Naps Mexico - Maquiladora

Start Up and Business Process Outsourcing (BPO) in Mexico
Outsourced manufacturing support services since 1991

WHAT IS A MAQUILADORA?

The Meaning of the Word Maquiladora

Maquiladora originates from the word maquilar, the fee Spanish mill owners charged for processing wheat cultivated by local growers. Today the term Maquiladora in Mexico has evolved to include any industrial or service process, utilizing imported materials, that will be transformed, repaired, or elaborated and subsequently exported to the U.S. or other foreign country. Under the North American Free Trade Agreement (NAFTA), materials imported from the U.S. or Canada pay zero duties, as long as the components used are NAFTA certified.

For manufacturers, it is a way to remain competitive without moving operations to Asia, involving significant lead times, cumbersome freight charges, and U.S. import duties. The close proximity of Mexico allows easy, inexpensive transportation to and from the U.S.

Additionally, Mexico has a young, educated workforce, with a strong work ethic and a desire to remain in their own country. Mexico earns foreign exchange by exporting labor, without exporting laborers.

Why Mexico

Close by Mexico is a sensible choice for manufacturing products destined to be consumed in North America. U.S. manufacturers ship raw materials and parts to Mexico, where they are assembled by low-cost Mexican labor, and returned to the U.S. as finished or semi-finished products. Under NAFTA, U.S. businesses are required to source more of their raw materials and products within North America, and only pay customs duties on components of their products originating in countries other than the U.S., Canada, or Mexico. In the past ten years, upgrading of infrastructure in Mexico, such as the installation of T1 lines, has made it possible for companies to benefit from the latest technologies, including using Oracle to place and manage orders in real time. Merchandise can now be scheduled for pick up by services such as U.P.S. and Federal Express, as articles leave the production line in the Mexican facility, with a label addressed to the end user, avoiding warehousing and distribution charges.