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How to establish a maquiladora
The maquiladora program was created by the Mexican government in 1965 to promote economic development along the northern border of Mexico.
However, it was not until after the peso devaluation in 1982 that a boon in the industry was experienced along the U.S.-Mexico border.
As a maquiladora, a company benefits from the considerable savings of operating
in Mexico under this "in-bond" program. A fully operational plant is established in Mexico without paying any Mexican duty. Raw material are exported into Mexico duty-free, and when the product is returned to the U.S.,
duty is charged on the "value added" in Mexico and those raw materials of non-U.S. origin.
To form a maquiladora operation, companies create a Mexican corporation using a process similar to that used in the U.S.
Five stockholders are necessary in setting up a corporation. Usually, the American parent company holds 95 percent of the ownership, with the remainder to be divide between four other individuals employed by the parent
company. No Mexican ownership is required.
In the maquiladora application process, the company submits a full description of their proposed operations to the Mexican government. The written proposal describes the
company's production intent for the first 12 months of operation and lists the nature of the product to be produced, employment range, investment, materials, supplies and all packaging materials and production
equipment.
Upon approval of the written program, the proposal is sent to SECOFI (Secretaria de Comercio y Fomento Industrial), the Mexican Customs Agency, to permit entry into Mexico as a maquiladora. The
Mexican maquiladora work permit allows up to 15 percent of the workforce in the maquila to be non-Mexican employees. At start-up, this percentage can be exceeded for the period of the time necessary to get operation
underway. Work permits allow individual to enter the country for six-month period, and are routinely renewed by the Mexican government.
A maquiladora company is, in most cases, foreign to Mexico and operating
under license from the Mexican government for a specified period of time - usually 35 years.
The term maquiladora evolved from the agricultural process of production sharing. Raw materials and equipment are imported
to the Mexican business site where, using the available labor force, these materials are transformed or assembled and re-exported.
From this process comes the term in-bond, as sales of goods in Mexico, though
possible, occur only under further licensing once certain requirements have been met. In many instances, a support facility exists on the U.S. side for further assembly or distribution. This supports the concept of twin
plant operation.
Traditionally, maquiladora operations were used for labor-intensive assembly, but there has been a shift towards fully transformation of raw materials to the finished product. This progress has come
with the availability of a more highly trained work force, and favorable duty rates under the U. S. General System of Preference of GSP program.
When considering options for developing manufacturing operation in
Reynosa, companies have 10 aspects to consider.
The legal structure of each option and its suitability to their desired operation must be considered. Labor aspects and financial consideration must be taken into
account. Communication requirements may dictate a specific park or facility. Engineering requirements and materials management will vary with the company. The translation of operations materials will provide
Spanish-speaking workers with what they need to do a quality job. Site selection can be as simple as viewing the maquila parks set up, and construction supervision will assure a facility that meets the company's needs.
There are several options available for operation in Mexico.
SUBCONTRACT
Using the subcontract option, a company saves on labor costs. This option, is specially appealing for companies who want a
limited capital investment in Mexico.
Companies choosing the subcontract option have no exposure to the daily operations of the maquiladora. Under the agreement, which normally defines a volume commitment, a price
is quoted, a quality level is established, raw materials and processing equipment are consigned and a delivery schedule is set.
SHELTER
The shelter program provides a company with the facility, staffing,
training, equipment set-up and coordination. Companies utilizing this program are usually small firms or those who want to take investing in Mexico a step at a time.
Services for shelter operations are quoted on a
per direct labor hour, per person bases. The number of direct labor employed is a mutually agreed to a derivative of a mutually agreed to labor standard.
MAQUILADORA
Depending on the company's needs, a
maquiladora may be more suitable. The Mexican maquiladora or production sharing program is considered a viable alternative for manufacturing companies who prefer to locate close to the United States. Utilizing
competitive wage rates and manufacturing a quality product. McAllen/Reynosa is currently host to many Fortune 500 companies who have operations, and in some cases, whole divisions along its borders.
JOINT VENTURE
The joint venture option is a practical for companies who identifty marketing opportunities in Mexico, the U.S. or abroad. The nature of the product determines the degree of Mexican capital investment
participation
INDUSTRIAL PARKS
Industrial parks in Reynosa offer easier set-up and the security of locations with other maquiladoras. Most offer different sized sites, according to customer needs.
Parque
Industrial del Norte, a 300-acre industrial park located seven miles from the International Bridge, is an attractive addition to the nearby communities where it is located. Parque Industrial's grounds feature a unique
blend of native mesquite and ebony trees.
Established in 1973, Parque Industrial Reynosa is the oldest industrial park in Reynosa. Located off the Reynosa-Rio Bravo Highway next to the Reynosa International Airport,
Parque Industrial Reynosa has 700-acres of developed land and offers sites ranging from 2.5-acres and up.
Park features often include sewer and water, electrical power, microwave telecommunications systems,
maintenance, lease, purchase and build-to-suit options, propane gas available and drainage systems. Most feature full fencing and 24-hour security.
RECENT DEVELOPMENTS
Among the most recent developments
that will impact all forms of foreign owned companies within Mexico will be NAFTA (North American Free Trade Agreement). In the year 2001, most companies and industries doing business in Mexico will be subject to
import duties for importation of raw materials, assemblies or equipment which are not of American, Canadian or Mexican origin.
Thus, those companies which import foreign articles of non-NAFTA goods or articles will
now be subject to NAFTA duties from the county such goods are brought into i.e. U.S. Mexican or Canadian import duties. |
