Maquiladoras are Mexican companies that temporarily import materials without paying export taxes to produce goods at a low cost, usually by Mexican workers, and then export and sell them at a higher price. The maquila program allows for the import of all necessary equipment, but the maquiladora must sign a bond stating that the equipment will not remain permanently in Mexico. There are over 2,500 maquiladoras today, employing approximately 1.15 million Mexicans, with women making up 70% of the workforce. While corporate profits are huge, workers are typically paid around US$5.75 (USD) a day and work 60 to 70 hours a week. The products range from fashion clothing to electronic products, and there are no limits on what can be made in a maquiladora, except for firearms. Maquiladoras account for 85% of trade revenues generated between Mexico and the United States, with annual profits standing at $200 billion.
A maquiladora is a Mexican company that operates under a maquila program. This program is approved by the Mexican Secretariat of Commerce and Industrial Development. The maquila program entitles the company to temporarily import materials without paying export taxes on the products they produce. These products are manufactured in Mexico, usually by Mexican workers. They can be produced at a very low cost and then exported and sold at a much higher price.
A special customs agreement allows the company to import all the equipment needed to set up the premises and produce its goods. This can include machinery, administrative equipment, parts and materials: in practice, everything that supports the production process can be imported according to the rules of the Maquila program. The maquiladora must sign a bond stating that the imported equipment will not remain permanently in Mexico. The maquiladora’s products are usually exported for sale to another exporter or maquiladora.
The word maquiladora originated to describe the process of grinding grain. Maquila was referring to the share that was paid to a miller to grind grain. When maquiladoras first started appearing in the 1960s and 1970s, they were large industrial complexes and export processing plants. The low costs soon attracted the attention of international textile companies.
Today there are over 2,500 maquiladoras. The North American Freetrade Agreement facilitated rapid expansion. Today the Maquiladoras employ approximately 1.15 million Mexicans, and women make up 70% of the overall workforce.
Slums called Colonias were hastily built to house these workers. While corporate profits are huge, workers are typically paid around US$5.75 (USD) a day and work 60 to 70 hours a week.
There are some restrictions on where a maquiladora can be located in Mexico. Mexico City, Guadalajara and the urban areas of Monterrey are the only exemptions. This is due to congestion and the already high concentration of industrial complexes within these areas. Aside from these three areas, the position of a new maquiladora is entirely the company’s choice.
The products made in a maquiladora range range from fashion clothing to electronic products. With the exception of firearms, which need special permission, there are no limits on what can be made in a maquiladora. Anything can be worked, assembled, packaged, produced, transformed and rebuilt.
The maquiladoras continue to grow in strength. Within just four decades, they now account for 85% of trade revenues generated between Mexico and the United States. With annual profits now standing at $200 billion, there are no signs this business is heading for a recession.
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