Firms Find a Haven From U.S. Environmental Rules : Commerce: Hundreds of companies set up shop in Mexico, where regulation is less strict and wages are low.

It’s not easy to make the trip every week. But for David Finegood, 71, it’s well worth the trouble to drive three hours from Los Angeles and pass through a border checkpoint from the First World to the Third.

His destination is his furniture factory on the southeast end of town, the replacement for plants he closed in Compton and Carson within the last 20 months. He employs 600 people, the same number he laid off in the United States.

Wages are much lower here--about 13% of U.S. pay. There is virtually no workers’ compensation expense. Best of all, in Finegood’s mind, he no longer must deal with the constant intrusions of air quality inspectors, emissions monitors, lawyers and ever-stricter rules, rules, rules.

In the United States, his company paid tens of thousands of dollars in environmental fines and penalties in only two years. Lawsuits blamed his operations for incidents ranging from sawdust lodged in someone’s eye to the spontaneous combustion of solvent-soaked rags that forced the evacuation of 2,000 people.

Looming restrictions on polluting paints and varnishes promised to be more costly. So Finegood decided to go. “We’re not trying to evade anything,” he said. “We’re trying to live with reality.”

Reality these days is Muebles Fino Buenos , a literal translation of Fine Good Furniture. In many ways, it is the embodiment of environmental fears about a pending free-trade pact between the United States and Mexico. Environmental activists say they believe that a free-trade pact will create a Mexican haven for many companies with tainted records in the United States and a desire to lower the costs of controlling contamination.

The Tijuana incarnation of Finegood’s factories appears to abide by Mexican laws, or at least follow practices accepted by the government. This is more than most U.S.-owned companies here can claim, regulators on both sides of the border say.

Yet, even Muebles Fino Buenos pollutes more than the two U.S. plants did. Gases pour from the stacks for longer hours. Shifting winds carry the sharp tang of solvents to surrounding homes. “It makes me dizzy and my throat is sore,” said Elodia Montano, a 50-year-old mother who lives near the plant’s front gate.

Diesel trucks spew smog-forming exhaust during long-distance trips to a warehouse that was close to the U.S. plants. The Tijuana factory’s jobs are part of the attraction fueling the city’s explosive growth, outpacing the government’s ability to treat sewage or provide drinking water.

The experience of Muebles Fino Buenos underscores the vagueness of Mexico’s environmental rules, the regulators’ lack of resources, the shortage of precise information about conditions here and the many years it will take, even for a government intent on change, to clean up the crisis.

One company may not have much impact, but there are nearly 2,000 foreign-owned firms, known as maquiladoras , allowed in Mexico under special trade rules since 1965. The largest concentration, about 530, is in Tijuana. Cumulatively, the industries have significantly fouled the water, air and soil.

Finegood is a transplanted Canadian, but his Los Angeles roots go deep. The Saskatchewan native started manufacturing furniture in Bell in 1956 as an employer of 10. By the mid-1980s, he had a staff of 700 making tables in Carson, bedroom sets in Compton and working in his distribution center.

Environmental awareness also had grown, and for Finegood that meant trouble. Though he invested in new technology, his companies started showing up in the violation logs of the South Coast Air Quality Management District.

The Compton factory exceeded solvent emissions limits in 1988; AQMD agreed to accept an out-of-court settlement of $17,500. The Carson plant paid $400 for sending out too much sawdust in 1988 and $1,000 in 1990 because neighbors complained about odors and dust. The inspectors “couldn’t find an odor themselves,” Finegood said, still softly seething, “but they called us a public nuisance.”

In May, 1989, a waste hauler picked up a load from the Carson factory and headed for a hazardous materials dump in Santa Barbara County. In the Ventura County town of Fillmore, the driver pulled over for a nap. A sheriff’s deputy woke him, saying, “your truck’s on fire.”

Fear of toxic smoke led authorities to evacuate 2,000 people, more than 10% of Fillmore’s residents, for about five hours. Prosecutors charged Finegood’s firm with improperly preparing and marking the solvent-soaked rags in the drums, which made it more difficult for the hauler to take precautions and for firefighters to battle the flames. After a no-contest plea, the penalty was $2,350 plus $10,730 for cleanup costs.

