What is a Maquiladora? Mexico Manufacturing as an Attractive Alternative

The term "Maquiladora" refers to a foreign-owned manufacturing factory in Mexico that exports its products after undergoing a manufacturing process. 

Like most words that make it into the vernacular, the word maquiladora has a legal definition as well as benefits while manufacturing in Mexico.

The maquiladora boom originally stems from a joint U.S.-Mexico program to provide employment for Mexican nationals returning from agricultural work in the U.S. under the “Bracero Program.” After it's dissolution in 1965, the Mexican government started the Border Industrialization Program which, to this day, continues to attract foreign investment.

Operating as a maquiladora gives manufacturers preferential treatment for temporary imports, lower or no tariffs (sometimes covered under free trade agreements), and duty-free imports of materials, components, and production equipment. Most maquiladoras export their finished goods to our North American trading partners the U.S. and Canada, as well as around the world.

In the early years of the program, there were some 2,000 maquiladoras with 500,000 workers in Mexico. In 1994, the North American Free Trade Agreement (NAFTA), today USMCA, sparked the growth of maquila plants, and within a few years the numbers more than doubled. The proliferation of maquiladoras in Mexico has lowered the rate of unemployment in Mexico, most notably along the border cities, employing more than one million Mexicans.

What is the difference between the Maquiladora Program and the IMMEX Program?

The Maquiladora Program has now been branded as the “IMMEX Program,” and requires the foreign company to be certified by the Mexican government in order to qualify for duty-free imports of raw materials and machinery . The main requirement once you begin operating is that the imported raw materials be transformed and exported within 18 months.

This certification process can take up to a year and has highly involved requirements for compliance. Many foreign companies that want to set up manufacturing in Mexico opt to work with a shelter services provider, like CPI, which allows them to operate under their legal entity and existing IMMEX permits and certifications. This also frees up the manufacturer to focus on production while the shelter services provider manages the complete set up and administration of the operation, labor laws, compliance, permitting, inspections and more. 

What are the Pros of a Mexican Maquiladora/IMMEX Program?

It’s all about cost savings. A company that is certified under the IMMEX Program, especially those that work under a shelter company, can operate at not only lower costs but lower risks.

• Maquiladoras can import raw materials, equipment and assembly components duty-free
• Low labor costs
• Highly skilled labor force
• Proximity to North American markets
• Supply chain opportunities
• Reduced transportation costs and negligible time in transit

Many manufacturers take advantage of these benefits using a co-production approach. Some parts and components are made in the United States, subsequently exported to Mexico for assembly, and returned as sub-assemblies or final products ready for sale. There are also import/export requirements for product marking and labeling, which we cover here.

This may sound like a lot to digest. CPI’s Maquiladora Shelter Program has helped hundreds of companies navigate the process. Don’t know where to start? Contact us today for a no-obligation consultation!

Other insights:

About Mexico's Workforce

Mexico Logistics and Infrastructure

Costs of Manufacturing in Mexico

About the CPI Librarian Series

CPI’s in-house Librarian is your own personal curator of Mexico manufacturing knowledge. Sometimes you just need the facts and you need them now. Do you have a question you’d like answered? Send your questions to This email address is being protected from spambots. You need JavaScript enabled to view it.