05/12/97 NOGALES-NOGALES: THE ECONOMY WENT SOUTH

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NOGALES-NOGALES: THE ECONOMY WENT SOUTH

Along much of the border, U.S. towns pale next to their Mexican counterparts. That's especially true in Ambos Nogales--Both Nogales, two border cities that share a name but little else. Nogales, Mexico, boasts 71 maquiladoras employing 26,700 workers and has a fast-growing population of 133,500. But Nogales, Ariz., (pop. 20,300) shows how NAFTA's dismantling of trade barriers is hurting traditional U.S. border businesses that once prospered from retail sales to Mexicans.
Nogales, Ariz., features a strip of shuttered-up shops next to the border crossing. Local businesses, 90% dependent on Mexican customers, were hit hard by the 1994 peso collapse. The Arizona town is also feeling the pinch from Mexico's market opening. Imported goods now stream into Mexico, and outlets such as Wal-Mart Stores have sprung up in cities such as Hermosillo, capital of the Mexican state of Sonora, 183 miles to the south. ''People from Hermosillo used to do a lot of shopping in Nogales or Tucson, but now they don't need to,'' says Jim Capin, co-owner of a True Value Hardware store on Morley Street. What keeps Nogales afloat, mainly, is a cluster of warehouses along I-9 that handle winter vegetable shipments from Sonora to the U.S.
About the only growing operation in Nogales, Ariz., is the Border Patrol. When the Immigration & Naturalization Service cracked down in San Diego and El Paso, illegal aliens flooded across the Arizona border. In three years, to try to stem the tide, the INS has nearly doubled the number of agents in Arizona, to 867.
On this day at the border patrol station, 42-year-old Leonardo Gomez Sanchez, from the central Mexican state of Zacatecas, stands sullenly as his fingerprints and photo are taken digitally and entered into a computer database. A sun-wrinkled farmer with six children, he lost his crop last year in the drought. ''I had never crossed before, and they got me on my first try,'' Gomez says. ''That's it for me--I'm going home.''
Another perspective on the border economy is offered by Joe Flores, who runs the Chevron gas station in the tiny town of Why, Ariz., northwest of Nogales at the junction of state highways 85 and 86. The ''Y'' in the highway gave Why (population 250) its name. Joe Flores, a Mexican widower with a silver handlebar mustache and white cowboy hat, owns the local Chevron gas station. His main customers are sun-seeking retirees, patrons of casinos run by Native Americans, and Arizonans who drive down the road to ''Gringo Pass.'' That's what locals call the Lukeville-Sonoyta border crossing, which leads to towns selling cheap prescription drugs and to the Gulf of California beaches. As Arizona and Sonora come closer together, more tourism should flow. ''Things should be getting pretty good around here in a couple of years' time,'' Flores predicts.
Things are already doing pretty well down the highway in Sonoyta, Mexico. Jose Ramos, manager of a local pharmacy, says as much as 40% of his business comes from Americans, attracted by the low prices for prescription drugs. As he chats, three teenage American boys wearing baseball caps stride in. One asks: ''Where's the steroids at?'' Without asking to see a prescription, the clerk hands them four boxes of the muscle-building hormones and a couple of syringes.

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