What is the benefit of using a maquiladora for your contract manufacturing needs? There are many if you’re considering bringing production elements for your company to Mexico, or simply thinking about expanding your manufacturing capabilities in Mexico. Many foreign companies are attracted to Mexico because of the cost effective labor costs and the ease of manufacturing capabilities overall.
What is a Maquiladora?
Let’s start with taking a look at exactly what a maquiladora is.
Simply stated, a maquiladora is a foreign-run company exporting goods to other countries. While the company’s administrative or corporate facility is located in the U.S., manufacturing plants are located in Mexico.
In Mexico, the maquiladora program began in 1964, designed to enhance the economy overall and increase industry opportunities in the country. IMMEX, the Maquiladora, Manufacturing and Export Services Industry modernized the system in 2006.
Today, foreign-owned companies can benefit from the maquiladora model, due to benefits in labor, tax, and the importation of both duty and tariff-free raw materials. Finished manufactured products can be exported to the manufacturer’s country of ownership.
The system works with Mexico-based management and facilities conducting daily manufacturing operations, with the foreign company owner controlling the manufacturing expertise and production operation, as well as long-term planning.
Maquiladoras are beneficial for foreign companies due to:
- Production flexibility
- Fast, efficient operation start-up
- Operations cost and tax benefits
- Access to large and qualified labor pool
Where Can Maquiladoras Be Located?
Basically, a maquiladora location can be anywhere in Mexico as long as the produced products are sold outside Mexico itself. Tijuana is a popular location due to its proximity to the U.S. border, success as an import/export hub, and established providers.
It’s easy to access a maquiladora through working with a contract manufacturer, of which can provide services such as:
- On-site management of manufacturing processes
- Hiring and human resources
- Administering payroll and benefits
- Managing imports and exports
- Managing customs
- Management of freight and logistics
- Handling tax issues
- Overseeing environmental and occupational standards of health and safety
- Taking care of purchasing negotiations
- Facilitating vendor relationships
- Managing facilities, leases, and equipment
Some providers of contract manufacturing and shelter services offer a full community for foreign companies, such as an industrial park location that includes the leasing of a building among other services.
Maquiladora Cost Benefits and Tax Incentives
Among the many benefits for maquiladoras are the low shipping costs, duty-free production materials and reduced labor costs. They also allow simple compliance with local regulations and provide many benefits in regard to taxes, including corporate income tax, payroll tax, and VAT tax.
Working with a services provider is one of the easiest, simplest ways to take advantage of the many benefits offered by the maquiladora program, and Coastline International can help. While Coastline International is based in San Diego, California, all manufacturing operations are performed at their Tijuana, Mexico (maquiladora) facilities.
We have comprehensive, cost-effective methods that can assist you with effective manufacturing under a maquiladora.
Learn More About Mexico Contract Manufacturing at Coastline International
If you’re ready to learn more about contract manufacturing in Tijuana, or get started with a maquiladora program, then Coastline International can help. We specialize in the nearshore manufacturing of medical devices and electronics with extensive experience in the aerospace and consumer goods sectors as well.
Call Coastline International today at (888) 748-7177 or contact us online.