“A 50-year-old export industry that provides millions of jobs has to reinvent itself quickly to stay competitive.”

Seth Dixon‘s insight:

A maquiladora is a term that often used to describe a factory in Northern Mexico that enjoys special tax breaks for eport-driven production. Northern Mexico is an ideal location for this type of industry because 1) access to American markets is high and 2) labor costs are relatively low.  The Mexican Maquiladoras can no longer compete in a ‘race to the bottom’ for the lowest skill jobs, but they can produce higher-end goods and compete with China to supply more innovative consumer goods.  Labor costs in China are on the rise, making Mexico able to compete more effectively with them on the open market.  The total value of Mexican maquiladoras exports has grown by more than 50% in the last 5 years; more foreign corporations are investing money into Mexico.  Some of the more innovative and aggressive maquiladoras are attempting to become more involved in the research and development end of production; essentially they want to start competing with European and American companies on the lucrative high-end of the commodity chain instead of fighting for the scraps at the bottom. 


Tags: Mexico, manufacturing, industry, economic, globalization, technology.

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