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Business closure and unemployment, the other side of Vallarta in 2013

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It is the result of five years of economic and financial crisis in the United States, which seriously affected the tourism industry of this city

This 2013 has been the year of unemployment in Puerto Vallarta, it has been the year in which various sectors of the local tourism industry hit bottom in both the number of deals closed and the amount of lost work places.

In terms of employment, the record high was in 2007 when there were 54 thousand 474 insured workers in the sub-delegation of the Mexican Social Security Institute (IMSS) of Puerto Vallarta, all formal jobs and acceptably well paid.

However, the economic and financial crisis that began in the U.S. in the last quarter of 2008 seriously affected the local tourism industry, which began recording a steady decline since the arrival of foreign tourists, which finally ended by collapsing Vallarta's tourist industry that year.

To date there are about 4 thousand 345 formal jobs lost and 25 thousand 358 less stores, according to the figures revealed by the sub-delegation of the IMSS and the local National Chamber of Commerce (Canaco).

The General Secretary of the CTM on the north coast of Jalisco, Rafael Yerena Zambrano said that in the most recent three months this year, the loss of jobs in Puerto Vallarta has worsened as never before in the last four decades.

The also general secretary of the Federation of Workers of Jalisco (FTJ-CTM) stated that in the 40 years that he has of dealing with syndicate matters in this city "we had never seen a crisis as strong as the one we are living now in Puerto Vallarta".

He asserted that there are no liquid assets, no investment and, most seriously, no employment, however, that "there is a great willingness of the employer to keep the job sources, but it is costing a lot of effort".

He also acknowledged that there is a very positive attitude among workers to take more than one day a week off and to take early holidays in an attempt to keep their jobs and avoid being cut by the companies, as "the situation is very difficult".

He said that the situation worsened in the city "since 90 days ago and what is dangerous and disturbing is that it is presented at the end of the year, and finishing a year with a crisis in Puerto Vallarta involves more risks".

He noted that the employment crisis in this city is even stronger than the economic and financial crisis at the end of 2008, since it "is not a matter of Vallarta, but a national and even international economic issue, so we have to worry because if the United States gets a cold, we get pneumonia".

He noted that in addition, in recent years the arrival of tourism of less economic power has done a lot of damage to the tourist destination, and he attributed the all included packages to the arrival of tourism of lower and narrower means.

"The purchasing power of our tourists is very low, tourism that does not spend as much money has arrived, yes we fill the hotels, but they come with everything included and our hoteliers have had to lower their rates in over 50 percent and now almost all the hotels are all inclusive because they have no other choice to be able to promote themselves, then that also results in that there isn't an acceptable economic impact".

The labor leader said that while in Puerto Vallarta all businesses depend directly or indirectly on tourism, about 90 percent of workers are integrated to tourism activities, which would mean about 45 thousand employees joining the industry sector today.

BUSINESS CLOSURE

In turn, the president of the local Canaco, Martin Puebla Ontiveros, said that a recent study of the corporate body showed that in the 2007-2012 period, 40 thousand 980 businesses were in operation, while during the first half of this year only 15 thousand 622 were accounted, ie there are 25 thousand 358 less stores then a little over five years ago.

He commented that the key internal factors that have exacerbated the crisis are a lack of planning, training and advice to entrepreneurs, while the external economic problems are international, the influenza crisis of 2009, the increase in commodity prices and the fall of the U.S. economy, which has hit the local tourism sector.

He said that other factors that caused this mass closure of businesses were the tourism crisis and the annual increase in local, state and federal taxes, which apply whether or not there are sales.

In the statistics of the Canaco it can be seen that the most beaten sector is the overall grocery sales (stores), as in the aforementioned period there was a shrinkage from 2 thousand 795 businesses to 1 thousand 202 by 2012, a difference of minus 1 thousand 523.

The urban crafts had 1 thousand 443 stores six years ago and only 580 last year; the administrative offices passed from 959 to 226 open companies, a differential percentage of minus 733; another beaten sector was the clothing stores with minus 943 stores in 2012, when six years ago there were 1 thousand 371 such businesses.

He also argued that small and medium enterprises had not been supported as they should in the hard times during and after the influenza crisis of 2009, "others simply didn't adjust to new ways of doing business with the marketing strategies and the linking to new tools for wealth creation".

The leader advised the entrepreneurs to approach the Chamber of Commerce for advice on starting a business, since the early months, and even years, are the most difficult to bear, "it is not enough anymore to put out a table to sell or rent a business to see what to offer, if there is no market, no strategy or planning it is more likely to lose the investment and close down ".

CRUISE SHIPS TOUCHED BOTTOM

Moreover, the fall in the international cruise ship arrivals this year led to the closure of businesses and the consequent unemployment of people who were integrated into the supply chain of this industry in Puerto Vallarta.

Figures from Canaco Vallarta show the closure of dozens of stores dedicated to the care and provision of services for international cruise passengers, which this year hit rock bottom in terms of number of arrivals.

