History of the Maquiladora Program
Mexico established the Bracero Program in 1942 at the request of U.S. President Franklin Roosevelt, who enlisted the support of Mexican President Manuel Ávila Camacho as a member of the Allies in World War II. The program was created to help the United States meet the demand for manual labor, particularly in the areas of agriculture and railroad repair and maintenance.
After its original expiration in 1947, the Bracero Program received several extensions for agricultural purposes for temporary, seasonal workers. Nearly two decades after the end of the war, the program had finally run its course and was officially abolished in 1964.
Mexico focused its attention on manufacturing and enacted the Border Industrialization Program (BIP) in 1965 to attract foreign investment and technology while addressing Mexican joblessness along the border. The first step eliminated high import duties and allowed for foreign ownership of companies in Mexico, addressing the two biggest deterrents to capital investment.
Initially, the primary benefits of BIP were low-wage manufacturing and reduced tariff access to the U.S. A pre-existing U.S. tariff law that provided for reduced duty on products imported into the U.S., which were made from material originating in the U.S. but assembled elsewhere, made manufacturing in Mexico an attractive option to U.S. companies. Early on, products were assembled in Mexico but finished in the U.S., which became known as Twin Plant Assembly.
By the mid-1980’s, the program was widely known as the Maquiladora Program. Manufacturing in Mexico had evolved to the point that it began to rival oil in export revenues as plants spread south into the interior of Mexico and were no longer exclusively concentrated along the border. The Mexican government sought economic expansion through a series of legislative actions to increase incentives designed to grow both direct foreign investment and domestic industry.
The single most significant event occurred on December 17, 1992, when Canadian Prime Minister Brian Mulroney, U.S. President George H.W. Bush and Mexican President Carlos Salinas signed the North American Free Trade Agreement (NAFTA) in San Antonio, Texas. NAFTA took effect on January 1, 1994, followed by the U.S./Mexico Bilateral Tax Treaty to avoid double taxation and Mexico’s membership in the Organization for Economic Co-operation and Development (OECD), making them a global partner in trade and commerce.
Manufacturing in Mexico has progressed from high volume, low tech, labor intensive assembly maquiladoras to low volume, high tech facilities staffed by skilled third generation manufacturing engineers, electrical engineers, mechanical engineers, and civil engineers. Maquiladoras serve a wide-range of international industries, including aerospace, automotive, electronic, medical, metal processing, plastic molding and many others.