Maquiladora Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Maquiladoras are plants devoted to producing or assembling intermediate goods required by other companies in their productive processes, so they are part of productive chains for activities of international subcontracting. They operate under a special tax system that allows them to import inputs and components free of tariffs for assembling products destined for the international market.

Maquiladoras rose in the 1960s. They expanded as part of the processes of internationalization of production, the establishment of free trade agreements, and economic globalization. They are considered an alternative to increasing international competitiveness by taking advantage of the conditions offered by the host countries: abundant and cheap labor, flexibility in the use of the workforce, a corporative system that favors trade unionism control and discipline in the factory, and loose regulations in protecting the environment. To encourage their establishment, governments offer tax benefits and other economic incentives, creation of infrastructure, labor deregulation, and containment of wages.

Maquiladoras initially developed in border areas and were considered a proper means to solving problems of unemployment and migration. They reached significant development during the 1980s and 1990s along the border of Mexico and the United States and in countries of southeast Asia such as Korea, Taiwan, Hong Kong, and Singapore. However, the internationalization of production through maquiladoras should be regarded as a phenomenon of global industrial redesign. They have constituted export processing zones involving an asymmetrical industrial articulation between developed and peripheral countries based on a new regime of international division of labor, which benefits contracting corporations without encouraging industrial development in the host country.

Initially, maquiladoras emerged as small plants of low investment, characterized by intensive use of unqualified workforce under a very fragmented and routine assembly work process. They have been called “sweatshops” owing to low wages, piecework payment, extended hours of work, poor working conditions that damage the health of workers, abuse and gender inequity, unjustified dismissal, and illegal employment of child labor. They operate traditionally with female labor, especially with single mothers and teenagers who accept the conditions of work and compensation because they need the employment to survive. These precarious job conditions explain their high levels of turnover.

In addition to this traditional model of maquiladoras, a segment of them has evolved toward manufacture under forms of lean production and flexible specialization. They are factories with sophisticated technology that enables increased automation of the work process that requires higher levels of skills in the workforce; there was an increasing incorporation of specialized technicians and engineers. In these plants, the traditional advantage of cheaper labor lost its importance. In its place, competitiveness rested on greater flexibility based on polyvalent work and the use of Japanese manufacturing techniques such as Just-in-Time production and Total Quality Control.

Also, a smaller segment of maquiladoras corresponds to highly capital-intensive companies based on research and development processes. They require increased investment and advanced technology to facilitate innovation and design. They increasingly participate in integrated international business networks operating under diverse collaborative and exchange frameworks.

Trade liberalization trends and economic regionalization and globalization have pushed many countries to accept the establishment of maquiladoras as part of their strategies to boost economic development and facilitate their incorporation into the international economy. However, primarily large transnational corporations control this process. They impel off-shoring production to increase their competitive capabilities in the global markets, which rarely attend the development requirements of the host country. One of the great problems is related to the so-called runaway shops, the footloose industry and the fly-by-night enterprises: The maquiladoras simply move to distinct geographic zones when they find greater competitive advantages. This process creates what it wanted to avoid, i.e., unemployment, migration, and the emergence of ghost towns that have no alternative economic activities for the people. Therefore, governments are increasingly forced to establish better regulations to guarantee more equitable treatment and a different incorporation of the maquiladoras considering the economic and social needs of the country.

The design of national development strategies tends to encourage a better integration of national manufacturing, a greater economic development, and an advantageous incorporation to the flow of international trade and production.

Bibliography:

Shad Dowlatshahi and Cristina Urias, “An Empirical Study of ISO Certification in the Maquiladora Industry,” International Journal of Production Economics (v.88/3, 2004);
Rachel Kamel and Anya Hoffman, The Maquiladora Reader: Cross-Border Organizing Since NAFTA (American Friends Service Committee, 1999);
Alejandro Lugo, Fragmented Lives, Assembled Parts: Culture, Capitalism, and Conquest at the U.S.-Mexico Border (University of Texas Press, 2008);
NAFTA and the Maquiladora Program: Rules, Routines, and Institutional Legitimacy (Texas Western Press, 2008);
Devon G. Peña, The Terror of the Machine: Technology, Work, Gender & Ecology on the U.S.-Mexico Border (CMAS Books, 1997);
Fernando Romero, Hyperborder: The Contemporary U.S.-Mexico Border and Its Future (Princeton Architectural Press, 2008);
James G. Samstad and Seth Pipkin, “Bringing the Firm Back In: Local Decision Making and Human Capitol Development in Mexico’s Maquiladora Sector,” World Development (v.33/5, 2005);
Enrique De La Garza Toledo, “The Crisis of the Maquiladora Model in Mexico,” Work and Occupations (v.34/4, 2007).

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