(FORTUNE Magazine) – A couple of weeks ago I came across a small news item: "Fruit of the Loom will close its Harlingen, Texas, plant Dec. 31, ending jobs for 791 people...." Unfortunate, though not unexpected. But the next phrase jumped off the page. The article said the closure would be "erasing the last of the region's textile industry," then went on to list a string of factories that had shut down in recent years, all done in by less expensive imports. Now here was something remarkable: A whole industry of an entire region swept away by the invisible hand of global macroeconomics. (As FORTUNE went to press, Levi Strauss announced it was closing all its North American plants.)

It made me curious about Harlingen. What was it like there now? Was the area depressed economically--and maybe psychologically too? What would all those laid-off factory workers do? I decided to visit the town and what I discovered was surprising. Yes, the unemployment rate is high--8% in Harlingen and 11% in Cameron County--and, yes, the town's main drag is no Rodeo Drive. But businesses other than textiles have been growing, and while it's hard to generalize, the people in Harlingen don't appear to have given up or descended into a funk. In fact, they seem ready to move on. If you're looking for a laboratory of the country's massive job losses and the global economic forces triggering them, Harlingen is it. Unlike previous generations in New England and the Carolinas, people here quickly recognized those forces as inevitable. "If a company comes down here now and says, 'We want you to help us open up a minimum-wage factory,' we say, 'Thanks, but no thanks,' " says Connie de la Garza, the mayor of Harlingen, who works part-time out of his realty office. "Those are the jobs of the past. We want jobs of the future."

Harlingen sits in the southernmost tip of Texas, a dozen miles north of the Rio Grande and 30 miles inland from South Padre Island on the Gulf Coast. The town of 82,000 is 76% Hispanic, and along with McAllen to the west and Brownsville to the southeast, it forms a tri-city border metropolis in the Rio Grande Valley. About one million people live within a 50-mile radius of Harlingen, not including the Mexicans south of the border in Matamoros and Reynosa.

Harlingen grew up around a railroad junction in the early years of the last century. Today the older part of town is still intersected by active rail lines, and long freight trains chug across the town's major roads on the way to Laredo to the west and Corpus Christi, San Antonio, and Houston to the north. Near the airport, which has an oversized runway befitting the former Air Force base it was, an Iwo Jima Memorial appears out of nowhere; it's the original full-sized cast used to make the real deal at Arlington National Cemetery. The area's bird watching and bird hunting are topflight, its Rio red grapefruits are the world's finest, and its young people have a reputation for being loyal and hardworking. It's that last quality that drew the textile companies to Harlingen.

Since the mid-1950s there had been a Dickies plant (uniforms and overalls) in Weslaco, between Harlingen and McAllen. But the real rush didn't begin until 1970, when Levi Strauss and Carter's (kids' clothes) opened plants in Harlingen. Two years later Levi's built another factory in San Benito, just to the east, and then another in McAllen, and then a fourth near the Brownsville airport. Dickies opened two additional plants, and other companies, like Vanity Fair (dresses) and Haggar (slacks), followed. The most recent factory, built by Fruit of the Loom in 1991, was a mammoth 665,000-square-foot facility outside Harlingen that employed 800.

At that point there were 12 cut-and-sew factories around Harlingen producing pants, dresses, underwear, and kids' clothes. Total textile factory employment was more than 9,000. Most of the jobs were nonunion, and many of the workers, some as young as 16, had little education. But by 1993 the boom was waning. Textile companies began to set up what are known as maquiladoras, or twin plants, one in the U.S. and one in Mexico. The U.S. plant sent partly assembled clothing to a sister factory in Mexico, where it was put together using cheap labor, then shipped back to the U.S.