Documents show that plant manager Tom Pliner told investigators that the company had called the Fire Department two years earlier because a drum full of rags spontaneously burst into flames inside the Compton plant. A forklift driver told authorities that another drum had started smoking three days before the incident in Fillmore. In April, 1990, nearly a year after the truck fire, a state health inspector cited Finegood’s Carson operation because drums of waste at the factory still bore none of the identifying details required by law.

More problems lay ahead. The AQMD had passed a rule requiring furniture makers to cut down pollution by switching from solvent-based coatings to water-based coatings--likely to be more expensive--by 1996.

“We could see what was coming,” Finegood said. “It was not economically possible.”

He knew that other furniture companies were leaving the area. Indeed, a UCLA survey shows that 15% of the furniture industry’s work force departed Southern California between 1987 and 1989, when the AQMD coating measure was passed.

Finegood wanted to stay near his customers in the West. But he did not want to risk going to another part of the United States that might follow the AQMD’s lead. San Diego, for example, also is restricting use of solvent-based coatings.

The Compton plant closed in February, 1990. The Carson operation shut down last March.

Pliner transferred to a rambling new building in the heart of La Cienega , a working-class district here. Employees can get clean in the company shower room and healthy at the company doctor’s office. For 75 cents, they can buy lunch, with unlimited tortillas, in the company cafeteria.

On Fridays, a guard rolls a cart onto the factory floor with individual cash-stuffed envelopes containing an average wage of $43 a week.

A block away, Montano’s symptoms ebb and flow with the breezes. In 25 years, she has watched the site at the end of Calle Primera change from a wheat field to a cement mixing facility, then the maquiladora . Until production geared up and odors started seeping out, she had no health problems, she said. She recovers a few hours after the fumes recede.

In the opposite direction, on a rise overlooking the back of the plant, Daniel Saavedra and seven relatives rarely venture out of their cramped quarters. Their home’s walls blunt the olfactory assault of “ tiner “--paint thinner--the Lutheran pastor said. “From 8 to 4, we smell it all day long.”

Below, by the factory wall, lies a onetime elementary school. For years, church volunteers from the United States have leased the building as a campsite, sleeping in bedrolls on the floors. This past summer, for the first time, many suffered headaches and nausea.

The strength of the vapors varied from day to day. But most of the campers felt worse at “the mission,” as they call the school, than they did at the drug recovery center where they planted trees or the convalescent home where they took orphans to visit the elderly.

“It was terrible to wake up to that smell,” said Heidi Hyland, a Chicago seminary student who was a counselor during July. The first morning, she led a Bible study session outdoors until “this one girl in my group said . . . ‘I just can’t stand it. It’s making me sick.’ ”

Often, a fine dust coated the group’s three vans overnight. “It was lacquer,” said Rob Lochner, another counselor. “I know it was. I’ve worked spraying at a carpentry shop.”

The neighbors’ complaints are consistent with exposure to solvents used in furniture making, said Paul Papanek, who heads the toxics program for the Los Angeles County Department of Health Services.

In the suburbs of Los Angeles, clean air rules set a strict daily cap on how much pollutant can escape from each plant’s stacks. The limit forced Finegood’s U.S. workers to stop painting and varnishing by mid-afternoon.

Here, employees start a half hour earlier and spray later, at least till 5 p.m. There is a small night shift too.

Workers aim nozzles of paint and lacquer at furniture passing by on a conveyor belt. A free-standing wall of pads is positioned on the other side--a setup designed to absorb the extra spray.

The pads are changed every two weeks, Pliner said. In the Los Angeles area, most companies install clean pads more often, anywhere from once a day to once a week, said Bill Kelly, an AQMD spokesman.

The factory tests its emissions every six months, Pliner said, declining to divulge the results. In the United States, the company monitored and logged them every hour.

