Julio A. Jimenez
Gateway to Exporting Consultant
juliojimenez@consultant.com
The Maquiladora Industry
The Rise of Production Sharing
• The second half of the 20th century increased in world
wide trade.
• Between 1970 – 2000 trade increased in more than
370% due to production sharing.
• An agreement to share the production costs between
two or more firms.
• this represents more than $800 billion in trade anually.
• Maquiladora U.S. – Mexico trade is primarily intra
industry trade (Production Sharing).
• 80% of U.S. trade with Mexico is intra-industry.
Introduction to Maquiladoras
• End of the Bracero Program 1965
• Border industrialization program
• The Maquiladora program was a measure to alleviate
higher unemployment and growing poverty
• By 1969 , 147 companies were in place, accounting for
17,000 jobs
• The first two industrial parks were in Cd. Juarez, Chih. and
Nogales, Sonora Mexico. (RCA, Convertors and Sylvania)
• By 1985 had become Mexico’s second largest source of
income from foreign exports, behind oil.
What is a Maquiladora?
• Maquiladoras are foreign-owned, these are
controlled or subcontracted manufacturing
plants that process or assemble imported
components for export.
• Maquiladora inputs are generally imported
duty-free and countries like the U.S. only tax
the value-added portion of maquiladora
exports.
Industry Evolution
• First - generation: Highly labor-intensive with limited
technology and dependent on decision from parent
company i.e. textile. (U.S. located)
• Second - generation: Oriented less toward assembly and
more reliant on a manufacturing process. i.e. Automotive
harnesses, TV sets and electrical appliances.
• Third - generation: Research oriented, with emphasis on
design and development. i.e. Delphi’s Mexico Technical
Center.
Delphi’s Mexico Technical Center
Importance to the Mexican Economy
• Maquiladora exports represent almost
50% of Mexico’s total exports.
• The industry employs 10% of Mexico’s
formal employment.
Maquiladora Jobs Distribution
in México
Has the Maquiladora Impact change
over time?
• Over the years, the industry has switch from
the manufacturing sector to the services
sector.
• This is good news because these type of jobs
pay higher wages.
• i.e. ACS which gives bilingual customer
service to Boost mobile users in the U.S.
Low-Wage Competition is over
• Mexico’s Ministry of Economy estimates that the
country pays and average wage with benefits of
$2.96 per hour, compared to California's $16.60
per hour, and unfavorable when compared with
China’s 0.72cents per hour.
• The U.S. Bureau of Labor statistics puts Mexican
wages at $2.08 per hour compared with 0.48 cents
in Sri Lanka.
• The international labor organizations estimates
Chinese manufacturing wages at 0.25 cents per hr.
How does Mexico compete today?
1. Proximity with the U.S. Market: Works for Large
items, Big-screen TV’s, freezers, water heaters and blades
for wind turbine’s. All produced in Juarez.
2. Quick turnarounds: Frequent changes to products or
an ASAP shipment to the U.S. i.e. Auto parts.
3. Goods with high value added: Such as medical
instruments, are often made in Mexico. This is to its
skilled and experienced labor force.
4. Intellectual property: Used in the production process
can be at risk overseas, Mexico offers better protection
than other countries.
20 Largest Foreign Investors in
Maquiladora Industry
NUM.
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COMP.
1 DELPHI AUTOMOTIVE SYSTEMS
2 LEAR CORPORATION
3 YAZAKI NORTH AMERICA
4 ALCOA FUJIKURA LTD
5 GENERAL ELECTRIC COMPANY
6 THE OFFSHORE GROUP
7 TAKATA
8 SANMINA-SCI
9 THOMSON, INC
10 PHILIPS ELECTRONICS
11 SIEMENS AG
12 JABIL CIRCUIT
13 VISTEON CORPORATION
14 MAGNA INTERNATIONAL INC
15 SONY CORPORATION
16 KEMET CORPORATION
17 CARDINAL HEALTH
18 MALLINCKRODT, INC.
19 SUMITOMO
20 WHIRLPOOL
EMPLOYES PLANTS ORIGEN
66,000
34,000
33,400
23,000
20,700
16,590
15,800
12,110
10,874
10,575
10,200
10,000
10,000
9,800
9,679
8,000
7,566
7,521
7,500
7,500
51
8
41
26
30
3
10
7
6
11
15
3
16
12
3
8
6
8
14
5
EUA
EUA
JAPON
JAPON
EUA
EUA
JAPON
EUA
EUA
HOLANDA
ALEMANIA
EUA
EUA
CANADA
JAPON
EUA
EUA
EUA
JAPON
EUA
INDUSTRIAL SEC.
AUTOMOTRIZ
AUTOMOTRIZ
AUTOMOTRIZ
INDUSTRIAL
INDUSTRIAL
SHELTER
AUTOMOTRIZ
ELECTRONICA
ELECTRONICA
ELECTRONICA
ELECTRONICA
ELECTRONICA
AUTOMOTRIZ
AUTOMOTRIZ
ELECTRONICA
ELECTRONICA
MEDICA
MEDICA
ELECTRICA
ELECTRONICA
Examples of Maquilas
Automotive Industry
Electronic Industry
Most common production inputs
purchased by maquilas:
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Metal components
Tool and die products
Plastic injection
Packaging materials
Resins
Chemicals
Industrial wire
Logistical services
Maquila Considerations
• Most maquilas are Fortune 500 companies or are global in nature.
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Quality control is a given for maquila suppliers (ISO, Six-sigma, etc.)
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Supply chain management usually entails putting pressure on suppliers to
supply production inputs when needed.
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If you are not located directly on the border, can you quickly and economically
supply your Mexican buyer?
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Becoming a supplier to a maquila means that you have to be prepared to
become a part of its supply chain.
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Volume can sometimes be a major consideration.
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In addition to direct inputs, maquilas purchase MRO (maintenance, repair and
operations) supplies.
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Getting in front of a maquila purchasing manager can be a challenge.
Thanks!
Julio A. Jimenez
Gateway to Exporting Consultant
juliojimenez@consultant.com