As wages in the U.S. plants slowly rose, the gap between labor costs around Harlingen and in Mexico grew larger. In 1999 the average textile worker in South Texas made $9.45 an hour with bonuses, vs. about $2 in Mexico. Do the math: Saving $7 an hour on 600 employees working 40 hours comes to $168,000 a week. Like water seeking the lowest ground, textile jobs flowed across the Rio Grande. At first the lowest-skilled operations of the cut-and-sew process went south of the border. But soon whole plants began to close. The Vanity Fair plant in Brownsville changed hands and then shut. A Levi's plant closed in 1999, and the others followed: a few in 2000, three in both '01 and '02. Then came the announcement this summer that the huge Fruit of the Loom plant would cease operation at year-end.

The empty factories, as you can see from the images on these pages, are haunting and evocative. I wondered what was happening to the people who worked in them. People like Elizabeth Torres, a 45-year-old woman with four kids, wearing a Beatles shirt and a warm smile when I met her outside an algebra class at Texas State Technical College (TSTC). Torres began working at age 20 in the Harlingen Levi's plant in 1978 and stayed for 21 years, until the day it closed. "When the plant shut, I was devastated," she says. "I felt like my whole world had come to an end. I felt like I had nothing." You didn't have to remind Torres how tough the job market is for a fortysomething mom with a ninth-grade education. "The first thing I needed to do was get my GED, and that's what I'm doing. I want to be a nurse's assistant." (For the record, the 20 or so mostly women in the class, all former textile workers, were doing math that required this reporter's full attention to follow.)

I met Oralia Romero, 39, in a computer class at TSTC. Romero started at Levi's in Harlingen at 16 and, like Torres, stayed until it shut down. She, too, wants to move into nursing, but she is much less sentimental about her time in the factory. "It was hard work for good pay," she says. "I took home $500 a week. But I was happy when it shut down. I wasn't scared about the future. I was tired out." Romero, who has five children and a grandson, collects $199 a week in unemployment benefits, which run out in December. Does she think she'll find a job? "If God's willing," she says firmly.

Former textile worker Angel Carrizales, 41, recently began working at Matheson Tri-Gas, a national specialty-gas company with a small office in Harlingen. Carrizales, who has a high school diploma, learned a little welding in his shop class. After a training course at TSTC, he received a certificate in welding and landed the job at Matheson in August. Carrizales (who was wearing a Levi's shirt) admits that his starting pay at Matheson isn't as much as he was making at the factory. "But I expected that," he says. "I'd worked at Levi's for 21 years. I'm just starting here. And I like my new job," he adds quickly.

And what of the women at TSTC who want to be a nurse's aide? Health care is an expanding business in the area. A new University of Texas medical school opened here a year ago. Retirees are moving to the area, and the city's Valley Baptist Medical Center--Harlingen's biggest employer, with more than 2,300 jobs--is a growing business with a strong reputation for joint-replacement surgeries. Other jobs are coming to Harlingen as well. In September Echostar opened a call center that will employ 1,000. But those jobs will require technical skills, and city officials admit that not many textile workers will fill them.

Late one afternoon I'm driving across one of Harlingen's endless flat roads with Nanette Fitch, the city's director of economic development. It's her job to persuade companies to set up shop in Harlingen, even to occupy some of the old factory sites. Fitch and other town officials are aware that Warren Buffett's Berkshire Hathaway owns Fruit. "If Fruit of the Loom decides to find another occupant for the building, we hope its connection to Berkshire Hathaway will yield some propects," says Fitch.

Whatever happens with Fruit of the Loom, think of Harlingen as just one stop on an economic journey that began more than 200 years ago, with the first textile mills in New England. Those factories were eventually supplanted by lower-cost operations in the Carolinas. The next move was further south, to places like Harlingen and the Rio Grande Valley. Now there's Mexico, which by all accounts may be the shortest stop yet. "The Mexican cut-and-sew operations are all being put out of business by Asia now," says Mayor de la Garza, shaking his head. "You know those famous Mexican shirts for men, the guayaberas? Now they're made in Taiwan."

Who wants to fight against that inexorable economic tide? Not the mayor. And not the people of Harlingen either.

FEEDBACK aserwer@fortunemail.com