Though Mexico adopted a General Ecology Law in 1988, giving environmental regulators authority over maquiladoras , the country has no measures limiting air pollution from furniture factories. “We are working on many other standards that are much more important,” said Sergio Reyes Lujan, undersecretary for the environment. “The production of electricity, cement, textiles, chemicals.”

He added that he is concerned about the health problems such fumes could cause, from mere irritation to long-term damage from smog. New factories, he said, will have to comply with whatever standard is the tightest in the world, until Mexico can frame its own.

As for existing companies, Reyes said, “I don’t know if it’s this week, next week, next month, or even next year, but with or without a standard, we will stop situations like that.”

Meanwhile, plant manager Pliner said: “I haven’t had any complaints.”

But then the residents of La Cienega have not complained, except among themselves, about any of the contamination they suspect comes from maquiladoras in Tijuana. That is a common reaction, said Laura Durazo, a social anthropologist who helped form one of the city’s nascent environmental groups.

“They simply accept,” she said, “that this is part of Tijuana’s progress.”

In the yards of La Cienega stand empty 55-gallon drums purchased from used furniture stores or roving trucks--price: about $3.50. Most now serve as trash receptacles, but some hold water for washing or flushing toilets. “This container will be hazardous when emptied,” one warns in English. “Residues will be explosive or flammable.”

An outfall spills directly into a shallow stream where dogs splash and drink. In poorer neighborhoods, squatters use such canals for bathing. Water samples analyzed for The Times in August by a San Diego laboratory show levels of two suspected carcinogens, perchloroethylene and bis (2-ethylhexyl) phthalate, at 18 to 24 times the drinking water standards of the U.S. Environmental Protection Agency.

The concrete pipe emerges from a steep rise next to Muebles Fino Buenos . The company has told Mexican regulators that it sends its waste water into the city sewage system, in an area where there is no treatment. This particular pipe may also carry residues from any number of sites further southwest, where two more maquiladoras make magnetic heads and baby furniture. Perchloroethylene is used in both industries. Bis (2-ethylhexyl) phthalate is used to soften plastics.

Where do the chemicals come from? Mexican regulators are in no position to unravel mysteries like these.

Even with recent budget increases, there is little money for analyses and few staffers are available for investigations. For the foreseeable future, the government will simply have to trust industry, said Diane Perry, a UCLA analyst who has studied the border region for the past five years. U.S. and other foreign owners “will have to do it on their own, knowing that the enforcement’s not going to be there,” she said.

In a widely publicized move this summer, border-area inspectors, with their ranks doubled to 100, visited 1,000 maquiladoras to check the firms’ documents. They found that in 1990, less than a third of the companies had applied for the required environmental operating license; by 1991, after a series of well-publicized crackdowns, 55% had. In 1990, only 14.5% had proof that they sent hazardous wastes back to the United States for disposal as required; in 1991, 31% had.

The new figures show major progress, but Reyes conceded that they are still abysmal. “We will improve them further,” he promised. To that end, inspectors are being hired to double the number along the border again in 1992.

Muebles Fino Buenos is one of the positive statistics. The environmental inspector who arrived Aug. 13 was the first ever to pay a formal visit. (One had dropped by briefly before). Pliner produced a notebook containing the factory’s application. A stamp acknowledged its receipt on Sept. 27, 1990, by SEDUE--the Spanish acronym for the federal ministry that includes the environmental office.

The EPA also had been notified that about 325 drums of hazardous waste would be shipped back across the border in 1991.

The SEDUE inspector pronounced himself satisfied.

The license documents were submitted late--six months after opening for assembly of furniture and four months after spraying had begun. This was illegal, according to Reyes, but the government will not punish for the offense because it shows more effort than other firms have made. He added, that from now on, new industries will face penalties.

Because the license was pending, the company was churning out bedroom sets and tables without a permit. Operating under such circumstances also was not strictly legal; since 1990, every new business must have its license before even starting construction of its facility.

