

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A Lot, a Little at a Time

Rather than a flood, the money comes in millions of trickles -- from what little is left after struggling migrants like the Mendozas pay for food and rent in the United States -- and goes largely to sustain poor kin back home. The recipients typically collect cash at wire transfer counters and spend more than 90% of it on consumer goods.

Mexican multinationals have begun targeting the 23 million Mexicans and Mexican Americans who live in the U.S., offering ways they can order and pay for furniture, home appliances and even groceries for delivery in Mexico instead of sending home cash.

But the cement company’s initiative has won high-profile endorsement from U.S. and Mexican officials, who are seeking to channel the remittance boom -- Mexico’s fastest-growing source of income -- into savings, home-building, small business ventures and other job-creating investment.

“That $10 billion could become a detonator of economic growth in the regions abandoned by our migrants, our most backward regions,� said Javier Gavito, general director of Mexico’s state-owned National Savings and Financial Services Bank.

The bank, which serves 3.8 million small-scale savers in Mexico, joined 16 other banks and credit unions on both sides of the border in January to create the People’s Network, an Internet-based system that allows money transfers from the U.S. directly to savings accounts at 750 Mexican bank branches.

Mexican and U.S. officials have lobbied other American banks to make it easier to open accounts and cheaper to send money home.

With scores of American banks and wire transfer agencies vying for migradolares, fees have tumbled from an average 15% of the amount remitted five years ago to about 5% today. In April, Citibank and its Mexican partner Banamex offered the lowest fee of any major bank -- $5 plus a 2% commission on the transfer of any sum up to $3,500 between accounts in their branches.

President Vicente Fox, meanwhile, has expanded government programs that match part of the estimated $60 million that U.S.-based migrant associations send each year for public works projects in their home communities in Mexico.

On June 9 in San Francisco, U.S. and Mexican officials will meet to review such initiatives, which are part of their 2-year-old Partnership for Prosperity program, and to try to attract more American corporate investment to Mexico’s poorer regions.

“We are looking for new ways to close the income gap between the two nations,� said Eduardo Sojo, Fox’s economic advisor.

While one aim of these efforts is to discourage illegal migration, the result is a paradox. As tougher U.S. border patrols raise the risks for undocumented Mexicans and as the Bush administration resists Fox’s calls for a more open frontier, the income of those who slip through is increasingly welcomed by American banks and freer to move around.

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Flat-Fee Transfer

The day after the Mendozas placed an order and paid $315 at a Cemex branch office in Los Angeles last month, Gabriela Castillo walked into a Pachuca hardware store that is one of 5,000 Cemex sales outlets across Mexico and identified the order by code number. She hauled away 20 sacks of cement and 400 concrete blocks to start her daughter and son-in-law’s two-story house.

The fee for moving the cash across the border, an operation handled for Cemex customers by the Texas-based money transfer company Dolex, is the best bargain in the market: a flat $1 for any sum.

With cash from separate remittances, Castillo paid $3,500 for the lot in this state capital about 60 miles northeast of Mexico City. And she is paying a Pachuca tradesman to build the home from a precise blueprint that was produced by a consulting engineer from the couple’s design and at Cemex’s expense.

“First we are putting up a wall around the property,� Castillo said during a recent inspection of the lot, in a new subdivision where ranchero music blares from other building sites along dirt streets lined with scraggly palms.

“Then we will lay some rich, black soil and plant some fruit trees,� she added. “When my daughter finally sees her home, it will have plenty of shade.� Striding through tangles of dry weeds, Castillo spoke with matriarchal pride.

The home, like many in Mexico, is being built for three generations at once.

Castillo and her husband, Ramon Hernandez, both 63, will move into one of the four ground-floor bedrooms, leaving their place in Mexico City so he can recover from respiratory ailments induced by smog.

The other three bedrooms are for the Mendoza couple; their son Erick, now 13; and 9-year-old daughter Yessenia. The second story is reserved for Erick if in the future he chooses to start a family and stay.

