These facilities also make up a good portion of the goods exported to the United States. While there may be cases of unsafe working conditions or unscrupulous maquila owners who take advantage of their employees by paying them low wages, they don't have the same reputation as sweatshops. Sweatshops don't provide their workers with a living wage and the overall conditions are unsafe to the point where they may even be dangerous.
Many of these establishments employ children and women, don't provide any job security or guarantee of wages. Although there's no limitation to where maquiladoras can be located, they are generally found along the border of the United States and Mexico. Border cities and states tend to benefit the most from maquiladoras.
Those in Mexico benefit from the creation of plants and facilities and a boost in labor and employment. American companies can benefit from cheaper labor costs, a reduction in production costs, import-export tariffs, and duties. University of Delaware. Federal Reserve Bank of Dallas.
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We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Your Practice. Popular Courses. Markets International Markets. Table of Contents Expand. What Is a Maquiladora? Understanding a Maquiladora. Benefits of a Maquiladora. Labor Exploitation. History of Maquiladoras. Maquiladoras FAQs. Key Takeaways A maquiladora is a low-cost factory in Mexico that is owned by a foreign corporation.
Facilities are usually located near the U. These plants assemble products and export them back to the United States and other countries. Despite the benefits, maquiladoras have come under fire because of the way they exploit their labor force.
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In other words, assembly components, materials, machinery and equipment for production purposes used in maquiladoras are allowed to enter Mexico duty-free. Labor in Mexico is inexpensive and courtesy of NAFTA, custom fees, tariffs and taxes are a much lower cost, which helps benefit the profits of corporations.
The history of the Maquila Industry is a byproduct of the Bracero Program, which allowed millions of Mexican male workers to come to the United States on short-term, seasonal labor contracts, primarily in the agriculture sector.
Created in , this program was conceived as a solution to the labor shortages due to World War II. Between the years and , there is an estimated 4. While U. About two decades later, the Maquiladora Program became the second largest industry in Mexico, surpassing tourism and coming second to the petroleum industry.
The fast growth of the maquiladora industry has created over one million jobs, established over 3, manufacturing or export assembly plants and has lowered the unemployment rate significantly in areas along the United States-Mexico border.
Growing with global economy demands for on-time delivery, quality manufacturing, and low labor costs, the Maquiladora industry is a mix of foreign-owned and locally-owned businesses found mostly along the U. Maquiladoras mainly service US-based clientele, but through 11 different free trade agreements with 43 countries, Mexico hosts maquiladoras investments from many other countries including Germany, Canada, Great Britain, Australia, Korea, Japan, Israel and several South American countries.
Typical maquiladoras registration for transforming raw materials into finished goods that are exported. At the discretion of the Department of Economy, a service provider that distributes goods meant for export from one manufacturer to another within Mexico. Registration for a manufacturing entity operating with third party manufacturers or subcontractors. Maquiladora operations are primarily found in industrial and business parks adjacent to the U.
The manufacturing ecosystem of Nogales, Mexico and Santa Cruz County, Arizona is an example of the symbiosis of increased flexibility and trade benefits.
Strategic border locations offer flexibility for distribution costs and easy transportation through new larger Ports of Entry.
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