At the end of this year, the port terminal will have received close to 85 cruise ships, which represents the lowest number in the past 20 years, after the cap in 2008 with the arrival of 276 boats.

The unemployment problems generated by the lack of tourism in the region worsened during the period of May 14 to September 5, during which the cruise industry recorded a single arrival, ie four months were almost motionless in the port.

Martín Puebla Ontiveros warned that businesses related to the international cruise industry and members of the business organization also suffered in the terms of job losses and closure of premises.

He established that the fall in the number of cruise ship arrivals to Puerto Vallarta in the past two years decreased economic activity in the port, mainly in between tourism service providers such as tours, zip lines and even jewelry stores, a situation that also resulted in the downsizing of employees in the businesses that directly depend on the activity generated by international cruise ships arriving to the city.

He explained that even though 2014 comes with a larger number of ships in the Mexican Pacific route, consisting of Los Cabos, Mazatlan and Puerto Vallarta, the companies were in need of temporarily laying off some workers in the offseason of cruise ship arrivals, especially during the period from May to September.

It should be noted that businesses engaged in the sale of souvenirs, installed on the port terminal of this city practically live "on a day by day basis", as the income they get from passengers who hire services is not enough, in fact, it is estimated that the passengers who contract services amounts to 500 people per boat, since on a cruise there are between 2 thousand and 2 thousand 500 potential clients.

Recently tourism authorities from Puerto Vallarta formed together with Mazatlan and Los Cabos, the Council of the Pacific Route, to implement measures to promote the three marine terminals, as well as dialogue with cruise companies.

DOWNWARD JOB NUMBERS

After the economic crisis that began in 2008, in recent years there has been a 4 percent wage increase that has not even served to cover inflation and that has resulted in a reduction in the purchasing power of families in this port.

The economist Hugo Rojas recalled that in that year started the international economic crisis that hit Puerto Vallarta for what happened in the United States and which was aggravated by the influenza AH1N1 health crisis.

The former head of the Municipal Economic Development Department at the port announced that the northern coastal region keeps an important population growth; in 1970 it only accounted for 1.75 percent of the total population of the state of Jalisco and the Guadalajara Metropolitan Area the 49.64 percent; by 2010, the North Coast was the 3.96 percent and the GMA increased to 63.23 percent.

Puerto Vallarta attracts many workers from neighboring towns and the neighboring state of Nayarit. Therefore, by 2030 it is estimated that the North Coast will represent 5% of the population of Jalisco and the 71.24% of the GMA.

In terms of jobs, the record high was recorded in 2007, when there were 54 thousand 474 insured workers in the IMSS, however, following the U.S crisis that began in late 2008, in this region in 2010 there were only 49 thousand 700 employees registered in the IMSS, which marked the first major loss of seats. In 2012 the loss still had not been recovered, as there were 50 thousand 129 workers registered in the IMSS, a figure that has prevailed and has even declined in the first half of this year.

The service sector remains the main source of formal employment in Puerto Vallarta, as it concentrates 85 percent of the workforce, followed by the secondary sector (processing) with 15 percent, while the primary sector (the farms) have almost disappeared as an economic sector, where a decade ago it represented at least 2 percent of the jobs.

These figures prove that tourism represents only 90 percent of the economy, in fact there are more and more jobs in other areas, such as government, financial services, services to third parties, which are also increasingly having a greater participation of the total.

BUSINESS CONFIDENCE

The companies that survive the economic storm of recent years will be able to start a gradual recovery in the last quarter of the year, with the expectation that the results of promotional campaigns of tourism that are being made, improve the flow of resources from tourism to other sectors.

For the president of Coparmex Puerto Vallarta, Arnulfo Ortega Contreras, one should not be pessimistic but plan coping strategies in times of crisis, which can also represent an opportunity for businesses to engage the new market conditions and direct themselves more toward local consumers.

He acknowledged that there have been difficult years since 2009, when there was the influenza emergency, and that to date there has not been a full recovery.

However, he said that many employers have been smart and do not depend solely on tourism or offer their products and services only to visitors, "they have been years to focus on the regional market which has continued to grow."

He said that from hotels, which have designed options so that local residents get to know them and buy in them to the restaurants and bars, they have developed strategies to capture the attention of local consumers, in periods when foreign tourism has been scarce.

He said that another strategy is to approach business chambers such as the Coparmex, with advisors, counselors, and a number of experts in the design of strategies to cope with a crisis, this should not be seen as a cost but as a as investment as through the Coparmex help can be managed from the federal and state governments, with tax, legal and business advice to succeed.

He said that this is a time to close ranks among entrepreneurs, so that one buys inputs from others, ingredients and items needed to make a craft, a food that can be distributed in a small, medium or large business of the region, the key is to seek advice and alternatives for not closing businesses.

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[readon1 url="http://vallartaopina.net/2013/10/12/cierre-de-negocios-y-desempleo-la-otra-cara-de-vallarta-en-2013"]Source: Vallarta Opina Translated by Rene Tripp[/readon1]

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