| [Q] |
What is a "maquiladora"
and what are its functions? |
| [A] |
A "maquiladora" is a manufacturing facility
in Mexico. A maquiladora is a method of foreign outsourcing
to reduce production costs.
Also known as Twin plants, Offshore Operations and In-Bond. |
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| [Q] |
What is the Maquiladora Program? |
| [A] |
A It was first introduced in 1965 under the Mexican
Border Industrialization Program, which was designed to generate
employment, foreign investment and create industry growth in
Mexico. It was part of a program called "global production
sharing", a worldwide movement to increase and facilitate
trade. |
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| Starting Up |
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| [Q] |
How can I be assured that once
I am set up in Mexico, that my operation will be as cost effective
as you claim? |
| [A] |
After filling out the appropriate questionnaire,
CPI conducts a feasibility study that includes both an hourly
rate structure and start up fees. These quotes are accurate
costs outlining all the expenses of the project. The manufacturer
can use these costs to compare with their current operating
costs. |
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| [Q] |
How can I be in operation as
little as 30 days after I sign your contract?
I can’t move that fast in the U.S. |
| [A] |
CPI has people and facilities available at all times, although
turnaround depends on the basis of the manufactures requirements,
product and the complexity of production.
Step 1:
Provide CPI with an agreed time schedule and quantities.
Step 2:
Coordinate with CPI transportation of specialized equipment
and raw materials to maquiladora.
Step 3:
Hire plant supervisor who will participate in the hiring of
direct employees and begin production.
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| About CPI |
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| [Q] |
What are the differences between
the "shelter" and "sub-contracting" program? |
| [A] |
The major business difference between shelter
and sub-contracting is that under the shelter program the manufacturer
takes on all production risk, such as quality, operating efficiencies,
unplanned downtime and the like, in addition to the legal and
financial risk. By using the sub-contracting program, the manufacturer
can shift these risks to another party. Furthermore, by using
an experienced service company to administer the sub-contracting,
the manufacturer will receive a finished product with little
or no involvement in the production or administration of making
the product. |
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| Human Resource |
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| [Q] |
How does the hiring process work
for (direct personnel) supervisors? |
| [A] |
After you instruct us on the type of skills necessary,
we select the personnel best suited for your requirements. All
applicants are interviewed and tested by CPI ‘s Human Resource
Department. If accepted, we than involve the manufacturer appointed
plant supervisor to interview possible candidates if necessary. |
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| Logistics |
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| [Q] |
Why Mexico? |
| [A] |
Lower labor costs reduce the price of production
and assembly and the North American Free Trade Agreement provides
tariff benefits for importing and exporting. |
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| Mexican Regulations |
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| [Q] |
You mentioned that there is no
risk or legal compliance for my company with the Mexican government.
How can I operate without a license or permit? |
| [A] |
Under our shelter program, the manufacturer is
buying labor from Co-Production de Mexico S.A. de C.V. and using
our facilities and services. Co-Production de Mexico S.A. de
C.V. is Co-Production Internationals Mexican subsidiary. |
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| [Q] |
What taxes will I have to pay
in Mexico? |
| [A] |
None. CPI pays all Federal and local taxes required
in Mexico. |
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| [Q] |
What permits do we need while
doing business in Mexico? |
| [A] |
CPI will ensure that the manufacture has the required
permits in Mexico. For example the "FM-N" is a 30-day
temporary Visa, while the "FM-3" is a yearlong visa
that foreign personnel must have while doing business in Mexico.
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| U.S. Duties and Taxes |
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| [Q] |
What duties do I pay when my
products return to the U.S.? |
| [A] |
The duties you will have to pay are based on your
product’s classification number determined by U.S. Customs.
If the material used is not dutiable, then only "value
added" consists of direct labor costs, hourly rate, plus
support costs. In some cases, such as re-packaging, there is
no duty because no real value has been added to the basic product.
CPI’s staff will help you determine what your product’s
classification and duty rate will be. |
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| [Q] |
If I manufacture a product in
Mexico and export it to foreign countries, are there any tax
advantages available? |
| [A] |
Yes, since Mexico is a developing country, the
duty is often less than if the product was shipped directly
from the U.S. CPI can assist in the exportation of your product
and can provide you with duties rates if exporting from Mexico.
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