Maquiladora Manufacturing 

The Mexican decree of August 15, 1983 states the legal basis for the authorization and operation of maquiladoras. A multitude of organizational forms have been designed to attract new plants and to reduce the risks of operating a facility in a foreign country. The more traditional forms of Maquiladora organization are:

1. Single corporation (any nationality).

2. Joint venture.

3. Shelter manufacturing.

4. Contract/subcontract operations.

5. Temporary import (PITEX).

Maquiladoras can have foreign management and foreign technicians. These personnel may be issued unlimited business visas to work in the facilities. Maquiladoras can acquire real estate freely in the interior of the country, and in the border areas or along the coasts, real estate can be acquired and maintained in a trust.

The maquiladora firm is subject to all Mexican taxes. However, since many Maquiladora plants are treated as cost centers, they generate little income and pay little or no Mexican corporate income tax. The maquiladoras must buy pesos in Mexico at the prevailing rate to cover all salaries, wages, leases, local services, federal and local taxes, insurance and any other expenses incurred in Mexico. This exchange of foreign currency for Mexican pesos provides Mexico with foreign exchange used to service its foreign debt and trade with other nations.

In 1965 when the Border Industrialization Program (BIP) was initiated there was little infrastructure in northern Mexican cities to support the new and promising industrial production sharing program. Mexican entrepreneurs responded to this opportunity and established industrial parks which included water, sewer, electric and natural gas service as well as roads. These industrial parks had been a critical element in the growth of Maquiladora plants. The owners of the parks frequently offer help to any firm wishing to establish a Maquiladora in order to meet the requirements of government regulations and in some cases assist in financing. Approximately 90% of Maquiladora plants are adjacent to the U.S.-Mexico border and most of the Maquiladora operations are located in industrial parks.

The Maquiladora program has been very successful. Evidence of its accomplishment can be shown by its impressive growth, both in number of operations and levels of employment. When the program began in the mid 1960s there were approximately 12 Maquiladoras in the border region employing about 3000 workers. By 1970, the number of operations had grown to 69 and the number of workers increased to about 16,750. Five years later, the number of plants had grown to 454 and the number of workers to 67,214. As Table 1 shows, Maquiladora plants decreased in 1976 and 1977. During 1979 and 1980 significant growth occurred again and plants reached 620 by the end of 1980. Between 1981 and the end of 1983 Maquiladora operations declined again. By the end of 1982 installations were down to 585. However, from 1984 to the present, employment and plants have continued to grow. Today there are more than 2000 operations giving employment to approximately 500,000 workers. The Maquiladora program accounts for about one percent of the total Mexican labor force and about two percent of the total Mexican wages.

To be Continued

Lean Six Sigma Training   Thinking Out of the Box   
Balanced Scorecards  Strategic Tactical Planning  
Supply Chain Inventory Management  Total Quality Management Principles
Lean Manufacturing Implementation  Lean Manufacturing Principles