A maquiladora is a Mexican corporation which operates under the maquila program approved by the Ministry of Economy. The maquila program entitles the company to foreign investment and allows it temporary duty free import of machinery, equipment, parts and inputs. Then, maquiladora’s products are exported (directly or indirectly) through sale to another maquiladora or exporter.

        Among most frequent maquiladora’s production is the manufacture of a product using various countries’ materials (including Mexico) and/or the assembly of temporarily imported parts. Any conceivable combination of the various phases involved in manufacturing could be done, even non-industrial operations, such as data-processing and packaging.

        The maquiladora industry has played an important role in Mexico’s economic growth for more than three decades. The program was created as an effort to industrialize the northern Border States in 1965, and since its implementation, it has been an important source of technology development and job creation. Currently, 2,804 plants generate more than one million jobs.

        Since NAFTA’s implementation in 1994, maquiladora’s exports have almost quadrupled, going from $21.8 million to $76.8 million in 2003. This industry accounts for 48.5 percent of Mexico’s total exports, with the United States the main destination. This can be attributed, among other important factors, to the reduced freight cost and short turnaround time between both countries.

        The maquiladora industry experienced a temporary setback in 2001, as a consequence, among others, of the U.S economic slowdown. Production of manufactured goods in the United States depends on the performance of domestic consumption; thereby Mexican exports are affected by North Americans spending behavior.

        From October 2000 to February 2002, employment fell, on average, 1.48 percent per month, totaling 21.3 percent for the period. During the previous 16 months, employment had grown 18.8 percent.

        In an effort to offset the economic worldwide recession consequences, the Ministry of Economy is supporting the Mexican exporting sector through promotion, deregulation and simplification of administrative procedures.

        Mexican authorities have defined several strategies to promote productivity and competitiveness in the manufacturing sector. Among them:

            •The deferral of the permanent establishment of maquiladoras by extending the special tax regime applicable to them which includes the option of adhering to a Safe...

...Continued in the pages of Twin Plant News, Subscribe Today!