Talent for Mexico's industrial sector...

Maquiladoras are manufacturing facilities in Mexico that are owned and managed by a foreign company.  The factory (in Mexico) manufactures the company's products and then export them to other countries.

Maquiladoras are governed under the Mexican government's program formally known as the IMMEX maquiladora program.  The program allows foreign manufacturers to import raw materials and components into Mexico on a tax and duty free basis with the provision that 100% of all finished goods will be exported out of Mexico within a government mandated timeframe.

The system of maquiladoras was started by the Mexican government in 1965 to alleviate unemployment along the border region while also providing foreign companies with various tax benefits, special customs terms and easy access to skilled and affordable labor.  Maquiladoras initially focused on textiles, apparel, and simple electronic assembly operations, however by 1985 they became the largest source of foreign exchange in Mexico.  This happened largely due to Mexico's educational institutions partnering with multinational manufacturers to develop skilled and educated workers to serve more complex sectors such as automotive, aerospace, medical devices and general consumer products.

With the advent of the North American Free Trade Agreement (NAFTA) in 1994, the maquiladora industry opened foreign trade lines between Canada, the United States and Mexico by eliminating most tariffs and barriers to free trade between the three countries.

Globalization and competition has forced manufacturers to set up offshore factories, particularly in China and other low-cost Asian countries.  This practice has existed for decades.  The benefit to businesses to set up these factories include:

• Inexpensive labor
• Reduced taxes
• Less government regulation in such areas as building, construction and environmental.

Outsourcing to China has been shown to come with significant drawbacks including rapidly rising wage inflation and transportation costs and more recently - a general shortage in labor. 

Companies selling products into the lucrative North American market have found that the maquiladora program achieves most of the above stated benefits and with the added benefit of being much closer to their customer base.

Additional social benefits of the maquiladora program have shown its contribution to providing viable employment to Mexicans and lowering the economic incentives that have driven illegal immigration to the United States.  Furthermore, multinational organizations have set up regional headquarters in the United States that manage the maquiladoras in Mexico further creating desirable employment opportunities in the US.