Manufacturing In Mexico Offers Prosperity To All Parties Involved

August 9, 2013

When global business leaders are first introduced to the concept of “maquiladoras,” one of their first questions is invariably, “What does that word mean?” But a direct Spanish-to-English, word-for-word translation for “maquiladora” is difficult to provide.

“Maquiladora” (pronounced mah-KEY-ah-DOOR-uh) is derived from the Spanish word “maquila.” In Spain hundreds of years ago, farmers took their grain to mills to be ground into flour or meal. Mill owners kept a portion of the processed grain as payment for their services and this payment was called a “maquila.”

Today, in a broader sense, maquiladoras mean much more than a simple “payment” to the cities where they are located and the businesses involved. Maquiladoras mean great prosperity for foreign companies manufacturing in Mexico and Mexico in general.

In maquiladora operations, raw materials are shipped from around the world to plants throughout Mexico. Employees at the maquiladoras in Mexico process the raw materials and prepare them for final sale. The majority of the finished product is exported to the United States but a more recent trend has exports going to South America and elsewhere.

The Mexican plant’s hometown benefits from job creation and foreign companies benefit from the lower Mexican labor costs. Third parties, such as trucking firms, customs brokers and the local supply chain benefit from the increased business.

Manufacturing in Mexico has undergone some dramatic and difficult changes to accommodate the maquiladoras. Nonetheless, business and community leaders of border cities speak glowingly about the symbiotic relationship the maquiladoras offer, and with good reason. Post-World War II manufacturing in Mexico had made it difficult to compete against Asian competition, which was often aided by American intervention in improving manufacturing processes. But it experienced a rebirth in the last decade, thanks to the maquiladora industry.

Business and civic leaders on both sides of the border are grateful for the maquiladora industry, not only for the economic advantages it provides but for the renewed spirit of cooperation and understanding it has brought to the border.

The maquiladora industry remains strongest along the border cities, beginning in the west with the huge population center of San Diego/Tijuana. The area remains ripe for more maquiladora development, though, as the population of the entire Tijuana/Baja area of Mexico continues to explode. The area’s infrastructure, particularly the highway and rail systems, are highly developed, and the Mexican workforce is exceptionally large in the area.