Mexico’s Maquiladora Plants

Mexico’s famous “Maquiladoras” can also be described as “twin plants”. The name comes from the fact that while the manufacturing plants are based in Mexico, the parent company’s administration facility operates in the company’s native country.

This brings foreign companies the advantage of being able to capitalize on the less expensive labor force in Mexico while still receiving the benefits of doing business in the native country. It also grants the company various tax benefits. These advantages can achieve savings up to $ 1 million per year, studies have shown.

The Maquiladora program dates all the way back to 1964 when Mexico was looking for ways to create jobs, as there was a huge unemployment wave coming over Mexico. They solved this problem by creating the IMMEX program, which attracted foreign investors and caused a huge growth in the manufacturing factories based in Mexico. The already rapidly growing numbers of factories exploded when NAFTA (North American Free Trade Agreement) was established.

Nowadays there are over 3.000 Maquiladores in Mexico, showing the significance of them, with their main utilizers being Canada and the USA. They grant low production costs and duty-free or tarif-free imports of raw materials.

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