Maquiladoras began in 1965 as an economic development program to relieve unemployment and poverty in northern Mexico. The organizing principle was to provide a platform for low-wage labor to perform unskilled assembly operations, with components and completed goods moving across the U.S.–Mexico border duty-free.

      These factories have grown to be a major engine of Mexico’s economy, providing jobs for 1.2 million workers — a third of the country’s manufacturing employment. The industry has encountered booms and busts in recent years, and competition from low-wage countries around the world has slowly reshaped the maquiladoras’ role in U.S.–Mexico production sharing.

      In 2000–01, a slump in maquiladora employment raised serious concerns about the industry’s future. The U.S. recession in 2001 triggered the downturn, which was worsened by the prolonged struggle of U.S. manufacturing in the face of a strong dollar and a drop in investment. Low-wage competition from China and other emerging economies led to questions about whether maquiladora jobs would return once the cyclical recovery began. Had a Mexican industry built on low-wage assembly jobs simply lost an edge it could never reclaim?

      Maquiladora employment turned upward again in 2003, offering clues to the long-term future of this important industry. Although the assembly plants have lost significant ground in several low-wage sectors, they’ve found new ways to grow and compete. Productivity has risen rapidly, as have wages. The maquiladora industry isn’t dying. Rather, it’s maturing and leaving behind its roots as a low-wage industry. Just as important, the industry...

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