The Maquiladora Program began in September of
1965 when President Gustavo Diaz Ordaz announced a Border
Industrialization Program (BIP) to address the serious problems of
unemployment in the northern Mexican border region. Unemployment
problems had intensified with the 1964 termination of the Bracero
Program which had permitted Mexican farm workers to work in the U.S.
The original objectives of the BIP program remain valid today and
can be summarized as: 1) to solve the unemployment problem, 2) to
generate foreign exchange to improve the Mexican balance of
payments, and 3) to attract foreign capital and technology to expand
the industrial base in Mexico.
A significant factor used by Mexico to promote the BIP was the
waiving of several provisions of its strict foreign
investment regulations to allow 100% foreign ownership of firms
incorporated under this program. Mexican law also authorized the
duty free importation into Mexico of all machinery, equipment,
components and raw materials required by Maquiladora firms under the
provision that all finished products be exported out of Mexico. In
1972, a presidential decree authorized the establishment of
maquiladora plants anywhere in Mexico.
From its inception in 1965 until the 1982 Mexican
economic crisis, the Maquiladora Program evolved and grew
significantly although it was not well known or publicized. It was
considered by some Mexican politicians as an "ideological
embarrassment" and was scarcely mentioned, even in government
documents. In 1982, as a result of the worldwide decrease in oil
prices, Mexico suffered enormously. Severe reductions in foreign
income occurred in the two major producers of foreign exchange,
namely oil and tourism. The peso was allowed to float and had large
devaluations in a few months. Industrial production dropped, and the
banking system was nationalized. Mexico also experienced a
significant reduction in its GNP.
In 1983, the new government headed by Miguel De
La Madrid Hurtado recognized the importance of the Maquiladora
Program in the recovery efforts of the nation. Although the
Maquiladora Program represented a small part of Mexico's productive
capacity it was a major sustaining element in the country's foreign
currency income. In fact, in 1985 the Maquiladora Program replaced
tourism as the second most important means of generating foreign
currency income. In 1983 a major revision of the law authorized a
maquiladora operation to sell up to 20% of its production capacity
in the domestic Mexican market (subject to government approval). In
1985, President Miguel De La Madrid announced that since the
Maquiladora industry had such a significant influence in the
economic recovery efforts of the nation, it deserved the
consideration of national priority.
Maquiladora is rooted in the Spanish verb maquilar,
which means the portion of the flour retained by the miller in
payment for grinding the wheat. The Mexican decree of August 15,
1983 describes maquiladoras as "operations related to the
industrial process or services to be used in the transformation,
manufacture, or repair of products of foreign origin, temporarily
imported for later export." Most of the maquiladora plants are
located in U.S. style industrial parks.
The Twin Plant concept consists of a maquiladora plant performing
labor intensive operations in Mexico and a twin U.S. plant or
distribution center that services or provides the inputs and
receives back the outputs after the assembly/transformation process.
The U.S. twin plant is sometimes located in a free trade zone to
take advantage of favorable U.S. customs regulations, but may be
located anywhere in the U.S., even hundreds of miles from the
To be Continued
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