The Mendozas’ arrival might still be a few years off. Olga Lidia said the couple learned a lesson nine years ago when they came home after a year’s work in California with $1,000 in their pockets. They found cleaning jobs in Mexico City, but rent devoured their wages.

Within four years they were back in Los Angeles with a more ambitious plan: to work until they could build not only a home here but also a place to start a business.

“What we can save in Mexico in 10 years, we can save here in five,� Olga Lidia said. But building or buying a home is far more expensive in Los Angeles than in Mexico -- the Pachuca house will cost about $15,000 -- and more complicated for an undocumented migrant.

“That is why so many of our people come here� to the U.S., she added. “To save so they can have something back home.�

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Pilfering Relatives

The Mendozas are setting aside up to $500 a month for building materials, first for the house and then for a business. Olga Lidia’s university-educated brother, who lives in Pachuca, is surveying the market to determine whether this fast-growing city can support a Japanese restaurant.

For as long as they have migrated north, Mexicans and Mexican Americans have sent back money to build homes. But in many cases, the relatives who pick up the cash and buy the bricks know little about construction. The result is waste.

Across Mexico, mounds of cement and piles of rusting steel rods lie idle at unfinished homes.

When Cemex surveyed clients a few years ago, migrants back in Mexico on vacation complained about high remittance fees and pilfering relatives.

“The money was going for things like the quinceanera [a girl’s lavish 15th birthday celebration], the wedding, the brother-in-law who’s in jail because he got drunk,� said Francisco Garza Zambrano, president of Cemex North America.

“All that gets in the way of building houses.� That discovery led Garza to start up the remittance service known as Construmex, to assure home-building migrants that their money would indeed build homes and do so faster and cheaper. Construmex engineers cut down on waste by dictating building instructions to the folks back home and planning how much material is to be delivered at a time.

“It used to take four to five years to build these houses,� Garza said. “Today, with this project, it can take as little as 12 to 16 months.�

Since the service started in July 2001, Construmex has reported $2.5 million in sales to 2,100 customers at its five branch offices -- four in Los Angeles and one in Fresno -- and has invested $1.5 million in Spanish language radio advertising. (One sales pitch in the works: “If you don’t want your mother-in- law moving in, build a new house to keep her in Mexico.�)

Wariness of new money transfer schemes has kept sales below expectations, Garza said. But with its U.S. sales potential estimated at $160 million a year, Construmex is planning to expand to cities with other large Mexican communities, including Chicago and Houston. Mexican cement industry rival Apasco is considering a similar service, according to Mexican officials.

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U.S. Treasurer Applauds

Construmex got a vote of confidence early last month when U.S. Treasurer Rosario Marin endorsed its mission during back-to-back visits to its operations here and in Huntington Park, where she used to be mayor.

The first Mexico native to hold the treasurer post, Marin once depended on migradolares and is now a visible advocate of freeing their southward flow to help relieve poverty. When she was growing up in a two-room house in Mexico City, she recalls, her father worked in a California textile plant and sent money home.

“I remember my mama would say, ‘OK, well, with the next check, we’re going to paint the house,’ � Marin said in a telephone interview. “She had so much pride that she was going to be able to paint her home.�

“We don’t think remittances are a panacea,� Marin added. But for many Mexicans who receive them in the form of new homes, she added, “there won’t be a need to migrate� or remain in the United States.

That might not be true for others.

Antonio Romero Lazcano, a 23-year-old construction laborer, spent nearly four years sending home money from Los Angeles to build a concrete-block house in Pachuca for himself and for his wife and mother, who stayed behind.

But after moving into the new home a few weeks ago, Lazcano said he became disillusioned by Mexico’s low wages and decided to migrate back to his old job on a demolition crew. By his calculation, he can earn $20 a day to put up a building in Mexico or $9 an hour to tear one down in L.A.

“Will remittances keep Mexicans home?� asked Manuel Orozco, a specialist on the subject at the Inter-American Dialogue think tank in Washington. “That depends on whether policymakers come to terms with reality and harness the remittance flows to generate wealth. In the United States and Mexico, they are starting to go in that direction.