But environmental officials admit that it is partly their fault. More than a year after Muebles Fino Buenos submitted its papers, overworked regulators have not gotten around to reviewing the documents. The wait is typical. And until the application is examined, SEDUE cannot decide what changes, if any, to require.

“We are trying to respond very, very rapidly,” Reyes said. “They are going to receive a written answer.

“We are rewriting history here. It was only recently that anyone here started to care about the environment. It will take time.”

The backlog troubles EPA officials who deal regularly with SEDUE. Said one, who spoke on the condition of anonymity: “This is a situation where the economic activity has gotten way ahead of the regulatory activity.”

The EPA official also worries about SEDUE’s emphasis on documents: “I would like to put SEDUE (inspectors) in respirators and have them look at what’s really going on. They’re afraid to take the bull by the horns. . . . They just deal with the paperwork.”

There also has been little attention paid to the indirect pollution caused by maquiladoras .

Finegood’s warehouse is at what was once the Carson plant--just a few miles from what was once the Compton factory. Diesel trucks, the owner said, make 20 round-trip treks each weekday between Tijuana and the distribution center. In a year, that means about 13.9 tons of carbon monoxide is added to the air along the way. The trucks also discharge about 20 tons of nitrogen oxides and 4.2 tons of hydrocarbons, the two main building blocks of smog.

An overall increase in cross-border traffic--from 12.4 million crossings in 1987 to 16.9 million in 1990--concerns air pollution authorities in San Diego and the Los Angeles region. One problem is the Customs stations themselves, where hundreds of idling vehicles sometimes wait as long as an hour. Nearly half the cars and trucks are Mexican-registered and not subject to smog checks.

The jobs offered by Muebles Fino Buenos and the other maquiladoras also lure newcomers from the rural interior. Tijuana grew from about 429,500 people in 1980 to about 743,000 in 1990--and these official census numbers are widely assumed to be low.

The city’s skyrocketing population has outstripped the government’s ability to provide basic services. In response to complaints about a proposed border environmental plan, SEDUE recently announced that 24,000 houses will be connected to Tijuana’s sewers next year. By 1995, an international treatment plant is scheduled to open, but financing arrangements are not complete. For now, 12 million gallons of raw sewage flow into the Tijuana River each day.

The operators of Muebles Fino Buenos know firsthand about the infrastructure problems. Raw sewage spilled across the property when pipes overflowed during a winter storm. And the company did not plan on constructing its own water reservoir and electric generating substation. But it had to be done.

Finegood does not mind. He sees himself protecting a 35-year investment. “I’ve spent much of my life in this company,” he said. “I’m not a young kid anymore. But I couldn’t get anything for the company there. Nobody’s going to buy a furniture company in Los Angeles now.”

Factory on the Move

The Good Bedrooms factory in Compton closed in February of 1990. The Good Tables plant in Carson shut down last March. Both were owned by David Finegood, who replaced the manufacturing operations with Meubles Fino Buenos --a literal translation of Fine Good Furniture--which opened in southeast Tijuana in March of 1990.

Wages are much lower in Mexico and there is no workers’ compensation, but Finegood says the main reason he left was increasing environmental regulation.

“We had no intention of moving; it never entered my mind,” Finegood says, “until we started getting rulings from the (South Coast Air Quality Management District).” He cites the AQMD’s passage in 1988 of Rule 1136, which gives furniture makers until 1996 to replace solvent-based coatings, which contain pollutants that evaporate into the air, with water-based coatings. Finegood’s companies also paid thousands of dollars in penalties for violations of air quality and hazardous waste regulations.

Mexico has no emissions limits for furniture manufacturers.

Facts and Figures

Products: Laminated particle-board tables and bedroom sets; ready-to-assemble furniture line called Good Ideas.

Employees: Good Bedrooms had 350 employees; as did Good Tables. One hundred employees still work preparing raw materials at the distribution center in Carson.

Meubles Fino Buenos: 600 employees.

Production: Currently at 85% of production of the combined U.S. factories.

Factory space: 286,000 square feet.

Employee turnover: 4% to 6% a week.

Average wage: $43 a week as compared to $330 a week in the U.S.